UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 814-00821

FRANKLIN BSP LENDING CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Maryland						27-2614444
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)
9 West 57th Street, 49th Floor, Suite 4920 New York, New York						10019
(Address of Principal Executive Office)						(Zip Code)

(212) 588-6770

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001 per share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

    

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x No o

    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes x No o

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    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o						Accelerated filer o
Non-accelerated filer x						Smaller reporting company o
						Emerging growth company o

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

    Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of

the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.

7262(b)) by the registered public accounting firm that prepared or issued its audit report. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The number of shares of the registrant's common stock, $0.001 par value, outstanding as of August 9, 2022 was 218,841,301.

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FRANKLIN BSP LENDING CORPORATION

FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 2022

TABLE OF CONTENTS

 

			Page
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements			4
Consolidated Statements of Assets and Liabilities as of June 30, 2022 (Unaudited) and December 31, 2021			4
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)			5
Consolidated Statements of Changes in Net Assets for the Six Months Ended June 30, 2022 and 2021 (Unaudited)			7
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (Unaudited)			8
Consolidated Schedules of Investments as of June 30, 2022 (Unaudited) and December 31, 2021			9
Notes to Consolidated Financial Statements (Unaudited)			32
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			88
Item 3. Quantitative and Qualitative Disclosures About Market Risk			105
Item 4. Controls and Procedures			106
PART II - OTHER INFORMATION
Item 1. Legal Proceedings			107
Item 1A. Risk Factors			107
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			108
Item 3. Defaults Upon Senior Securities			108
Item 4. Mine Safety Disclosures			108
Item 5. Other Information			108
Item 6. Exhibits			109
Signatures			110

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PART I - FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(dollars in thousands except share and per share data)

			June 30,						December 31,
			2022						2021
			(Unaudited)
ASSETS
Investments, at fair value:
Control Investments, at fair value (amortized cost of $611,288 and $614,408, respectively)			$	651,828					$	657,414
Affiliate Investments, at fair value (amortized cost of $138,696 and $154,211, respectively)			90,727						110,952
Non-affiliate Investments, at fair value (amortized cost of $2,031,700 and $2,014,998, respectively)			2,014,400						2,010,598
Investments, at fair value (amortized cost of $2,781,684 and $2,783,617, respectively)			2,756,955						2,778,964
Cash and cash equivalents			16,448						42,774
Interest and dividends receivable			37,122						29,089
Receivable for unsettled trades			13,136						37,379
Prepaid expenses and other assets			4,442						6,749
Unrealized appreciation on forward currency exchange contracts			—						266
Total assets			$	2,828,103					$	2,895,221
LIABILITIES
Debt (net of deferred financing costs of $10,116 and $9,553, respectively)			$	1,189,831					$	1,272,274
Stockholder distributions payable			24,661						23,253
Management fees payable			10,549						10,499
Incentive fee on income payable			7,737						7,169
Accounts payable and accrued expenses			24,290						29,975
Payable for unsettled trades			195						34,394
Interest and debt fees payable			6,049						8,044
Directors' fees payable			28						121
Unrealized depreciation on forward currency exchange contracts			60						—
Total liabilities			1,263,400						1,385,729
Commitments and contingencies (Note 7)
NET ASSETS
Preferred stock, $.001 par value, 50,000,000 shares authorized, none issued and outstanding			—						—
Common stock, $.001 par value, 450,000,000 shares authorized; 244,777,636 issued and 210,809,173 outstanding at June 30, 2022, and 232,419,916 issued and 201,610,757 outstanding at December 31, 2021			211						202
Additional paid in capital			1,982,856						1,913,365
Total distributable loss			(418,364)						(404,075)
Total net assets			1,564,703						1,509,492
Total liabilities and net assets			$	2,828,103					$	2,895,221
Net asset value per share			$	7.42					$	7.49

The accompanying notes are an integral part of these consolidated financial statements.

4

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FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands except share and per share data)

(Unaudited)

			For the three months ended June 30,												For the six months ended June 30,
			2022						2021						2022						2021
Investment income:
From control investments
Interest income			$	4,571					$	2,791					$	9,157					$	6,271
Dividend income			15,754						13,666						32,034						27,499
Fee and other income			74						7						144						42
Total investment income from control investments			20,399						16,464						41,335						33,812
From affiliate investments
Interest income			1,396						2,517						3,277						4,875
Dividend income			137						1,179						621						2,057
Fee and other income			—						2,036						—						2,036
Total investment income from affiliate investments			1,533						5,732						3,898						8,968
From non-affiliate investments
Interest income			39,423						34,596						77,982						69,476
Dividend income			—						56						—						56
Fee and other income			2,042						1,401						3,957						2,370
Total investment income from non-affiliate investments			41,465						36,053						81,939						71,902
Interest from cash and cash equivalents			20						2						21						3
Total investment income			63,417						58,251						127,193						114,685
Operating expenses:
Management fees			10,494						9,462						20,997						19,036
Incentive fee on income			7,124						6,876						14,380						13,531
Interest and debt fees			13,393						11,032						25,677						20,632
Professional fees			1,126						1,133						1,979						2,412
Other general and administrative			1,602						1,429						3,009						3,030
Administrative services			198						181						393						362
Directors' fees			232						228						505						454
Total expenses			34,169						30,341						66,940						59,457
Income tax expense, including excise tax			752						403						2,731						1,103
Net investment income			28,496						27,507						57,522						54,125
Realized and unrealized gain (loss):
Net realized gain (loss)
Control investments			6,840						2						6,841						3
Affiliate investments			392						20,364						504						20,057
Non-affiliate investments			(1,253)						7,636						3,654						7,193
Net realized gain (loss) on foreign currency transactions			308						(853)						501						(1,381)
Net realized loss on extinguishment of debt			—						—						(1,769)						(1,286)
Total net realized gain			6,287						27,149						9,731						24,586

The accompanying notes are an integral part of these consolidated financial statements.

5

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FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands except share and per share data)

(Unaudited)

			For the three months ended June 30,												For the six months ended June 30,
			2022						2021						2022						2021
Net change in unrealized appreciation (depreciation) on investments
Control investments			(12,179)						(1,301)						(2,656)						(9,426)
Affiliate investments			(5,564)						(1,470)						(4,520)						19,412
Non-affiliate investments			(5,100)						14,241						(12,900)						44,115
Net change in deferred taxes			(107)						—						122						—
Total net change in unrealized appreciation (deprecation) on investments, net of change in deferred taxes			(22,950)						11,470						(19,954)						54,101
Net change in unrealized appreciation (depreciation) from forward currency exchange contracts			214						595						(325)						888
Net realized and unrealized gain (loss)			(16,449)						39,214						(10,548)						79,575
Net increase in net assets resulting from operations			$	12,047					$	66,721					$	46,974					$	133,700
Per share information - basic and diluted
Net investment income			$	0.14					$	0.14					$	0.28					$	0.27
Net increase in net assets resulting from operations			$	0.06					$	0.33					$	0.23					$	0.67
Weighted average shares outstanding			205,577,018						199,172,026						203,038,687						199,753,150

The accompanying notes are an integral part of these consolidated financial statements.

6

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FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(dollars in thousands except share and per share data)

(Unaudited)

			For the six months ended June 30,
			2022						2021
Operations:
Net investment income			$	57,522					$	54,125
Net realized gain from investments			10,999						27,253
Net realized gain (loss) on foreign currency transactions			501						(1,381)
Net realized loss on extinguishment of debt			(1,769)						(1,286)
Net change in unrealized appreciation (depreciation) on investments			(20,076)						54,101
Net change in deferred taxes			122						—
Net change in unrealized appreciation (depreciation) from forward currency exchange contracts			(325)						888
Net increase in net assets resulting from operations			46,974						133,700
Stockholder distributions:
Distributions			(61,263)						(39,657)
Net decrease in net assets from stockholder distributions			(61,263)						(39,657)
Capital share transactions:
Issuance of common stock, net of issuance costs			79,441						—
Reinvestment of stockholder distributions			13,630						9,145
Repurchases of common stock			(23,571)						(19,532)
Net increase (decrease) in net assets from capital share transactions			69,500						(10,387)
Total increase in net assets			55,211						83,656
Net assets at beginning of period			1,509,492						1,399,755
Net assets at end of period			$	1,564,703					$	1,483,411
Net asset value per common share			$	7.42					$	7.43
Common shares outstanding at end of period			210,809,173						199,773,641

The accompanying notes are an integral part of these consolidated financial statements.

7

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FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

			For the six months ended June 30,
			2022						2021
Operating activities:
Net increase in net assets resulting from operations			$	46,974					$	133,700
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash provided by (used in) operating activities:
Payment-in-kind interest income			(5,472)						(2,555)
Net accretion of discount on investments			(4,326)						(4,683)
Amortization of deferred financing costs			1,456						1,605
Amortization of discount on unsecured notes			619						433
Sales and repayments of investments			216,780						483,587
Purchases of investments			(194,050)						(623,054)
Net realized gain from investments			(10,999)						(27,253)
Net realized (gain) loss on foreign currency transactions			(501)						1,381
Net realized loss on extinguishment of debt			1,769						1,286
Net change in unrealized (appreciation) depreciation on investments			20,076						(54,101)
Net change in unrealized (appreciation) depreciation from forward currency exchange contracts			325						(888)
(Increase) decrease in operating assets:
Interest and dividends receivable			(8,033)						(10,994)
Receivable for unsettled trades			24,243						(7,367)
Prepaid expenses and other assets			2,307						429
Increase (decrease) in operating liabilities:
Management fees payable			50						14
Incentive fee on income payable			568						1,381
Accounts payable and accrued expenses			(5,553)						8,003
Payable for unsettled trades			(34,199)						(144,905)
Interest and debt fees payable			(1,995)						379
Directors' fees payable			(93)						(24)
Net cash provided by (used in) operating activities			49,946						(243,626)
Financing activities:
Proceeds from issuance of shares of common stock, net			79,441						—
Repurchases of common stock			(23,571)						(19,532)
Proceeds from debt			129,000						784,994
Payments on debt			(211,500)						(509,100)
Payments of financing costs			(3,918)						(708)
Stockholder distributions			(46,225)						(30,670)
Net cash provided by (used in) financing activities			(76,773)						224,984
Net decrease in cash and cash equivalents			(26,827)						(18,642)
Effect of foreign currency exchange rates			501						(1,381)
Cash and cash equivalents, beginning of period			42,774						53,182
Cash and cash equivalents, end of period			$	16,448					$	33,159
Supplemental information:
Interest paid during the period			$	25,416					$	9,022
Net taxes, including excise tax, paid (refunds received) for the period			$	1,808					$	(297)
Distributions reinvested			$	13,630					$	9,145
Assets and liabilities exchanged for interest in FBLC Senior Loan Fund, LLC (Note 3)			$	—					$	262,544

The accompanying notes are an integral part of these consolidated financial statements.

8

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FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

Portfolio Company (f) (q) (v)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Senior Secured First Lien Debt - 117.9% (b)
1236904 BC, Ltd. (c) (h)						Software/Services						L+7.50% (9.63%), 3/4/2027						$	10,441					$	10,281					$	10,600					0.7		%
1236904 BC, Ltd. (c) (h) (i)						Software/Services						L+5.50% (7.13%), 3/4/2027						18,545						18,041						17,933						1.1		%
Absolute Software Corp. (a) (c) (h) (i)						Software/Services						L+6.00% (8.25%), 7/1/2027						46,172						45,402						45,401						2.9		%
ADCS Clinics Intermediate Holdings, LLC (c) (h)						Healthcare						L+6.25% (8.22%), 5/7/2027						13,703						13,481						13,481						0.9		%
ADCS Clinics Intermediate Holdings, LLC (c)						Healthcare						L+6.25% (7.74%), 5/7/2027						2,812						2,812						2,767						0.2		%
Arch Global Precision, LLC (c)						Industrials						L+4.75% (7.00%), 4/1/2026						2,368						2,368						2,369						0.2		%
Arch Global Precision, LLC (c) (h) (i)						Industrials						L+4.75% (7.00%), 4/1/2026						7,518						7,491						7,518						0.5		%
Arctic Holdco, LLC (c) (i)						Paper & Packaging						L+6.00% (8.25%), 12/23/2026						10,582						10,582						10,423						0.7		%
Arctic Holdco, LLC (c)						Paper & Packaging						L+6.00% (8.25%), 12/23/2026						1,830						1,829						1,802						0.1		%
Arctic Holdco, LLC (c) (h) (i)						Paper & Packaging						L+6.00% (8.25%), 12/23/2026						50,399						49,435						49,643						3.2		%
Armada Parent, Inc. (c) (h)						Industrials						L+5.75% (6.99%), 10/29/2027						44,943						44,145						44,143						2.8		%
Aventine Holdings, LLC (c)						Media/Entertainment						L+6.00% (7.61%) 4.00% PIK, 6/18/2027						9,116						9,116						8,951						0.6		%
Aventine Holdings, LLC (c)						Media/Entertainment						10.25% PIK, 6/18/2027						23,589						23,081						23,056						1.5		%
Aventine Holdings, LLC (c) (i)						Media/Entertainment						L+6.00% (7.61%) 4.00% PIK, 6/18/2027						25,670						25,215						25,205						1.6		%
Axiom Global, Inc. (c) (h) (i)						Business Services						L+5.50% (6.49%), 10/1/2026						20,421						20,282						20,421						1.3		%
BCPE Oceandrive Buyer, Inc. (c) (i)						Healthcare						L+6.25% (8.50%), 12/29/2028						3,416						3,416						3,345						0.2		%
BCPE Oceandrive Buyer, Inc. (c) (i)						Healthcare						L+6.25% (8.50%), 12/29/2028						20,499						20,070						20,070						1.3		%
BCPE Oceandrive Buyer, Inc. (c)						Healthcare						L+6.25% (7.85%), 12/30/2026						1,142						1,142						1,118						0.1		%
Bearcat Buyer, Inc. (c) (i)						Healthcare						L+4.25% (6.50%), 7/9/2026						150						150						150						0.0		%
Bearcat Buyer, Inc. (c) (i)						Healthcare						L+4.25% (6.50%), 7/9/2026						723						723						723						0.0		%
Black Mountain Sand, LLC (c)						Energy						L+9.00% (10.51%), 6/30/2024						15,469						15,416						15,469						1.0		%
Capstone Logistics (c)						Transportation						L+4.75% (6.42%), 11/12/2027						1,121						1,121						1,121						0.1		%
Capstone Logistics (c) (h)						Transportation						L+4.75% (6.42%), 11/12/2027						19,111						18,972						19,111						1.2		%
CDS U.S. Intermediate Holdings, Inc. (a) (h) (i) (p)						Media/Entertainment						L+6.00% (8.23%), 11/24/2025						5,570						5,521						5,447						0.3		%
CHA Holdings, Inc. (c) (i)						Business Services						L+4.50% (6.75%), 4/10/2025						517						495						517						0.0		%
Chudy Group, LLC (c)						Healthcare						L+5.75% (6.75%), 6/30/2027						574						574						574						0.0		%
Chudy Group, LLC (c) (h)						Healthcare						L+5.75% (6.75%), 6/30/2027						20,497						20,241						20,497						1.3		%
Cobblestone Intermediate Holdco, LLC (c) (i)						Consumer						L+5.50% (7.17%), 1/29/2026						14,938						14,862						14,938						1.0		%
Cobblestone Intermediate Holdco, LLC (c)						Consumer						L+5.50% (7.17%), 1/29/2026						6,129						6,129						6,130						0.4		%
Cold Spring Brewing, Co. (c) (h) (i)						Food & Beverage						L+4.75% (5.81%), 12/19/2025						7,034						6,993						7,034						0.4		%

The accompanying notes are an integral part of these consolidated financial statements.

9

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FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

Portfolio Company (f) (q) (v)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Communication Technology Intermediate, LLC (c) (h)						Business Services						L+5.50% (7.17%), 5/5/2027						$	17,981					$	17,691					$	17,981					1.1		%
Communication Technology Intermediate, LLC (c) (i)						Business Services						L+5.50% (7.17%), 5/5/2027						6,255						6,255						6,255						0.4		%
Communication Technology Intermediate, LLC (c)						Business Services						L+5.50% (7.12%), 5/5/2027						205						205						205						0.0		%
Corfin Industries, LLC (c)						Industrials						L+5.75% (7.33%), 12/27/2027						1,606						1,606						1,606						0.1		%
Corfin Industries, LLC (c) (h) (i)						Industrials						L+5.75% (6.76%), 2/5/2026						16,436						16,224						16,436						1.1		%
Cornerstone Chemical, Co.						Chemicals						6.75%, 8/15/2024						14,850						14,453						13,278						0.8		%
CRS-SPV, Inc. (c) (o)						Industrials						L+4.50% (6.17%), 3/8/2023						62						62						62						0.0		%
Drilling Info Holdings, Inc. (c) (i)						Business Services						L+4.25% (5.92%), 7/30/2025						6,988						6,824						6,988						0.4		%
Dynagrid Holdings, LLC (c) (h)						Utilities						L+6.00% (8.06%), 12/18/2025						3,916						3,840						3,840						0.2		%
Dynagrid Holdings, LLC (c)						Utilities						L+6.00% (7.55%), 12/18/2025						452						452						452						0.0		%
Dynagrid Holdings, LLC (c) (i)						Utilities						L+6.00% (8.25%), 12/18/2025						14,264						14,053						14,264						0.9		%
Eliassen Group, LLC (c) (i)						Business Services						S+5.75% (7.80%), 4/14/2028						11,615						11,501						11,501						0.7		%
FGT Purchaser, LLC (c) (h)						Consumer						L+5.50% (6.51%), 9/13/2027						21,338						20,968						20,967						1.3		%
Foresight Energy Operating, LLC (p)						Energy						L+8.00% (10.25%), 6/30/2027						1,084						1,084						1,072						0.1		%
Galway Borrower, LLC (c) (h)						Financials						L+5.25% (7.50%), 9/29/2028						27,397						26,959						26,906						1.7		%
Geosyntec Consultants, Inc. (c)						Business Services						S+5.25% (6.76%), 5/16/2029						27,373						26,902						26,902						1.7		%
Green Energy Partners/Stonewall, LLC (c)						Utilities						L+6.00% (8.25%), 11/12/2026						10,296						10,116						10,296						0.7		%
Health Plan One, Inc. (c)						Financials						L+7.50% (9.75%), 7/16/2025						10,695						10,370						10,695						0.7		%
Higginbotham Insurance Agency, Inc. (c) (h)						Financials						L+5.50% (7.17%), 11/25/2026						14,700						14,573						14,700						0.9		%
Higginbotham Insurance Agency, Inc. (c)						Financials						L+5.50% (6.56%), 11/25/2026						956						956						956						0.1		%
Hospice Care Buyer, Inc. (c)						Healthcare						L+6.50% (8.08%), 12/9/2026						4,553						4,553						4,502						0.3		%
Hospice Care Buyer, Inc. (c) (h)						Healthcare						L+6.50% (7.74%), 12/9/2026						24,437						23,865						24,161						1.5		%
Hospice Care Buyer, Inc. (c) (h)						Healthcare						L+6.50% (7.74%), 12/9/2026						18,099						17,753						17,895						1.1		%
Hospice Care Buyer, Inc. (c)						Healthcare						P+5.50% (10.25%), 12/9/2026						2,141						2,141						2,117						0.1		%
ICR Operations, LLC (c) (h)						Business Services						L+5.25% (6.92%), 11/22/2028						42,559						41,781						41,780						2.7		%
ICR Operations, LLC (c)						Business Services						L+5.25% (6.92%), 11/22/2027						1,545						1,544						1,517						0.1		%
Ideal Tridon Holdings, Inc. (c)						Industrials						L+5.25% (7.50%), 7/31/2024						45						45						45						0.0		%
Ideal Tridon Holdings, Inc. (c) (h) (i)						Industrials						L+5.25% (7.50%), 7/31/2024						30,683						30,467						30,683						2.0		%
IG Investments Holdings, LLC (c) (h)						Business Services						L+6.00% (8.25%), 9/22/2028						17,718						17,403						17,550						1.1		%
IG Investments Holdings, LLC (c) (h)						Business Services						L+6.00% (8.25%), 9/22/2028						319						316						316						0.0		%
IG Investments Holdings, LLC (c)						Business Services						P+5.00% (9.75%), 9/22/2027						382						382						379						0.0		%

The accompanying notes are an integral part of these consolidated financial statements.

10

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

Portfolio Company (f) (q) (v)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Indigo Buyer, Inc. (c)						Paper & Packaging						S+5.75% (7.18%), 5/23/2028						$	605					$	605					$	593					0.0		%
Indigo Buyer, Inc. (c)						Paper & Packaging						S+5.75% (7.18%), 5/23/2028						21,333						20,914						20,915						1.3		%
Integrated Efficiency Solutions, Inc. (c) (o)						Industrials						7.50%, 12/31/2025						180						180						180						0.0		%
Integrated Efficiency Solutions, Inc. (c) (o)						Industrials						7.50%, 12/31/2025						1,428						1,428						1,428						0.1		%
Integrated Global Services, Inc. (c) (i)						Industrials						L+6.00% (7.34%), 2/4/2026						11,327						11,191						11,011						0.7		%
Integrated Global Services, Inc. (c)						Industrials						L+6.00% (7.62%), 2/4/2026						1,420						1,420						1,380						0.1		%
Internap Corp. (c) (h) (o)						Business Services						L+6.50% (7.90%), 5/8/2025						6,470						6,470						5,707						0.4		%
International Cruise & Excursions, Inc. (c) (i)						Business Services						S+5.35% (6.88%), 6/6/2025						4,875						4,853						4,437						0.3		%
IQN Holding Corp. (c) (i)						Software/Services						S+5.50% (6.90%), 5/2/2029						11,051						10,943						10,943						0.7		%
K2 Intelligence Holdings, Inc. (c) (h) (i)						Business Services						L+5.75% (8.00%), 9/23/2024						7,685						7,616						7,151						0.5		%
KidKraft, Inc. (c)						Consumer						L+5.00% (6.00%), 8/15/2022						1,060						984						1,060						0.1		%
Kissner Milling Co., Ltd.						Industrials						4.88%, 5/1/2028						2,983						2,983						2,481						0.2		%
Knowledge Pro Buyer, Inc. (c) (i)						Business Services						L+5.75% (7.44%), 12/10/2027						24,676						24,228						24,227						1.5		%
Knowledge Pro Buyer, Inc. (c)						Business Services						P+4.75% (9.50%), 12/10/2027						466						466						457						0.0		%
Labrie Environmental Group, LLC (a) (c) (h)						Industrials						L+5.50% (7.17%), 9/1/2026						22,466						22,154						22,466						1.4		%
Lakeland Tours, LLC (c) (h) (i)						Education						L+7.50% (8.75%) 6.00% PIK, 9/25/2025						4,432						4,117						3,989						0.3		%
Lakeland Tours, LLC (c) (h) (i)						Education						13.25% PIK, 9/25/2027						5,015						3,471						3,761						0.2		%
Lakeview Health Holdings, Inc. (c) (o)						Healthcare						P+6.00% (10.75%) PIK, 10/15/2024						538						538						538						0.0		%
Lakeview Health Holdings, Inc. (c) (o) (t)						Healthcare						P+4.50% (9.25%) PIK, 10/15/2024						1,640						664						518						0.0		%
LightSquared, LP						Telecom						15.50% PIK, 11/1/2023						1,933						1,933						1,053						0.1		%
Manna Pro Products, LLC (c)						Consumer						L+6.00% (7.20%), 12/10/2026						4,013						4,013						4,013						0.3		%
Manna Pro Products, LLC (c) (i)						Consumer						L+6.00% (7.67%), 12/10/2026						33,082						32,477						33,082						2.1		%
Manna Pro Products, LLC (c)						Consumer						L+6.00% (7.62%), 12/10/2026						1,759						1,759						1,759						0.1		%
McDonald Worley, P.C. (c)						Business Services						26.00% PIK, 12/31/2024						12,296						12,296						11,583						0.7		%
MCS Acquisition Corp. (c)						Business Services						L+6.00% (7.00%), 10/2/2025						776						776						776						0.1		%
Medical Depot Holdings, Inc. (h) (i)						Healthcare						L+9.50% (10.51%) 4.00% PIK, 6/1/2025						20,232						19,875						19,220						1.2		%
Medical Management Resource Group, LLC (c)						Healthcare						L+5.75% (6.50%), 9/30/2027						1,008						1,008						990						0.1		%
Medical Management Resource Group, LLC (c) (h)						Healthcare						L+5.75% (6.50%), 9/30/2027						16,058						15,777						15,777						1.0		%
MGTF Radio Company, LLC (c) (o)						Media/Entertainment						L+6.00% (7.67%), 4/1/2024						49,271						49,221						41,708						2.7		%
Midwest Can Company, LLC (c) (h) (i)						Paper & Packaging						L+6.00% (8.25%), 3/2/2026						32,220						31,792						32,220						2.1		%
Miller Environmental Group, Inc. (c) (h) (i)						Business Services						L+6.50% (8.81%), 3/15/2024						11,288						11,211						11,288						0.7		%

The accompanying notes are an integral part of these consolidated financial statements.

11

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

Portfolio Company (f) (q) (v)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Miller Environmental Group, Inc. (c) (h) (i)						Business Services						L+6.50% (8.81%), 3/15/2024						$	10,324					$	10,241					$	10,324					0.7		%
Mirra-Primeaccess Holdings, LLC (c) (h)						Healthcare						L+6.50% (8.17%), 7/29/2026						49,074						48,274						49,074						3.1		%
Mirra-Primeaccess Holdings, LLC (c)						Healthcare						L+6.50% (8.12%), 7/29/2026						5,870						5,870						5,870						0.4		%
Muth Mirror Systems, LLC (c) (h) (i)						Technology						L+6.75% (7.75%), 4/23/2025						14,981						14,840						13,760						0.9		%
New Star Metals, Inc. (c) (h) (i)						Industrials						L+5.00% (7.26%), 1/9/2026						32,635						32,255						32,635						2.1		%
Norvax, LLC (c)						Business Services						L+6.50% (8.15%), 9/13/2024						893						893						862						0.1		%
NTM Acquisition Corp. (c) (h) (i)						Media/Entertainment						L+7.25% (9.50%) 1.00% PIK, 6/7/2024						21,113						21,113						20,543						1.3		%
Odessa Technologies, Inc. (c) (h)						Software/Services						L+5.75% (7.35%), 10/19/2027						14,415						14,160						14,160						0.9		%
ORG GC Holdings, LLC (c) (o)						Business Services						L+6.50% (8.76%) PIK, 11/29/2026						8,660						8,660						8,660						0.6		%
Pie Buyer, Inc. (c) (i)						Food & Beverage						S+5.50% (6.50%), 4/5/2027						2,093						2,053						2,053						0.1		%
Pie Buyer, Inc. (c) (i)						Food & Beverage						L+5.50% (8.38%), 4/5/2027						28,176						27,505						27,638						1.8		%
Pie Buyer, Inc. (c)						Food & Beverage						L+5.50% (6.56%), 4/5/2027						6,098						6,098						5,982						0.4		%
PlayPower, Inc. (c) (h) (i)						Industrials						L+5.50% (7.75%), 5/8/2026						23,828						23,631						21,922						1.4		%
Pluralsight, LLC (c) (h)						Software/Services						L+8.00% (9.00%), 4/6/2027						18,826						18,527						18,514						1.2		%
Pluralsight, LLC (c) (h)						Software/Services						L+8.00% (9.00%), 4/6/2027						6,728						6,616						6,616						0.4		%
Point Broadband Acquisition, LLC (c) (h)						Telecom						L+6.00% (7.00%), 10/2/2028						19,243						18,814						18,814						1.2		%
Premier Global Services, Inc. (c) (t)						Telecom						P+5.50% (10.25%), 6/8/2023						5,024						4,908						—						—		%
Premier Global Services, Inc. (c) (t)						Telecom						P+5.50% (10.25%), 12/8/2022						969						969						239						0.0		%
Prototek, LLC (c) (h)						Industrials						L+5.75% (6.81%), 10/20/2026						11,116						10,936						11,060						0.7		%
Prototek, LLC (c)						Industrials						L+5.75% (7.78%), 10/20/2026						1,354						1,354						1,348						0.1		%
PSKW, LLC (c) (h) (i)						Healthcare						L+6.25% (7.92%), 3/9/2026						29,325						28,874						29,325						1.9		%
Questex, Inc. (c) (h) (i)						Media/Entertainment						L+5.00% (6.70%), 9/9/2024						15,582						15,468						14,991						1.0		%
Reddy Ice Corp. (c)						Food & Beverage						L+6.50% (7.62%), 7/1/2024						440						440						432						0.0		%
Reddy Ice Corp. (c)						Food & Beverage						L+6.50% (7.50%), 7/1/2025						1,798						1,787						1,763						0.1		%
Reddy Ice Corp. (c)						Food & Beverage						L+6.50% (7.50%), 7/1/2025						1,469						1,469						1,440						0.1		%
Reddy Ice Corp. (c)						Food & Beverage						L+6.50% (7.50%), 7/1/2025						4,838						4,838						4,744						0.3		%
Reddy Ice Corp. (c) (h) (i)						Food & Beverage						L+6.50% (7.50%), 7/1/2025						19,049						18,763						18,677						1.2		%
Relativity Oda, LLC (c) (i)						Software/Services						L+8.15% (9.15%) PIK, 5/12/2027						5,031						4,938						4,873						0.3		%
REP TEC Intermediate Holdings, Inc. (c) (h) (i)						Software/Services						L+6.50% (8.76%), 6/19/2025						28,636						28,219						28,192						1.8		%
Roadsafe Holdings, Inc. (c)						Industrials						P+4.75% (9.50%), 10/19/2027						5,296						5,296						5,209						0.3		%

The accompanying notes are an integral part of these consolidated financial statements.

12

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

Portfolio Company (f) (q) (v)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Roadsafe Holdings, Inc. (c) (i)						Industrials						L+5.75% (7.76%), 10/19/2027						$	7,792					$	7,665					$	7,665					0.5		%
RSC Acquisition, Inc. (c) (i)						Financials						S+5.50% (7.70%), 10/30/2026						11,051						11,035						11,051						0.7		%
Saturn SHC Buyer Holdings, Inc. (c) (h)						Healthcare						L+6.00% (7.83%), 11/18/2027						33,157						32,562						32,561						2.1		%
Sherlock Buyer Corp. (c) (i)						Business Services						L+5.75% (6.74%), 12/8/2028						11,096						10,892						10,892						0.7		%
Simplifi Holdings, Inc. (c) (h)						Media/Entertainment						L+5.50% (6.46%), 10/1/2027						35,283						34,665						34,665						2.2		%
Skillsoft Corp. (a) (h)						Technology						S+5.25% (6.19%), 7/14/2028						1,453						1,434						1,345						0.1		%
St. Croix Hospice Acquisition Corp. (c)						Healthcare						L+6.00% (8.07%), 10/30/2026						1,579						1,579						1,579						0.1		%
St. Croix Hospice Acquisition Corp. (c) (i)						Healthcare						L+6.00% (7.24%), 10/30/2026						25,550						25,181						25,550						1.6		%
Striper Buyer, LLC (c) (h)						Paper & Packaging						L+5.50% (7.17%), 12/30/2026						12,330						12,236						12,330						0.8		%
Subsea Global Solutions, LLC (c) (i)						Business Services						L+6.75% (9.06%), 12/31/2023						4,673						4,653						4,673						0.3		%
Subsea Global Solutions, LLC (c) (i)						Business Services						L+6.75% (9.06%), 12/31/2023						7,104						7,083						7,104						0.5		%
Subsea Global Solutions, LLC (c)						Business Services						L+6.75% (7.75%), 12/31/2023						623						623						623						0.0		%
SunMed Group Holdings, LLC (c) (h)						Healthcare						L+5.75% (8.00%), 6/16/2028						9,009						8,875						8,875						0.6		%
SunMed Group Holdings, LLC (c)						Healthcare						L+5.75% (7.90%), 6/16/2027						288						288						284						0.0		%
Tax Defense Network, LLC (c) (p) (t)						Consumer						L+6.00% (10.00%) PIK, 3/31/2023						6,937						3,833						486						0.0		%
Tax Defense Network, LLC (c) (p) (t)						Consumer						10.00% PIK, 3/31/2023						4,054						2,986						4,054						0.3		%
Tax Defense Network, LLC (c) (p) (t)						Consumer						L+6.00% (10.00%) PIK, 3/31/2023						39,079						21,646						2,736						0.2		%
Therapy Brands Holdings, LLC (c) (h)						Healthcare						L+4.00% (4.79%), 5/18/2028						3,458						3,443						3,458						0.2		%
Tillamook Country Smoker, LLC (c) (h)						Food & Beverage						L+7.75% (9.42%), 8/19/2022						9,527						9,527						9,527						0.6		%
Tillamook Country Smoker, LLC (c)						Food & Beverage						L+7.75% (9.42%), 8/19/2022						2,561						2,561						2,561						0.2		%
Trinity Air Consultants Holdings Corp. (c)						Business Services						L+5.25% (6.00%), 6/29/2027						3,836						3,836						3,772						0.2		%
Trinity Air Consultants Holdings Corp. (c) (h)						Business Services						L+5.25% (7.08%), 6/29/2027						20,424						20,084						20,083						1.3		%
Triple Lift, Inc. (c)						Software/Services						S+5.75% (7.17%), 5/5/2028						1,265						1,265						1,265						0.1		%
Triple Lift, Inc. (c) (i)						Software/Services						S+5.75% (6.58%), 5/5/2028						28,406						27,918						28,406						1.8		%
University of St. Augustine Acquisition Corp. (c) (h) (i)						Education						L+4.25% (5.92%), 2/2/2026						23,399						23,099						23,399						1.5		%
Urban One, Inc.						Media/Entertainment						7.38%, 2/1/2028						1,561						1,561						1,337						0.1		%
US Oral Surgery Management Holdco, LLC (c)						Healthcare						L+5.50% (7.76%), 11/18/2027						428						428						425						0.0		%
US Oral Surgery Management Holdco, LLC (c) (h)						Healthcare						L+5.50% (6.96%), 11/18/2027						12,173						11,955						12,079						0.8		%
US Salt Investors, LLC (c) (h)						Chemicals						L+5.50% (7.75%), 7/19/2028						20,032						19,686						19,658						1.3		%
Vantage Mobility International, LLC (c) (p) (t)						Transportation						L+6.00% (7.00%) 4.50% PIK, 3/21/2024						1,932						251						—						—		%
Vantage Mobility International, LLC (c) (p)						Transportation						L+6.00% (7.07%) 4.50% PIK, 3/21/2024						248						244						248						0.0		%

The accompanying notes are an integral part of these consolidated financial statements.

13

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

Portfolio Company (f) (q) (v)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Vensure Employer Services, Inc. (c) (i)						Business Services						L+4.75% (6.83%), 4/1/2027						$	11,564					$	11,494					$	11,564					0.7		%
Victors CCC Buyer, LLC (c)						Business Services						P+4.75% (9.50%), 6/2/2029						397						397						390						0.0		%
Victors CCC Buyer, LLC (c)						Business Services						S+5.75% (7.75%), 6/2/2029						17,032						16,695						16,695						1.1		%
Westwood Professional Services, Inc. (c)						Business Services						L+6.00% (7.06%), 5/26/2026						1,007						1,007						992						0.1		%
Westwood Professional Services, Inc. (c) (i)						Business Services						L+6.00% (7.06%), 5/26/2026						8,604						8,470						8,475						0.5		%
WHCG Purchaser III, Inc. (c) (h)						Healthcare						L+5.75% (8.00%), 6/22/2028						29,272						28,773						28,772						1.8		%
WHCG Purchaser III, Inc. (c)						Healthcare						L+5.75% (8.00%), 6/22/2028						7,113						7,113						6,992						0.4		%
WIN Holdings III Corp. (c) (h)						Consumer						L+5.75% (8.63%), 7/16/2028						31,468						30,925						30,924						2.0		%
WIN Holdings III Corp. (c)						Consumer						L+5.75% (8.63%), 7/16/2026						890						890						875						0.1		%
WMK, LLC (c) (i)						Business Services						L+5.75% (8.00%), 9/5/2025						2,545						2,538						2,545						0.2		%
WMK, LLC (c)						Business Services						L+5.75% (6.76%), 9/5/2025						351						349						351						0.0		%
WMK, LLC (c) (h) (i)						Business Services						L+5.75% (6.79%), 9/5/2025						18,069						17,905						18,069						1.2		%
WMK, LLC (c)						Business Services						L+5.75% (6.99%), 9/5/2024						2,618						2,618						2,618						0.2		%
Subtotal Senior Secured First Lien Debt																								$	1,882,170					$	1,844,648					117.9		%
Senior Secured Second Lien Debt - 15.1% (b)
Accentcare, Inc. (c) (h)						Healthcare						L+8.75% (10.83%), 6/21/2027						$	30,152					$	29,639					$	28,795					1.8		%
Anchor Glass Container Corp. (c) (t)						Paper & Packaging						L+7.75% (8.75%), 12/7/2024						6,667						6,469						2,003						0.1		%
Aruba Investments Holdings, LLC (i)						Chemicals						L+7.75% (9.38%), 11/24/2028						3,759						3,714						3,552						0.2		%
Astro AB Merger Sub, Inc. (a) (c) (h)						Financials						L+8.00% (9.24%), 4/30/2025						8,162						8,142						8,080						0.5		%
Carlisle FoodService Products, Inc. (c) (h)						Consumer						L+7.75% (8.81%), 3/20/2026						10,719						10,619						10,166						0.7		%
CDS U.S. Intermediate Holdings, Inc. (a) (p)						Media/Entertainment						L+8.00% (10.23%) 7.00% PIK, 11/24/2027						10,693						10,644						10,440						0.7		%
CommerceHub, Inc. (c) (h)						Technology						L+7.00% (9.25%), 12/29/2028						12,360						12,310						10,506						0.7		%
Corelogic, Inc. (c) (h)						Business Services						L+6.50% (8.19%), 6/4/2029						10,808						10,714						9,641						0.6		%
HAH Group Holding Company, LLC (c) (h)						Healthcare						L+8.50% (10.76%), 10/30/2028						12,445						12,198						12,445						0.8		%
Integrated Efficiency Solutions, Inc. (c) (o)						Industrials						10.00% PIK, 12/31/2026						1,509						918						640						0.0		%
Mercury Merger Sub, Inc. (c) (h)						Business Services						L+6.50% (7.50%), 8/2/2029						13,965						13,862						13,518						0.9		%
ORG GC Holdings, LLC (c) (o)						Business Services						18.00% PIK, 11/29/2027						3,757						3,757						3,673						0.2		%
PetVet Care Centers, LLC (c) (h)						Healthcare						L+6.25% (7.92%), 2/13/2026						3,539						3,531						3,510						0.2		%
Project Boost Purchaser, LLC (c)						Business Services						L+8.00% (9.67%), 5/31/2027						1,848						1,848						1,848						0.1		%
Proofpoint, Inc. (h)						Software/Services						L+6.25% (7.83%), 8/31/2029						8,541						8,503						8,157						0.5		%

The accompanying notes are an integral part of these consolidated financial statements.

14

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

Portfolio Company (f) (q) (v)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
QuickBase, Inc. (c)						Technology						L+8.00% (9.67%), 4/2/2027						$	7,484					$	7,395					$	7,484					0.5		%
RealPage, Inc. (c) (i)						Software/Services						L+6.50% (8.17%), 4/23/2029						13,647						13,472						13,664						0.9		%
Recess Holdings, Inc. (c) (h)						Industrials						L+7.75% (8.75%), 9/29/2025						16,134						16,020						16,134						1.0		%
River Cree Enterprises, LP (a) (c) (m)						Gaming/Lodging						10.00%, 5/17/2025						CAD	21,275					16,509						16,527						1.1		%
SSH Group Holdings, Inc. (c) (h)						Education						L+8.25% (10.50%), 7/30/2026						10,122						10,070						10,122						0.6		%
Therapy Brands Holdings, LLC (c) (h)						Healthcare						L+6.75% (7.54%), 5/18/2029						3,275						3,247						3,275						0.2		%
Travelpro Products, Inc. (a) (c)						Consumer						13.00%, 2.00% PIK, 11/20/2022						2,953						2,953						2,953						0.2		%
Travelpro Products, Inc. (a) (c) (m)						Consumer						13.00%, 2.00% PIK, 11/20/2022						CAD	3,411					2,645						2,650						0.2		%
USIC Holdings, Inc. (c) (h)						Business Services						L+6.50% (8.17%), 5/14/2029						5,798						5,748						5,721						0.4		%
Vantage Mobility International, LLC (c) (p) (t)						Transportation						L+6.00% (7.07%) PIK, 3/21/2024						1,155						17						—						—		%
Vantage Mobility International, LLC (c) (p) (t)						Transportation						L+6.00% (7.07%) PIK, 3/21/2024						3,750						2,914						—						—		%
Victory Buyer, LLC (c) (h)						Industrials						L+7.00% (9.06%), 11/19/2029						31,686						31,387						31,369						2.0		%
Subtotal Senior Secured Second Lien Debt																								$	249,245					$	236,873					15.1		%
Subordinated Debt - 7.1% (b)
Del Real, LLC (c)						Food & Beverage						16.00%, 12.00% PIK, 4/7/2023						$	4,567					$	3,914					$	4,185					0.3		%
Encina Equipment Finance, LLC (c) (o)						Financials						L+7.75% (9.00%), 12/31/2028						8,229						8,229						8,229						0.5		%
Encina Equipment Finance, LLC (c) (o)						Financials						L+7.75% (9.00%), 12/31/2028						38,100						37,973						38,100						2.4		%
Siena Capital Finance, LLC (c) (j) (o)						Financials						12.50%, 11/26/2026						61,000						60,994						61,000						3.9		%
Subtotal Subordinated Debt																								$	111,110					$	111,514					7.1		%
Collateralized Securities - 2.1% (b)
Collateralized Securities - Debt Investments
NewStar Arlington Senior Loan Program, LLC 14-1A FR (a) (c) (p)						Diversified Investment Vehicles						L+11.00% (12.18%), 4/25/2031						$	4,750					$	4,594					$	4,330					0.3		%
Newstar Fairfield Fund CLO, Ltd. 2015-1RA F (a) (c) (p)						Diversified Investment Vehicles						L+7.50% (8.56%), 1/20/2027						10,728						10,103						8,688						0.6		%
Whitehorse, Ltd. 2014-1A E (a) (c) (p)						Diversified Investment Vehicles						L+4.55% (5.84%) PIK, 5/1/2026						8,048						7,969						6,931						0.4		%
Collateralized Securities - Equity Investments (n)
NewStar Arlington Senior Loan Program, LLC 14-1A SUB (a) (c) (k) (p)						Diversified Investment Vehicles						20.69%, 4/25/2031						$	31,603					$	12,690					$	11,901					0.8		%
Newstar Fairfield Fund CLO, Ltd. 2015-1RA SUB (a) (c) (k) (p)						Diversified Investment Vehicles						0.00%, 1/20/2027						31,575						6,285						—						—		%
OFSI Fund, Ltd. 2014-6A Side Letter (a) (c)						Diversified Investment Vehicles						0.00%, 3/20/2025						1,970						47						—						—		%
Whitehorse, Ltd. 2014-1A Side Letter (a) (c) (p)						Diversified Investment Vehicles						0.00%, 5/1/2026						1,886						134						—						—		%
Whitehorse, Ltd. 2014-1A SUB (a) (c) (k) (p)						Diversified Investment Vehicles						0.00%, 5/1/2026						36,000						6,965						—						—		%
Subtotal Collateralized Securities																								$	48,787					$	31,850					2.1		%

The accompanying notes are an integral part of these consolidated financial statements.

15

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

Portfolio Company (f) (q) (v)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Equity/Other - 34.0% (b) (d)
Aden & Anais Holdings, Inc. (c) (e) (w)						Retail												4,470						$	—					$	—					—		%
Answers Corp. (c) (e) (p)						Media/Entertainment												908,911						10,262						118						0.0		%
Baker Hill Acquisition, LLC (c) (e)						Financials												22,653						—						—						—		%
Black Mountain Sand, LLC (c) (e) (u)						Energy												55,463						—						967						0.1		%
CDS U.S. Intermediate Holdings, Inc. (a) (e) (p)						Media/Entertainment												539,708						1,224						4,958						0.3		%
CDS U.S. Intermediate Holdings, Inc. (a) (c) (e) (p)						Media/Entertainment												874,000						437						2,360						0.2		%
Clover Technologies Group, LLC (c) (e)						Industrials												180,274						1,153						23						0.0		%
Clover Technologies Group, LLC (c) (e)						Industrials												2,753						275						516						0.0		%
CRS-SPV, Inc. (c) (e) (o)						Industrials												246						2,219						1,470						0.1		%
Danish CRJ, Ltd. (a) (c) (e) (o) (r)						Transportation												5,002						—						—						—		%
Data Source Holdings, LLC (c) (e)						Business Services												10,617						140						287						0.0		%
Del Real, LLC (c) (e) (u)						Food & Beverage												670,510						382						—						—		%
Dyno Acquiror, Inc. (c) (e)						Consumer												134,102						58						21						0.0		%
Encina Equipment Finance, LLC (c) (o) (u)						Financials												79,479						81,787						81,693						5.2		%
FBLC Senior Loan Fund, LLC (a) (c) (j) (o)						Diversified Investment Vehicles												304,934						304,934						304,934						19.5		%
First Eagle Greenway Fund II, LLC (a) (p)						Diversified Investment Vehicles												5,329						3,977						370						0.0		%
Foresight Energy Operating, LLC (c) (e) (p) (u)						Energy												158,093						2,087						3,789						0.2		%
HemaSource, Inc. (c) (e) (w)						Healthcare												223,503						168						277						0.0		%
Integrated Efficiency Solutions, Inc. (c) (e) (o) (u)						Industrials												55,991						—						—						—		%
Integrated Efficiency Solutions, Inc. (c) (e) (o) (u)						Industrials												57,427						—						—						—		%
Internap Corp (c) (e) (o)						Business Services												1,293,189						543						1,552						0.1		%
Jakks Pacific, Inc. (e) (p) (s)						Consumer												237,436						2,385						3,006						0.2		%
Jakks Pacific, Inc. (c) (p)						Consumer												5,303						204						788						0.1		%
Kahala Ireland OpCo Designated Activity Company (a) (c) (o) (y)						Transportation												1						—						11,176						0.7		%
Kahala Ireland OpCo Designated Activity Company (a) (c) (e) (o) (y)						Transportation												3,250,000						—						3,250						0.2		%
Kahala US OpCo, LLC (a) (c) (e) (o) (x)						Transportation												4,413,472						—						—						—		%
KidKraft, Inc. (c) (e) (u)						Consumer												2,682,257						—						2,682						0.2		%
Lakeview Health Holdings, Inc. (c) (e) (o)						Healthcare												5,272						—						—						—		%
McDonald Worley, P.C. (c) (e)						Business Services												20,167						20						804						0.1		%
MCS Acquisition Corp. (c) (e)						Business Services												31,521						4,103						1,662						0.1		%
MGTF Holdco, LLC (c) (e) (o) (u)						Media/Entertainment												402,000						—						—						—		%
Motor Vehicle Software Corp. (c) (e) (w)						Business Services												223,503						318						324						0.0		%
ORG GC Holdings, LLC (c) (e) (o)						Business Services												93,380						212						—						—		%
ORG GC Holdings, LLC (c) (e) (o)						Business Services												1,771						—						—						—		%
PennantPark Credit Opportunities Fund II, LP (a) (p)						Diversified Investment Vehicles												8,739						826						1,419						0.1		%
Point Broadband Acquisition, LLC (c) (e) (u)						Telecom												2,550,487						2,550						2,550						0.2		%
RMP Group, Inc. (c) (e) (u)						Financials												223						164						383						0.0		%

The accompanying notes are an integral part of these consolidated financial statements.

16

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

Portfolio Company (f) (q) (v)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Siena Capital Finance, LLC (c) (j) (o)						Financials												41,789,400						$	42,499					$	77,310					4.9		%
Skillsoft Corp (a) (e) (s)						Technology												248,712						2,636						875						0.1		%
Smile Brands, Inc. (c)						Healthcare												712						—						1,437						0.1		%
Squan Holding Corp. (c) (e)						Telecom												180,835						—						—						—		%
Tap Rock Resources, LLC (c) (g) (p) (u)						Energy												18,356,442						5,849						8,467						0.5		%
Tax Defense Network, LLC (c) (e) (p)						Consumer												147,099						425						—						—		%
Tax Defense Network, LLC (c) (e) (p)						Consumer												633,382						—						—						—		%
Tennenbaum Waterman Fund, LP (a) (p)						Diversified Investment Vehicles												10,000						10,000						9,119						0.6		%
Travelpro Products, Inc. (a) (c) (e)						Consumer												447,007						506						165						0.0		%
United Biologics, LLC (c) (e) (u)						Healthcare												39,769						132						—						—		%
United Biologics, LLC (c) (e) (u)						Healthcare												3,155						—						—						—		%
United Biologics, LLC (c) (e) (u)						Healthcare												4,206						31						—						—		%
United Biologics, LLC (c) (e) (u)						Healthcare												99,236						—						—						—		%
United Biologics, LLC (c) (e) (u)						Healthcare												223						35						—						—		%
USASF Holdco, LLC (c) (e) (u)						Financials												10,000						10						—						—		%
USASF Holdco, LLC (c) (e) (u)						Financials												490						490						364						0.0		%
USASF Holdco, LLC (c) (e) (u)						Financials												139						139						278						0.0		%
Vantage Mobility International, LLC (c) (e) (p)						Transportation												512,923						—						—						—		%
Vantage Mobility International, LLC (c) (e) (p)						Transportation												4,639,261						3,140						—						—		%
Vantage Mobility International, LLC (c) (e) (p)						Transportation												1,940,977						—						—						—		%
World Business Lenders, LLC (c) (e)						Financials												922,669						3,750						2,676						0.2		%
WPNT, LLC (c) (e) (o) (u)						Media/Entertainment												402,000						—						—						—		%
Wythe Will Tzetzo, LLC (c) (e) (u)						Food & Beverage												22,312						302						—						—		%
YummyEarth, Inc. (c) (e)						Food & Beverage												223						—						—						—		%
Subtotal Equity/Other																								$	490,372					$	532,070					34.0		%
TOTAL INVESTMENTS - 176.2% (b)																								$	2,781,684					$	2,756,955					176.2		%

Forward foreign currency contracts:

Counterparty

Contract to Deliver

In Exchange For

Maturity Date

Unrealized Depreciation

Goldman Sachs International

CAD 21,807

$

16,859

8/17/2022

$

60

_____________

(a)All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act"). Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. Qualifying assets represent 82.8% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.

(b)Percentages are based on net assets as of June 30, 2022.

(c)The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's Board of Directors as required by the 1940 Act. Such investments are valued using significant unobservable inputs (See Note 3 to the consolidated financial statements).

(d)All amounts are in thousands except share amounts.

(e)Non-income producing at June 30, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

17

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

(f)The Company has various unfunded commitments to portfolio companies. Please refer to Note 7 - Commitments and Contingencies for details of these unfunded commitments.

(g)The commitment related to this investment is discretionary.

(h)The Company's investment or a portion thereof is pledged as collateral under the JPM Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.

(i)The Company's investment or a portion thereof is pledged as collateral under the Wells Fargo Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.

(j)The Company's investment falls under the definition of a significant subsidiary, as it exceeded the threshold of at least one of the tests under Rule 4-08(g), or exceeded the threshold of at least one of the tests under Rule 3-09. See Note 3 for additional disclosure.

(k)The Collateralized Securities - subordinated notes are treated as equity investments and are entitled to recurring distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s securities less contractual payments to debt holders and fund expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.

(l)The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L"), Secured Overnight Financing Rate ("SOFR" or "S"), or Prime ("P") and which reset daily, monthly, quarterly, or semiannually. For each, the Company has provided the spread over the relevant reference rate and the current interest rate in effect at June 30, 2022. Certain investments are subject to reference rate floors. For fixed rate loans, a spread above a reference rate is not applicable. For floating rate securities the all-in rate is disclosed within parentheses.

(m)The principal amount (par amount) is denominated in Canadian Dollars ("CAD").

(n)For equity investments in Collateralized Securities, the effective yield is presented in place of the investment coupon rate for each investment. Refer to footnote (k) for a further description of an equity investment in a Collateralized Security.

(o)The provisions of the 1940 Act classify investments based on the level of control that the Company maintains in a particular portfolio company. As defined in the 1940 Act, a company is generally presumed to be "non-controlled" when the Company owns 25% or less of the portfolio company's voting securities and/or does not have the power to exercise control over the management or policies of such portfolio company. A company is generally presumed to be "controlled" when the Company owns more than 25% of the portfolio company's voting securities and/or has the power to exercise control over the management or policies of such portfolio company. The Company classifies this investment as "controlled".

(p)The provisions of the 1940 Act classify investments further based on the level of ownership that the Company maintains in a particular portfolio company. As defined in the 1940 Act, a company is generally deemed as "non-affiliated" when the Company owns less than 5% of a portfolio company's voting securities and "affiliated" when the Company owns 5% or more of a portfolio company's voting securities. The Company classifies this investment as "affiliated".

(q)Unless otherwise indicated, all investments in the consolidated schedule of investments are non-affiliated, non-controlled investments.

(r)The Company's investment is held through the consolidated subsidiary, Kahala Aviation Holdings, LLC, which owns 49% of the operating company, Danish CRJ LTD.

(s)The investment is not a restricted security. All other securities are restricted securities.

(t)The investment is on non-accrual status as of June 30, 2022.

(u)Investments are held in the taxable wholly-owned, consolidated subsidiary, 54th Street Equity Holdings, Inc.

(v)Unless otherwise indicated, all of the Company's investments or a portion thereof are pledged as collateral under the JPM Revolver Facility.    

(w)The investment is held through BSP TCAP Acquisition Holdings LP, which is an affiliated acquisition entity utilized for the Triangle Transaction. Due to certain restrictions, such as limits on the number of partners allowable within the equity structures of the newly acquired investments, these investments are still held within the acquisition entity as of June 30, 2022.

(x)The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc., which own 100% of the equity of the operating company, Kahala US OpCo LLC.

(y)The Company's investment is held through the consolidated subsidiary, Kahala Aviation Holdings, LLC, which owns 100% of the equity of the operating company, Kahala Ireland OpCo Designated Activity Company.

The accompanying notes are an integral part of these consolidated financial statements.

18

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2022

(Unaudited)

The following table shows the portfolio composition by industry grouping based on fair value at June 30, 2022:

			At June 30, 2022
			Investments at Fair Value						Percentage of Total Portfolio
Healthcare			$	403,026					14.7		%
Business Services			385,660						14.0		%
Diversified Investment Vehicles (1)			347,692						12.6		%
Financials			342,421						12.4		%
Industrials			271,799						9.9		%
Software/Services			208,724						7.6		%
Media/Entertainment			193,779						7.0		%
Consumer			143,455						5.2		%
Paper & Packaging			129,929						4.7		%
Food & Beverage			86,036						3.1		%
Education			41,271						1.5		%
Chemicals			36,488						1.3		%
Transportation			34,906						1.3		%
Technology			33,970						1.2		%
Energy			29,764						1.1		%
Utilities			28,852						1.0		%
Telecom			22,656						0.8		%
Gaming/Lodging			16,527						0.6		%
Total			$	2,756,955					100.0		%

_____________

(1) Includes FBLC's investment in FBLC Senior Loan Fund, LLC, which represents 11.1% of the fair value of investments as of June 30, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

19

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021
Portfolio Company (f) (q)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Senior Secured First Lien Debt - 121.3% (b)
1236904 BC, Ltd. (c) (h)						Software/Services						L+7.50% (8.50%), 3/4/2027						$	10,441					$	10,264					$	10,754					0.7		%
1236904 BC, Ltd. (c) (h) (i)						Software/Services						L+5.50% (5.60%), 3/4/2027						18,639						18,079						18,276						1.2		%
Absolute Software Corp. (a) (c) (h)						Software/Services						L+6.00% (6.75%), 7/1/2027						46,405						45,555						45,556						3.0		%
ADCS Clinics Intermediate Holdings, LLC (c) (h)						Healthcare						L+6.25% (7.25%), 5/7/2027						13,772						13,526						13,527						0.9		%
ADCS Clinics Intermediate Holdings, LLC (c)						Healthcare						L+6.25% (7.25%), 5/7/2027						2,119						2,119						2,082						0.1		%
Arch Global Precision, LLC (c)						Industrials						L+4.50% (4.72%), 4/1/2026						2,216						2,216						2,216						0.1		%
Arch Global Precision, LLC (c) (h) (i)						Industrials						L+4.50% (4.72%), 4/1/2026						7,556						7,526						7,556						0.5		%
Arctic Holdco, LLC (c)						Paper & Packaging						L+6.00% (7.00%), 12/23/2026						6,938						6,938						6,834						0.6		%
Arctic Holdco, LLC (c)						Paper & Packaging						L+6.00% (7.00%), 12/23/2026						1,015						1,015						1,000						0.1		%
Arctic Holdco, LLC (c) (h) (i)						Paper & Packaging						L+6.00% (7.00%), 12/23/2026						51,003						49,921						50,238						3.3		%
Armada Parent, Inc. (c) (h)						Industrials						L+5.75% (6.50%), 10/29/2027						45,169						44,292						44,293						2.9		%
Armada Parent, Inc. (c)						Industrials						L+5.75% (6.50%), 10/29/2027						452						452						443						0.0		%
Aventine Holdings, LLC (c)						Media/Entertainment						10.25%, 6/18/2027						22,439						21,881						21,880						1.5		%
Aventine Holdings, LLC (c)						Media/Entertainment						L+6.00% (6.75%), 6/18/2027						25,159						24,658						24,658						1.6		%
Axiom Global, Inc. (c) (h) (i)						Business Services						L+4.75% (5.50%), 10/1/2026						20,525						20,370						20,525						1.4		%
BCPE Oceandrive Buyer, Inc. (c) (i)						Healthcare						L+6.25% (7.00%), 12/29/2028						20,550						20,088						20,088						1.3		%
Bearcat Buyer, Inc. (c) (i)						Healthcare						L+4.25% (5.25%), 7/9/2026						151						151						151						0.0		%
Bearcat Buyer, Inc. (c) (i)						Healthcare						L+4.25% (5.25%), 7/9/2026						726						726						726						0.0		%
Black Mountain Sand, LLC (c)						Energy						L+9.00% (10.50%), 6/28/2024						17,145						17,071						17,145						1.1		%
Capstone Logistics (c)						Transportation						L+4.75% (5.75%), 11/12/2027						1,127						1,127						1,127						0.1		%
Capstone Logistics (c) (h)						Transportation						L+4.75% (5.75%), 11/12/2027						19,208						19,053						19,208						1.3		%
Capstone Logistics (c)						Transportation						P+3.75% (7.00%), 11/12/2025						278						278						278						0.0		%
CDS U.S. Intermediate Holdings, Inc. (a) (h) (i) (p)						Media/Entertainment						L+6.00% (7.00%), 11/24/2025						5,570						5,514						5,565						0.4		%
CHA Holdings, Inc. (c) (i)						Business Services						L+4.50% (5.50%), 4/10/2025						520						493						520						0.0		%
Chudy Group, LLC (c) (h)						Healthcare						L+5.75% (6.75%), 6/30/2027						20,600						20,317						20,318						1.3		%
Cobblestone Intermediate Holdco, LLC (c) (i)						Consumer						L+5.25% (6.25%), 1/29/2026						15,014						14,927						15,014						1.0		%
Cobblestone Intermediate Holdco, LLC (c)						Consumer						L+5.50% (6.25%), 1/29/2026						1,116						1,116						1,116						0.1		%
Cold Spring Brewing, Co. (c) (h) (i)						Food & Beverage						L+4.75% (5.75%), 12/19/2025						7,746						7,694						7,746						0.5		%
Communication Technology Intermediate, LLC (c) (h)						Business Services						L+5.75% (6.75%), 5/5/2027						18,072						17,750						18,072						1.2		%
Communication Technology Intermediate, LLC (c)						Business Services						L+5.75% (6.75%), 5/5/2027						6,286						6,286						6,286						0.4		%

The accompanying notes are an integral part of these consolidated financial statements.

20

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021
Portfolio Company (f) (q)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Community Care Health Network, LLC (h)						Healthcare						L+4.75% (4.85%), 2/17/2025						$	8					$	7					$	7					0.0		%
Corfin Industries, LLC (c) (h) (i)						Industrials						L+5.75% (6.75%), 2/5/2026						16,520						16,277						16,520						1.1		%
Cornerstone Chemical, Co.						Chemicals						6.75%, 8/15/2024						14,850						14,369						13,271						0.9		%
CRS-SPV, Inc. (c) (j) (o) (w)						Industrials						L+4.50% (5.50%), 3/8/2022						62						62						62						0.0		%
Drilling Info Holdings, Inc. (c) (i)						Business Services						L+4.25% (4.35%), 7/30/2025						7,024						6,833						7,024						0.5		%
Dynagrid Holdings, LLC (c)						Utilities						L+6.00% (7.00%), 12/18/2025						679						679						679						0.0		%
Dynagrid Holdings, LLC (c) (i)						Utilities						L+6.00% (7.00%), 12/18/2025						14,336						14,101						14,336						0.9		%
FGT Purchaser, LLC (c) (h)						Consumer						L+5.50% (6.50%), 9/13/2027						21,445						21,038						21,038						1.4		%
FGT Purchaser, LLC (c)						Consumer						L+5.50% (6.50%), 9/13/2027						643						643						631						0.0		%
Foresight Energy Operating, LLC (c) (p)						Energy						L+8.00% (9.50%), 6/30/2027						1,091						1,091						1,102						0.1		%
Galway Borrower, LLC (c) (h)						Financials						L+5.25% (6.00%), 9/29/2028						26,354						25,878						25,845						1.7		%
Gold Standard Baking, Inc. (c) (t)						Food & Beverage						P+5.50% (8.75%) 2.00% PIK, 7/25/2022						2,515						2,176						755						0.1		%
Green Energy Partners/Stonewall, LLC						Utilities						L+6.00% (6.50%), 11/12/2026						10,339						10,138						10,235						0.7		%
Health Plan One, Inc. (c) (j)						Financials						L+7.50% (8.50%), 7/15/2025						10,695						10,317						10,695						0.7		%
Higginbotham Insurance Agency, Inc. (c) (h)						Financials						L+5.50% (6.25%), 11/25/2026						11,521						11,380						11,521						0.8		%
Higginbotham Insurance Agency, Inc. (c)						Financials						L+5.50% (6.25%), 11/25/2026						4,091						4,091						4,091						0.3		%
Hospice Care Buyer, Inc. (c)						Healthcare						L+6.50% (7.50%), 12/9/2026						4,579						4,579						4,527						0.3		%
Hospice Care Buyer, Inc. (c) (h)						Healthcare						L+6.50% (7.50%), 12/9/2026						24,561						23,956						24,283						1.6		%
Hospice Care Buyer, Inc. (c) (h)						Healthcare						L+6.50% (7.50%), 12/9/2026						18,191						17,804						17,986						1.2		%
Hospice Care Buyer, Inc. (c)						Healthcare						P+5.50% (8.75%), 12/9/2026						1,705						1,705						1,686						0.1		%
ICR Operations, LLC (c) (h)						Business Services						L+5.50% (6.50%), 11/22/2028						42,773						41,931						41,930						2.8		%
ICR Operations, LLC (c)						Business Services						L+5.25% (6.25%), 11/22/2027						3,089						3,089						3,028						0.2		%
Ideal Tridon Holdings, Inc. (c)						Industrials						L+5.25% (6.25%), 7/31/2024						45						45						45						0.0		%
Ideal Tridon Holdings, Inc. (c) (h) (i)						Industrials						L+5.25% (6.25%), 7/31/2024						820						812						820						0.1		%
Ideal Tridon Holdings, Inc. (c) (h) (i)						Industrials						L+5.25% (6.25%), 7/31/2024						26,837						26,699						26,837						1.8		%
Ideal Tridon Holdings, Inc. (c) (j)						Industrials						L+5.25% (6.25%), 7/31/2023						883						883						883						0.1		%
IG Investments Holdings, LLC (c) (h)						Business Services						L+6.00% (6.75%), 9/22/2028						17,807						17,465						17,465						1.2		%
IG Investments Holdings, LLC (c)						Business Services						L+6.00% (6.75%), 9/22/2027						695						695						682						0.0		%
Integrated Efficiency Solutions, Inc. (c) (o) (w)						Industrials						7.50%, 12/31/2025						1,436						1,436						1,436						0.1		%
Integrated Efficiency Solutions, Inc. (c) (o) (w)						Industrials						7.50%, 12/31/2025						131						131						131						0.0		%
Integrated Global Services, Inc. (c) (i)						Industrials						L+6.00% (7.00%), 2/4/2026						11,385						11,230						10,928						0.7		%

The accompanying notes are an integral part of these consolidated financial statements.

21

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021
Portfolio Company (f) (q)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Integrated Global Services, Inc. (c) (j)						Industrials						L+6.00% (7.00%), 2/4/2026						$	1,622					$	1,622					$	1,556					0.1		%
Internap Corp. (c) (h) (p)						Business Services						L+6.50% (7.50%) 5.50% PIK, 5/8/2025						6,294						6,294						5,475						0.4		%
International Cruise & Excursions, Inc. (c) (i)						Business Services						L+5.25% (6.25%), 6/6/2025						4,900						4,874						4,459						0.3		%
K2 Intelligence Holdings, Inc. (c) (h) (i)						Business Services						L+5.75% (6.75%), 9/23/2024						10,251						10,140						9,539						0.6		%
Kaman Distribution Corp. (c) (h) (i)						Industrials						L+5.00% (5.10%), 8/26/2026						20,448						19,219						20,448						1.4		%
KidKraft, Inc. (c) (w)						Consumer						L+5.00% (6.00%), 8/15/2022						1,060						680						1,060						0.1		%
Kissner Milling Co., Ltd.						Industrials						4.88%, 5/1/2028						2,983						2,983						2,871						0.2		%
Knowledge Pro Buyer, Inc. (c) (i)						Business Services						L+5.75% (6.50%), 12/10/2027						24,800						24,309						24,309						1.6		%
Knowledge Pro Buyer, Inc. (c)						Business Services						L+5.75% (6.50%), 12/10/2027						607						607						595						0.0		%
Labrie Environmental Group, LLC (a) (c) (h)						Industrials						L+5.50% (6.50%), 9/1/2026						22,580						22,229						22,580						1.5		%
Lakeland Tours, LLC (c) (h) (i)						Education						L+7.50% (8.75%) 6.00% PIK, 9/25/2025						3,565						3,548						3,565						0.2		%
Lakeland Tours, LLC (c) (h) (i)						Education						L+7.50% (8.75%) 6.00% PIK, 9/25/2025						4,321						3,955						3,889						0.3		%
Lakeland Tours, LLC (c) (h)						Education						L+12.00% (13.25%) 6.00% PIK, 9/25/2023						1,875						1,875						1,875						0.1		%
Lakeland Tours, LLC (c) (h) (i)						Education						13.25% PIK, 9/27/2027						4,700						3,010						3,290						0.2		%
Lakeview Health Holdings, Inc. (c) (o) (w)						Healthcare						P+6.00% (9.25%), 10/15/2024						414						414						414						0.0		%
Lakeview Health Holdings, Inc. (c) (o) (t) (w)						Healthcare						P+4.50% (7.75%) PIK, 10/15/2024						1,576						600						584						0.0		%
LightSquared, LP						Telecom						15.50% PIK, 11/1/2023						1,794						1,794						1,471						0.1		%
Manna Pro Products, LLC (c)						Consumer						L+6.00% (7.00%), 12/10/2026						4,033						4,033						4,033						0.3		%
Manna Pro Products, LLC (c) (i)						Consumer						L+6.00% (7.00%), 12/10/2026						33,250						32,596						33,250						2.2		%
Manna Pro Products, LLC (c)						Consumer						L+6.00% (7.00%), 12/10/2026						744						744						744						0.0		%
McDonald Worley, P.C. (c)						Business Services						26.00% PIK, 12/31/2024						12,080						12,080						11,826						0.8		%
MCS Acquisition Corp. (c)						Business Services						L+6.00% (7.00%), 10/2/2025						780						780						780						0.1		%
Medical Depot Holdings, Inc. (c) (h) (i)						Healthcare						L+9.50% (10.50%) 4.00% PIK, 6/2/2025						19,929						19,510						19,630						1.3		%
Medical Management Resource Group, LLC (c) (h)						Healthcare						L+5.75% (6.50%), 9/30/2027						16,139						15,830						15,829						1.0		%
MGTF Radio Company, LLC (c) (j) (o)						Media/Entertainment						L+6.00% (7.00%), 4/1/2024						51,596						51,529						42,567						2.8		%
Midwest Can Company, LLC (c) (h) (i)						Paper & Packaging						L+6.00% (7.00%), 3/2/2026						32,385						31,896						32,385						2.1		%
Midwest Can Company, LLC (c) (j)						Paper & Packaging						L+6.00% (7.00%), 3/2/2026						565						565						565						0.0		%
Miller Environmental Group, Inc. (c) (h) (i)						Business Services						L+6.50% (7.50%), 3/15/2024						11,346						11,246						11,346						0.8		%
Miller Environmental Group, Inc. (c) (h) (i)						Business Services						L+6.50% (7.50%), 3/15/2024						10,377						10,269						10,377						0.7		%
Ministry Brands, LLC (c) (i)						Software/Services						L+4.00% (5.00%), 12/2/2022						5,610						5,585						5,610						0.4		%
Mintz Group, LLC (c) (i)						Business Services						L+4.25% (5.25%), 3/18/2026						3,986						3,958						3,986						0.3		%

The accompanying notes are an integral part of these consolidated financial statements.

22

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021
Portfolio Company (f) (q)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Mirra-Primeaccess Holdings, LLC (c) (h)						Healthcare						L+6.50% (7.50%), 7/29/2026						$	49,321					$	48,419					$	49,321					3.3		%
Muth Mirror Systems, LLC (c) (h) (i)						Technology						L+5.25% (6.25%), 4/23/2025						15,140						14,973						14,032						0.9		%
New Star Metals, Inc. (c) (h) (i)						Industrials						L+5.00% (6.00%), 1/9/2026						32,817						32,335						32,817						2.2		%
Norvax, LLC (a) (c)						Business Services						L+6.50% (7.50%), 9/13/2024						893						893						893						0.1		%
NTM Acquisition Corp. (c) (h) (i)						Media/Entertainment						L+7.25% (8.25%) 1.00% PIK, 6/7/2024						21,678						21,655						21,093						1.4		%
Odessa Technologies, Inc. (c) (h)						Software/Services						L+5.75% (6.50%), 10/19/2027						14,451						14,172						14,172						0.9		%
Olaplex, Inc. (c) (h) (i)						Consumer						L+6.25% (7.25%), 1/8/2026						16,792						16,567						16,792						1.1		%
ORG GC Holdings, LLC (c) (o)						Business Services						L+6.50% (7.50%) PIK, 11/24/2026						8,343						8,343						8,343						0.6		%
Pie Buyer, Inc. (c) (i)						Food & Beverage						L+5.50% (6.50%), 4/5/2027						28,390						27,644						28,390						1.9		%
Pie Buyer, Inc. (c)						Food & Beverage						L+5.50% (6.50%), 4/5/2027						1,471						1,471						1,471						0.1		%
Pilot Air Freight, LLC (c) (i)						Transportation						L+5.25% (6.25%), 7/25/2024						8,964						8,859						8,964						0.6		%
Pilot Air Freight, LLC (c)						Transportation						L+5.25% (6.25%), 7/25/2024						2,326						2,326						2,326						0.2		%
PlayPower, Inc. (c) (h) (i)						Industrials						L+5.50% (5.72%), 5/8/2026						23,961						23,737						22,786						1.5		%
Pluralsight, LLC (c) (h)						Software/Services						L+8.00% (9.00%), 4/6/2027						18,826						18,496						18,481						1.2		%
Pluralsight, LLC (c) (h)						Software/Services						L+8.00% (9.00%), 4/6/2027						6,728						6,605						6,605						0.4		%
Point Broadband Acquisition, LLC (c) (h)						Telecom						L+6.00% (7.00%), 9/29/2028						19,340						18,874						18,874						1.3		%
Premier Global Services, Inc. (c) (t)						Telecom						P+5.50% (8.75%), 6/8/2023						5,024						4,908						251						0.0		%
Premier Global Services, Inc. (c)						Telecom						P+5.50% (8.75%), 3/31/2022						969						969						969						0.1		%
Prototek, LLC (c) (h)						Industrials						L+5.75% (6.75%), 10/20/2026						11,172						10,971						11,060						0.7		%
Prototek, LLC (c)						Industrials						L+5.75% (6.75%), 10/20/2026						1,242						1,242						1,229						0.1		%
PSKW, LLC (c) (h) (i)						Healthcare						L+6.25% (7.25%), 3/9/2026						29,475						28,961						29,475						2.0		%
PT Network, LLC (c) (h)						Healthcare						L+7.50% (8.50%) 2.00% PIK, 11/30/2023						17,179						17,142						17,179						1.1		%
PT Network, LLC (c)						Healthcare						L+7.50% (8.50%) 2.00% PIK, 11/30/2023						395						395						395						0.0		%
Questex, Inc. (c) (h) (i)						Media/Entertainment						L+5.00% (6.00%), 9/9/2024						15,665						15,525						14,257						0.9		%
Questex, Inc. (c) (j)						Media/Entertainment						L+5.00% (6.00%), 9/9/2024						1,550						1,550						1,410						0.1		%
Reddy Ice Corp. (c) (j)						Food & Beverage						L+6.50% (7.50%), 7/1/2025						1,807						1,795						1,772						0.1		%
Reddy Ice Corp. (c)						Food & Beverage						L+6.50% (7.50%), 7/1/2025						1,476						1,476						1,447						0.1		%
Reddy Ice Corp. (c)						Food & Beverage						L+6.50% (7.50%), 7/1/2025						4,844						4,845						4,707						0.3		%
Reddy Ice Corp. (c) (h) (i)						Food & Beverage						L+6.50% (7.50%), 7/1/2025						19,147						18,812						18,774						1.2		%
Refresh Parent Holdings, Inc. (c)						Healthcare						L+6.50% (7.50%), 12/9/2026						3,035						3,035						3,035						0.2		%

The accompanying notes are an integral part of these consolidated financial statements.

23

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021
Portfolio Company (f) (q)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Refresh Parent Holdings, Inc. (c) (h)						Healthcare						L+6.50% (7.50%), 12/9/2026						$	9,487					$	9,277					$	9,487					0.6		%
Refresh Parent Holdings, Inc. (c) (h)						Healthcare						L+6.50% (7.50%), 12/9/2026						1,159						1,136						1,136						0.1		%
Refresh Parent Holdings, Inc. (c)						Healthcare						P+5.50% (8.75%), 12/9/2026						406						406						406						0.0		%
Relativity Oda, LLC (c) (i)						Software/Services						L+7.50% (8.50%) PIK, 5/12/2027						4,885						4,781						4,787						0.3		%
REP TEC Intermediate Holdings, Inc. (c) (h) (i)						Software/Services						L+6.50% (7.50%), 12/1/2027						28,236						27,758						27,717						1.8		%
Resco Products, Inc. (c)						Industrials						L+7.00% (9.00%) 2.00% PIK, 6/5/2022						9,376						9,376						9,376						0.6		%
Roadsafe Holdings, Inc. (c) (i)						Industrials						L+5.75% (6.75%), 10/19/2027						7,832						7,692						7,692						0.5		%
Roadsafe Holdings, Inc. (c)						Industrials						P+4.75% (8.00%), 10/19/2027						2,879						2,879						2,828						0.2		%
RSC Acquisition, Inc. (c)						Financials						L+5.50% (6.25%), 10/30/2026						4,249						4,249						4,208						0.3		%
RSC Acquisition, Inc. (c)						Financials						L+5.50% (6.25%), 10/30/2026						1,293						1,293						1,280						0.1		%
RSC Acquisition, Inc. (c) (i)						Financials						L+5.50% (6.25%), 10/30/2026						1,847						1,829						1,829						0.1		%
Saturn SHC Buyer Holdings, Inc. (c) (h)						Healthcare						L+6.00% (6.75%), 11/18/2027						33,324						32,671						32,671						2.2		%
Saturn SHC Buyer Holdings, Inc. (c)						Healthcare						P+5.00% (8.25%), 11/18/2027						3,332						3,332						3,267						0.2		%
SCIH Salt Holdings, Inc. (c)						Industrials						L+4.00% (5.00%), 3/17/2025						1,030						1,030						978						0.1		%
Sherlock Buyer Corp. (c) (i)						Business Services						L+5.75% (6.50%), 12/8/2028						11,124						10,904						10,904						0.7		%
Simplifi Holdings, Inc. (c) (h)						Media/Entertainment						L+5.50% (6.25%), 10/1/2027						35,460						34,781						34,779						2.3		%
Skillsoft Corp. (a) (h)						Technology						L+4.75% (5.50%), 7/14/2028						1,460						1,440						1,462						0.1		%
St. Croix Hospice Acquisition Corp. (c) (i)						Healthcare						L+6.00% (7.00%), 10/30/2026						25,680						25,267						25,680						1.7		%
Striper Buyer, LLC (c) (h)						Paper & Packaging						L+5.50% (6.25%), 12/30/2026						12,393						12,287						12,393						0.8		%
Subsea Global Solutions, LLC (c) (i)						Business Services						L+7.00% (8.00%), 3/29/2023						4,697						4,663						4,697						0.3		%
Subsea Global Solutions, LLC (c) (i)						Business Services						L+7.00% (8.00%), 3/29/2023						7,916						7,877						7,916						0.5		%
Subsea Global Solutions, LLC (c) (j)						Business Services						L+7.00% (8.00%), 3/29/2023						963						963						963						0.1		%
SunMed Group Holdings, LLC (c) (h)						Healthcare						L+5.75% (6.50%), 6/16/2028						9,054						8,908						8,909						0.6		%
SunMed Group Holdings, LLC (c)						Healthcare						L+5.75% (6.50%), 6/16/2027						96						96						95						0.0		%
Tax Defense Network, LLC (c) (p) (t)						Consumer						L+6.00% (10.00%) PIK, 3/31/2022						6,633						3,833						464						0.0		%
Tax Defense Network, LLC (c) (p) (t)						Consumer						10.00% PIK, 3/31/2022						3,678						2,986						3,678						0.3		%
Tax Defense Network, LLC (c) (p) (t)						Consumer						L+6.00% (10.00%) PIK, 3/31/2022						37,368						21,646						2,616						0.2		%
Therapy Brands Holdings, LLC (c) (h)						Healthcare						L+4.00% (4.75%), 5/18/2028						3,475						3,459						3,475						0.2		%
Tillamook Country Smoker, LLC (c) (h)						Food & Beverage						L+7.75% (8.75%), 5/19/2022						9,629						9,618						8,493						0.6		%
Tillamook Country Smoker, LLC (c) (j)						Food & Beverage						L+7.75% (8.75%), 5/19/2022						2,561						2,561						2,259						0.1		%
Trilogy International Partners, LLC (a)						Telecom						8.88%, 5/15/2023						15,510						15,240						15,359						1.0		%

The accompanying notes are an integral part of these consolidated financial statements.

24

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021
Portfolio Company (f) (q)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Trilogy International Partners, LLC (a) (c) (h)						Telecom						10.00%, 5/1/2022						$	6,298					$	6,235					$	6,298					0.4		%
Trinity Air Consultants Holdings Corp. (c) (h)						Business Services						L+5.25% (6.00%), 6/29/2027						20,424						20,050						20,050						1.3		%
Trinity Air Consultants Holdings Corp. (c)						Business Services						L+5.25% (6.00%), 6/29/2027						1,594						1,594						1,565						0.1		%
Triple Lift, Inc. (c) (i)						Software/Services						L+5.75% (6.50%), 5/8/2028						22,983						22,566						22,983						1.5		%
University of St. Augustine Acquisition Corp. (c) (h) (i)						Education						L+4.25% (5.25%), 2/2/2026						23,520						23,177						23,520						1.6		%
Urban One, Inc.						Media/Entertainment						7.38%, 2/1/2028						1,561						1,561						1,613						0.1		%
US Oral Surgery Management Holdco, LLC (c)						Healthcare						L+5.50% (6.25%), 11/18/2027						428						428						420						0.0		%
US Oral Surgery Management Holdco, LLC (c) (h)						Healthcare						L+5.50% (6.25%), 11/18/2027						12,173						11,934						11,934						0.8		%
US Salt Investors, LLC (c) (h)						Chemicals						L+5.50% (6.25%), 7/19/2028						20,133						19,756						19,757						1.3		%
Vantage Mobility International, LLC (c) (p) (t) (w)						Transportation						L+6.00% (7.00%), 3/21/2024						1,897						251						251						0.0		%
Vantage Mobility International, LLC (c) (p) (w)						Transportation						L+6.00% (7.00%), 3/21/2024						244						244						244						0.0		%
Vensure Employer Services, Inc. (c) (i)						Business Services						L+4.75% (5.50%), 3/26/2027						9,614						9,536						9,614						0.6		%
Westwood Professional Services, Inc. (c)						Business Services						L+6.00% (7.00%), 5/26/2026						1,007						1,007						982						0.1		%
Westwood Professional Services, Inc. (c) (i)						Business Services						L+6.00% (7.00%), 5/26/2026						8,648						8,495						8,431						0.6		%
WHCG Purchaser III, Inc. (c) (h)						Healthcare						L+5.75% (6.50%), 6/22/2028						29,420						28,876						28,876						1.9		%
WHCG Purchaser III, Inc. (c)						Healthcare						L+5.75% (6.50%), 6/22/2028						919						919						902						0.1		%
WIN Holdings III Corp. (c) (h)						Consumer						L+5.75% (6.50%), 7/16/2028						31,627						31,036						31,035						2.1		%
WIN Holdings III Corp. (c)						Consumer						L+5.75% (6.50%), 7/16/2026						556						556						546						0.0		%
WMK, LLC (c) (j)						Business Services						L+5.75% (6.75%), 9/5/2025						2,558						2,550						2,558						0.2		%
WMK, LLC (c)						Business Services						L+5.75% (6.75%), 9/5/2025						352						350						352						0.0		%
WMK, LLC (c) (h) (i)						Business Services						L+5.75% (6.75%), 9/5/2025						18,912						18,714						18,912						1.3		%
WMK, LLC (c) (j)						Business Services						L+5.75% (6.75%), 9/5/2024						2,618						2,618						2,618						0.2		%
Subtotal Senior Secured First Lien Debt																								$	1,865,403					$	1,831,170					121.3		%
Senior Secured Second Lien Debt - 16.2% (b)
Accentcare, Inc. (c) (h)						Healthcare						L+8.75% (9.50%), 6/21/2027						$	30,152					$	29,588					$	30,152					2.0		%
Anchor Glass Container Corp. (c) (j)						Paper & Packaging						L+7.75% (8.75%), 12/6/2024						6,667						6,615						2,003						0.1		%
Aruba Investments Holdings, LLC (i)						Chemicals						L+7.75% (8.50%), 11/24/2028						3,759						3,710						3,765						0.2		%
Astro AB Merger Sub, Inc. (a) (c) (h)						Financials						L+8.00% (9.00%), 4/30/2025						8,162						8,138						8,162						0.5		%
Carlisle FoodService Products, Inc. (c) (h)						Consumer						L+7.75% (8.75%), 3/20/2026						10,719						10,606						10,166						0.7		%
CDS U.S. Intermediate Holdings, Inc. (a) (p)						Media/Entertainment						L+8.00% (9.00%) 7.00% PIK, 11/24/2027						10,324						10,271						10,262						0.7		%
CommerceHub, Inc. (c) (h)						Technology						L+7.00% (7.75%), 12/29/2028						12,360						12,306						12,125						0.8		%

The accompanying notes are an integral part of these consolidated financial statements.

25

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021
Portfolio Company (f) (q)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Corelogic, Inc. (h)						Business Services						L+6.50% (7.00%), 6/4/2029						$	10,808					$	10,707					$	10,882					0.7		%
HAH Group Holding Company, LLC (c) (h)						Healthcare						L+8.50% (9.50%), 10/30/2028						12,445						12,180						12,445						0.8		%
Integrated Efficiency Solutions, Inc. (c) (o) (w)						Industrials						10.00% PIK, 12/31/2026						1,436						780						780						0.1		%
Mercury Merger Sub, Inc. (c) (h)						Business Services						L+6.50% (7.00%), 8/2/2029						13,965						13,855						13,965						0.9		%
MLN US Holdco, LLC (a) (c) (h) (i)						Technology						L+8.75% (8.85%), 11/30/2026						3,000						2,963						2,699						0.2		%
ORG GC Holdings, LLC (c) (o)						Business Services						18.00% PIK, 11/24/2027						3,439						3,439						3,439						0.2		%
PetVet Care Centers, LLC (c) (h)						Healthcare						L+6.25% (6.35%), 2/13/2026						3,539						3,530						3,539						0.2		%
Project Boost Purchaser, LLC (c) (j)						Business Services						L+8.00% (8.10%), 5/31/2027						1,848						1,848						1,848						0.1		%
Proofpoint, Inc. (c) (h)						Software/Services						L+6.25% (6.75%), 8/31/2029						8,541						8,500						8,541						0.6		%
QuickBase, Inc. (c)						Technology						L+8.00% (8.10%), 4/2/2027						7,484						7,386						7,484						0.5		%
RealPage, Inc. (c) (i)						Software/Services						L+6.50% (7.25%), 4/23/2029						13,647						13,460						13,756						0.9		%
Recess Holdings, Inc. (c) (h)						Industrials						L+7.75% (8.75%), 9/29/2025						16,134						16,003						16,134						1.1		%
River Cree Enterprises, LP (a) (c) (m)						Gaming/Lodging						10.00%, 5/17/2025						CAD	21,275					16,493						16,836						1.1		%
SSH Group Holdings, Inc. (c) (h)						Education						L+8.25% (8.38%), 7/30/2026						10,122						10,064						10,122						0.7		%
Therapy Brands Holdings, LLC (c) (h)						Healthcare						L+6.75% (7.50%), 5/18/2029						3,275						3,245						3,275						0.2		%
Travelpro Products, Inc. (a) (c) (w)						Consumer						14.00%, 10.75% PIK, 11/21/2022						2,861						2,861						2,282						0.2		%
Travelpro Products, Inc. (a) (c) (m) (w)						Consumer						13.00%, 2.00% PIK, 11/21/2022						CAD	3,304					2,557						2,086						0.2		%
USIC Holdings, Inc. (c) (h)						Business Services						L+6.50% (7.25%), 5/14/2029						5,798						5,744						5,798						0.4		%
Vantage Mobility International, LLC (c) (p) (t) (w)						Transportation						L+6.00% (7.00%), 3/21/2024						1,134						17						17						0.0		%
Vantage Mobility International, LLC (c) (p) (t) (w)						Transportation						L+6.00% (7.00%) PIK, 3/21/2024						3,578						2,914						—						—		%
Victory Buyer, LLC (c) (h)						Industrials						L+7.00% (7.50%), 11/15/2029						31,686						31,369						31,369						2.1		%
Subtotal Senior Secured Second Lien Debt																								$	251,149					$	243,932					16.2		%
Subordinated Debt - 7.8% (b)
Del Real, LLC (c) (t) (w)						Food & Beverage						14.50%, 2.00% PIK, 4/1/2023						$	4,239					$	3,131					$	3,576					0.2		%
Encina Equipment Finance, LLC (c) (o)						Financials						L+7.75% (9.00%), 12/31/2028						38,100						37,964						37,964						2.5		%
Park Ave RE Holdings, LLC (c) (j) (o) (v)						Financials						13.00%, 12/30/2022						1,537						1,537						1,537						0.1		%
Siena Capital Finance, LLC (c) (j) (o) (z)						Financials						12.50%, 11/27/2026						75,000						74,995						75,000						5.0		%
Subtotal Subordinated Debt																								$	117,627					$	118,077					7.8		%
Collateralized Securities - 2.5% (b)
Collateralized Securities - Debt Investments
Newstar Fairfield Fund CLO, Ltd. 2015-1RA F (a) (c) (j) (p)						Diversified Investment Vehicles						L+7.50% (7.63%), 1/20/2027						$	10,728					$	9,945					$	8,237					0.6		%
NewStar Arlington Senior Loan Program, LLC 14-1A FR (a) (c) (j) (p)						Diversified Investment Vehicles						L+11.00% (11.12%), 4/25/2031						4,750						4,585						4,575						0.3		%

The accompanying notes are an integral part of these consolidated financial statements.

26

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021
Portfolio Company (f) (q)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Whitehorse, Ltd. 2014-1A E (a) (c) (p)						Diversified Investment Vehicles						L+4.55% (4.68%), 5/1/2026						$	8,000					$	7,899					$	7,171					0.5		%
Collateralized Securities - Equity Investments (n)
Newstar Fairfield Fund CLO, Ltd. 2015-1RA SUB (a) (c) (k) (p)						Diversified Investment Vehicles						0.00%, 1/20/2027						$	31,575					$	6,285					$	—					—		%
NewStar Arlington Senior Loan Program, LLC 14-1A SUB (a) (c) (j) (k) (p)						Diversified Investment Vehicles						23.85%, 4/25/2031						31,603						15,223						17,114						1.1		%
OFSI Fund, Ltd. 2014-6A Side Letter (a) (c)						Diversified Investment Vehicles						0.00%, 3/20/2025						1,970						47						—						—		%
Whitehorse, Ltd. 2014-1A Side Letter (a) (c) (p)						Diversified Investment Vehicles						0.00%, 5/1/2026						1,886						134						—						—		%
Whitehorse, Ltd. 2014-1A SUB (a) (c) (k) (p)						Diversified Investment Vehicles						0.00%, 5/1/2026						36,000						6,965						—						—		%
Subtotal Collateralized Securities																								$	51,083					$	37,097					2.5		%
Equity/Other - 36.3% (b) (d)
Aden & Anais Holdings, Inc. (c) (e) (w)						Retail												4,470						$	—					$	—					—		%
Answers Corp. (c) (e) (p)						Media/Entertainment												908,911						10,643						145						0.0		%
Baker Hill Acquisition, LLC (c) (e) (w)						Financials												22,653						—						—						—		%
Black Mountain Sand, LLC (c) (e) (u)						Energy												55,463						—						478						0.0		%
CDS U.S. Intermediate Holdings, Inc. (a) (e) (p)						Media/Entertainment												539,708						1,224						5,442						0.4		%
CDS U.S. Intermediate Holdings, Inc. (a) (c) (e) (p)						Media/Entertainment												874,000						437						2,884						0.2		%
Clover Technologies Group, LLC (c) (e)						Industrials												180,274						1,153						29						0.0		%
Clover Technologies Group, LLC (c) (e)						Industrials												2,753						275						627						0.0		%
CRS-SPV, Inc. (c) (e) (j) (o) (w)						Industrials												246						2,219						1,266						0.1		%
Danish CRJ, Ltd. (a) (c) (e) (o) (r)						Transportation												5,002						—						—						—		%
Data Source Holdings, LLC (c) (e) (w)						Business Services												10,617						140						276						0.0		%
Del Real, LLC (c) (e) (u) (w)						Food & Beverage												670,510						382						—						—		%
Dyno Acquiror, Inc. (c) (e) (w)						Consumer												134,102						58						107						0.0		%
Encina Equipment Finance, LLC (c) (e) (o) (u)						Financials												79,479,085						81,693						81,693						5.4		%
FBLC Senior Loan Fund, LLC (a) (c) (o) (z)						Diversified Investment Vehicles												304,934						304,934						304,934						20.2		%
First Eagle Greenway Fund II, LLC (a) (j) (p)						Diversified Investment Vehicles												5,329						4,049						464						0.0		%
Foresight Energy Operating, LLC (c) (e) (p) (u)						Energy												158,093						2,087						3,965						0.3		%
HemaSource, Inc. (c) (e) (w)						Healthcare												223,503						168						268						0.0		%
Integrated Efficiency Solutions, Inc. (c) (e) (o)						Industrials												55,991						—						—						—		%
Integrated Efficiency Solutions, Inc. (c) (e) (o)						Industrials												57,427						—						—						—		%
Internap Corp (c) (e) (p)						Business Services												1,293,189						543						1,552						0.1		%
Jakks Pacific, Inc. (e) (p) (s)						Consumer												237,436						2,385						2,412						0.2		%
Jakks Pacific, Inc. (c) (e) (p)						Consumer												5,303						185						785						0.1		%
Kahala Ireland OpCo Designated Activity Company (a) (c) (o) (y)						Transportation												1						—						23,732						1.6		%
Kahala Ireland OpCo Designated Activity Company (a) (c) (e) (o) (y)						Transportation												3,250,000						—						3,250						0.2		%
Kahala US OpCo, LLC (a) (c) (e) (o) (x)						Transportation						13.00%						4,413,472						—						—						—		%
KidKraft, Inc. (c) (e) (u) (w)						Consumer												2,682,257						—						1,048						0.1		%

The accompanying notes are an integral part of these consolidated financial statements.

27

---

FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021
Portfolio Company (f) (q)						Industry						Investment Coupon Rate / Maturity (l)						Principal / Number of Shares						Amortized Cost						Fair Value						% of Net Assets (b)
Lakeview Health Holdings, Inc. (c) (e) (o) (w)						Healthcare												5,272						$	—					$	—					—		%
McDonald Worley, P.C. (c) (e)						Business Services												248,600						104						1,272						0.1		%
MCS Acquisition Corp. (c) (e)						Business Services												31,521						4,103						2,431						0.2		%
MGTF Holdco, LLC (c) (e) (o) (u)						Media/Entertainment												402,000						—						—						—		%
Motor Vehicle Software Corp. (c) (e) (w)						Business Services												223,503						318						386						0.0		%
New Constellis Holdings Inc. (c) (e) (w)						Business Services												2,316						67						—						—		%
ORG GC Holdings, LLC (c) (e) (o)						Business Services												93,380						212						212						0.0		%
ORG GC Holdings, LLC (c) (e) (o)						Business Services												1,771						—						—						—		%
Park Ave RE Holdings, LLC (c) (e) (j) (o) (v)						Financials												719						1,623						4,461						0.3		%
PennantPark Credit Opportunities Fund II, LP (a) (p)						Diversified Investment Vehicles												8,739						3,936						4,953						0.3		%
Point Broadband Acquisition, LLC (c) (e)						Telecom												2,099,333						2,099						2,099						0.1		%
PT Network, LLC (c) (e) (u)						Healthcare												3						—						2,813						0.2		%
RMP Group, Inc. (c) (e) (u) (w)						Financials												223						164						340						0.0		%
Schweiger Dermatology Group, LLC (c) (e) (u) (w)						Healthcare												265,024						—						—						—		%
Siena Capital Finance, LLC (c) (j) (o) (z)						Financials												41,789,400						42,499						65,609						4.3		%
Skillsoft Corp (a) (e) (s)						Technology												248,712						2,636						2,275						0.2		%
Smile Brands, Inc. (c) (w)						Healthcare												712						—						1,437						0.1		%
Squan Holding Corp. (c) (e)						Telecom												180,835						—						—						—		%
Tap Rock Resources, LLC (c) (g) (p) (u)						Energy												18,356,442						6,490						8,742						0.6		%
Tax Defense Network, LLC (c) (e) (p)						Consumer												147,099						425						—						—		%
Tax Defense Network, LLC (c) (e) (p)						Consumer												633,382						—						—						—		%
Team Waste, LLC (c) (e) (p) (u) (w)						Industrials												128,483						2,569						3,073						0.2		%
Tennenbaum Waterman Fund, LP (a) (j) (p)						Diversified Investment Vehicles												10,000						10,000						9,764						0.6		%
Travelpro Products, Inc. (a) (c) (e) (w)						Consumer												447,007						506						—						—		%
United Biologics, LLC (c) (e) (u) (w)						Healthcare												39,769						132						—						—		%
United Biologics, LLC (c) (e) (u) (w)						Healthcare												3,155						—						—						—		%
United Biologics, LLC (c) (e) (u) (w)						Healthcare												4,206						31						—						—		%
United Biologics, LLC (c) (e) (u) (w)						Healthcare												99,236						—						—						—		%
United Biologics, LLC (c) (e) (u) (w)						Healthcare												223						35						—						—		%
USASF Holdco, LLC (c) (e) (u)						Financials												10,000						10						—						—		%
USASF Holdco, LLC (c) (e) (u)						Financials												490						490						510						0.0		%
USASF Holdco, LLC (c) (e) (u)						Financials												139						139						278						0.0		%
Vantage Mobility International, LLC (c) (e) (p) (w)						Transportation												512,923						—						—						—		%
Vantage Mobility International, LLC (c) (e) (p) (w)						Transportation												4,439,484						3,140						—						—		%
Vantage Mobility International, LLC (c) (e) (p) (w)						Transportation												1,940,977						—						—						—		%
World Business Lenders, LLC (c) (e)						Financials												922,669						3,750						2,676						0.2		%
WPNT, LLC (c) (e) (o) (u)						Media/Entertainment												402,000						—						—						—		%
Wythe Will Tzetzo, LLC (c) (e) (u) (w)						Food & Beverage												22,312						302						—						—		%
YummyEarth, Inc. (c) (e) (w)						Food & Beverage												223						—						—						—		%
Subtotal Equity/Other																								$	498,355					$	548,688					36.3		%
TOTAL INVESTMENTS - 184.1% (b)																								$	2,783,617					$	2,778,964					184.1		%

The accompanying notes are an integral part of these consolidated financial statements.

28

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FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021

Forward foreign currency contracts:

Counterparty

Contract to Deliver

In Exchange For

Maturity Date

Unrealized Depreciation

Goldman Sachs International

CAD 21,807

$17,388

2/17/2022

$266

_____________

(a)All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. Qualifying assets represent 81.4% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.

(b)Percentages are based on net assets as of December 31, 2021.

(c)The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's Board of Directors as required by the 1940 Act. Such investments are valued using significant unobservable inputs (See Note 3 to the consolidated financial statements).

(d)All amounts are in thousands except share amounts.

(e)Non-income producing at December 31, 2021.

(f)The Company has various unfunded commitments to portfolio companies. Please refer to Note 7 - Commitments and Contingencies for details of these unfunded commitments.

(g)The commitment related to this investment is discretionary.

(h)The Company's investment or a portion thereof is pledged as collateral under the JPM Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.

(i)The Company's investment or a portion thereof is pledged as collateral under the Wells Fargo Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.

(j)The Company's investment or a portion thereof is pledged as collateral under the MassMutual Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.

(k)The Collateralized Securities - subordinated notes are treated as equity investments and are entitled to recurring distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s securities less contractual payments to debt holders and fund expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.

(l)The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L") or Prime ("P") and which reset daily, monthly, quarterly, or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the current interest rate in effect at December 31, 2021. Certain investments are subject to a LIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable. For floating rate securities the all-in rate is disclosed within parentheses.

(m)The principal amount (par amount) is denominated in Canadian Dollars ("CAD").

(n)For equity investments in Collateralized Securities, the effective yield is presented in place of the investment coupon rate for each investment. Refer to footnote (k) for a further description of an equity investment in a Collateralized Security.

(o)The provisions of the 1940 Act classify investments based on the level of control that the Company maintains in a particular portfolio company. As defined in the 1940 Act, a company is generally presumed to be "non-controlled" when the Company owns 25% or less of the portfolio company's voting securities and/or does not have the power to exercise control over the management or policies of such portfolio company. A company is generally presumed to be "controlled" when the Company owns more than 25% of the portfolio company's voting securities and/or has the power to exercise control over the management or policies of such portfolio company. The Company classifies this investment as "controlled".

(p)The provisions of the 1940 Act classify investments further based on the level of ownership that the Company maintains in a particular portfolio company. As defined in the 1940 Act, a company is generally deemed as "non-affiliated" when the Company owns less than 5% of a portfolio company's voting securities and "affiliated" when the Company owns 5% or more of a portfolio company's voting securities. The Company classifies this investment as "affiliated".

(q)Unless otherwise indicated, all investments in the consolidated schedule of investments are non-affiliated, non-controlled investments.

(r)The Company's investment is held through the Consolidated Holding Company, Kahala Aviation Holdings, LLC, which owns 49% of the operating company, Danish CRJ LTD.

(s)The investment is not a restricted security. All other securities are restricted securities.

(t)The investment is on non-accrual status as of December 31, 2021.

(u)Investments are held in the taxable wholly-owned, consolidated subsidiary, 54th Street Equity Holdings, Inc.

(v)The Company's investment is held through the consolidated subsidiary, Park Ave RE, Inc., which owns 100% of the equity of the operating company, Park Ave RE Holdings, LLC.

(w)The investment is held through BSP TCAP Acquisition Holdings LP, which is an affiliated acquisition entity utilized for the Triangle Transaction. Due to

The accompanying notes are an integral part of these consolidated financial statements.

29

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FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

certain restrictions, such as limits on the number of partners allowable within the equity structures of the newly acquired investments, these investments are still held within the acquisition entity as of December 31, 2021.

(x)The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc., which own 100% of the equity of the operating company, Kahala US OpCo LLC.

(y)The Company's investment is held through the consolidated subsidiary, Kahala Aviation Holdings, LLC, which owns 100% of the equity of the operating company, Kahala Ireland OpCo Designated Activity Company.

(z)The Company's investment falls under the definition of a significant subsidiary, as it exceeded the threshold of at least one of the tests under Rule 4-08(g), but did not exceed the threshold of any tests under Rule 3-09. See Note 3 for additional disclosure.

The accompanying notes are an integral part of these consolidated financial statements.

30

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FRANKLIN BSP LENDING CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2021

The following table shows the portfolio composition by industry grouping based on fair value at December 31, 2021:

			At December 31, 2021
			Investments at Fair Value						Percentage of Total Portfolio
Healthcare			$	422,430					15.2		%
Diversified Investment Vehicles (1)			357,212						12.9		%
Business Services			339,083						12.2		%
Financials			337,699						12.2		%
Industrials			301,669						10.9		%
Software/Services			197,238						7.1		%
Media/Entertainment			186,555						6.7		%
Consumer			150,903						5.4		%
Paper & Packaging			105,418						3.8		%
Food & Beverage			79,390						2.9		%
Transportation			59,397						2.1		%
Education			46,261						1.7		%
Telecom			45,321						1.6		%
Technology			40,077						1.4		%
Chemicals			36,793						1.3		%
Energy			31,432						1.1		%
Utilities			25,250						0.9		%
Gaming/Lodging			16,836						0.6		%
Retail			—						—		%
Total			$	2,778,964					100.0		%

_____________

(1) Includes FBLC's investment in FBLC Senior Loan Fund, LLC, which represents 11.0% of the fair value of investments as of December 31, 2021.

The accompanying notes are an integral part of these consolidated financial statements.

31

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Note 1 — Organization and Basis of Presentation

Franklin BSP Lending Corporation (the “Company” or "FBLC") is an externally managed, non-diversified closed-end management investment company incorporated in Maryland in May 2010 that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (“the 1940 Act”). In addition, the Company has elected to be treated for tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company’s investment activities are managed by Franklin BSP Lending Adviser, L.L.C. (the “Adviser”), a subsidiary of Benefit Street Partners L.L.C. (“BSP”) and supervised by the Company’s Board of Directors ("Board" or "Board of Directors"), a majority of whom are independent of the Adviser and its affiliates. As a BDC, the Company is required to comply with certain regulatory requirements.

    The Company’s investment objective is to generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments. The Company invests primarily in first and second lien senior secured loans and mezzanine debt issued by middle market companies. The Company defines middle market companies as those with annual revenues up to $1 billion. The Company also purchases interests in loans through secondary market transactions. First and second lien secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in bankruptcy priority and are generally secured by liens on the operating assets of a borrower, which may include inventory, receivables, plant, property, and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured. The Company may invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles (“Collateralized Securities” or "CLOs"). CLOs are entities that are formed to manage a portfolio of senior secured loans made to companies whose debt is typically rated below investment grade or, in limited circumstances, unrated. The senior secured loans within these Collateralized Securities meet specified credit and diversity criteria and are subject to concentration limitations in order to create a diverse investment portfolio. In most cases, companies to whom the Company provides customized financing solutions will be privately held at the time the Company invests in them.

    On February 1, 2019, Franklin Resources, Inc. (“FRI”) and Templeton International, Inc. (collectively with FRI, “Franklin Templeton”) acquired BSP, including BSP’s 100% ownership interest in the Adviser (the “FT Transaction”).

    While the structure of the Company’s investments is likely to vary, the Company may invest in senior secured debt, senior unsecured debt, subordinated secured debt, subordinated unsecured debt, mezzanine debt, convertible debt, convertible preferred equity, preferred equity, common equity, warrants, CLOs, and other instruments, many of which generate current yields. If the Adviser deems appropriate, the Company may invest in more liquid senior secured and second lien debt securities, some of which may be traded. The Company will make such investments to the extent allowed by the 1940 Act and consistent with its continued qualification as a RIC for federal income tax purposes.

    On January 25, 2011, the Company commenced its initial public offering (the “IPO”) on a “reasonable best efforts basis” of up to 150.0 million shares of common stock, $0.001 par value per share, and subsequently amended the offering to issue up to an additional 101.1 million shares of its common stock (the “Offering”). The Company closed the Offering to new investments on April 30, 2015. As of June 30, 2022, the Company had issued 244.8 million shares of common stock for gross proceeds of $2.5 billion including the shares purchased by affiliates and shares issued under the Company's distribution reinvestment plan (“DRIP”). As of June 30, 2022, the Company had repurchased a cumulative 34.0 million shares of common stock through its share repurchase program for payments of $282.8 million.

    The Company intends to co-invest, subject to the conditions included in the exemptive order the Company received from the Securities and Exchange Commission ("SEC"), with certain of its affiliates. The Company believes that such co-investments may afford it additional investment opportunities and an ability to achieve greater diversification.

    As a BDC, the Company is generally required to invest at least 70% of its total assets primarily in securities of private and certain U.S. public companies (other than certain financial institutions), cash, cash equivalents and U.S. Government securities, and other high-quality debt investments that mature in one year or less.

    The Company is permitted to borrow money from time to time within the levels permitted by the 1940 Act (which generally currently allows it to incur leverage for up to one half of its total assets). The Company has used, and expects to continue to use, its credit facilities and other borrowings, along with proceeds from the rotation of its portfolio and proceeds from private securities offerings to finance its investment objectives.

    Although the Small Business Credit Availability Act of 2018 (the “SBCAA”) amended the 1940 Act to permit BDCs to incur increased leverage if certain conditions are met, the Company does not presently intend to avail itself of the increased

32

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

leverage limits permitted by the SBCAA. If the Company were to avail itself of the increased leverage permitted by the SBCAA, this would effectively allow the Company to double its leverage, which would increase leverage risk and expenses.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

    The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The consolidated financial statements reflect all adjustments, both normal and recurring which, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition for the periods presented. The Company is an investment company and follows accounting and reporting guidance in Accounting Standards Codification ("ASC") Topic 946 - Financial Services - Investment Companies ("ASC 946").

    We have also formed and expect to continue to form consolidated subsidiaries (the “Consolidated Holding Companies”). The Company consolidates the following subsidiaries for accounting purposes: FBLC Funding I, LLC (“Funding I”), FBLC 57th Street Funding, LLC ("57th Street") and 54th Street Equity Holdings, Inc. Prior to February 18, 2022, the Company also consolidated BDCA Asset Financing, LLC ("BDCA Asset Financing"); and prior to January 20, 2021, the Company consolidated BDCA-CB Funding, LLC (“CB Funding”). Refer to Note 3 and Note 5 for more information. The Company owns 100% of the equity of Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc., which are consolidated for accounting purposes. All significant intercompany balances and transactions have been eliminated in consolidation. 

Interim financial statements are prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, the consolidated financial statements may not include all of the information and notes required by U.S. GAAP for annual consolidated financial statements. U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets, and any other parameters used in determining these estimates could cause actual results to differ materially. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on December 31, 2022.

Use of Estimates

    The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Consolidation

    As provided under ASC 946, the Company will generally not consolidate its investment in a company other than a substantially or wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company's substantially wholly-owned subsidiaries in its consolidated financial statements. Although the Company owns more than 25% of the voting securities of FBLC Senior Loan Fund, LLC, ("SLF"), the Company does not have sole control over significant actions of SLF for purposes of the 1940 Act or otherwise, and thus does not consolidate its interest.

Valuation of Portfolio Investments

    Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis, the Company performs an analysis of each investment to determine fair value as follows:

    Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. The Company may also obtain quotes with respect to certain of the Company's investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined to be readily available, the Company uses the quote obtained.

    Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these

33

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

approaches, the types of factors that the Company may take into account in fair value pricing the Company's investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

    With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:

•Each portfolio company or investment will be valued by the Adviser, with assistance from one or more independent valuation firms engaged by the Company's Board of Directors or as noted below, with respect to investments in an investment fund;

•The independent valuation firm(s) conduct independent appraisals and make an independent assessment of the value of each investment; and

•The Board of Directors determines the fair value of each investment, in good faith, based on the input of the Adviser and independent valuation firm (to the extent applicable). On August 10, 2022, pursuant to Rule 2a-5, the Board has designated the Adviser as the Company's valuation designee (the "Valuation Designee") to perform fair value determinations relating to the value of assets held by the Company. The Adviser also has established a Valuation Committee to assist the Adviser in carrying out its designated responsibilities that the Board has designated to the Adviser as Valuation Designee, subject to oversight of the Board.

    For an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC 946, as of the Company's measurement date. However, there can be no assurance that the Company will be able to sell such investment at a price equal to its net asset value per share and the Company may ultimately sell such investment at a discount to its net asset value per share.

    The Company’s investments in funds that offer periodic liquidity have redemption frequencies which range from monthly to quarterly and redemption notice periods which range from 30 to 90 days. Investments in private equity typically do not offer liquidity and instead, capital is returned through periodic distributions.

    Because there is not a readily available market value for most of the investments in its portfolio, the Company values substantially all of its portfolio investments at fair value as determined in good faith by its Board of Directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company's investments may fluctuate from period to period. Additionally, the fair value of the Company's investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded it.

Investment Classification

    The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control” is defined 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. In addition, any person “who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company and/or has the power to exercise control over the management or policies of such portfolio company shall be presumed to control such company. Typically, any person who does not so own more than 25% of the voting securities of any company and/or does not have the power to exercise control over the management or policies of such portfolio company shall be presumed not to control such company.” Consistent with the 1940 Act, “Affiliated Investments” are defined as those investments in companies in which the Company owns 5% or more of the voting securities. Consistent with the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments.

34

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments in a money market deposit account. Cash and cash equivalents are carried at cost which approximates fair value.

Offering Costs

    The Company incurs certain costs in connection with the registration of shares of its common stock. Offering costs principally relate to professional fees, printing costs, direct marketing expenses, due diligence costs, fees paid to regulators, and other expenses, including the salaries and/or expenses of the Adviser and its affiliates engaged in registering and marketing the Company’s common stock. Such allocated expenses of the Adviser and its affiliates may include the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.

    Pursuant to the Investment Advisory Agreement, the Company and the Adviser have agreed that the Company will not be liable for organization and offering costs, including transfer agent fees, in excess of 1.5% of the aggregate gross proceeds from the Company’s on-going offering. Should the Company resume continually offering its shares, any offering costs incurred will be capitalized and amortized as an expense on a straight-line basis over a 12-month period. For the periods ended June 30, 2022 and 2021, the Company did not incur any offering costs subject to the Adviser limitation.

Deferred Financing Costs

    Financing costs incurred in connection with the Company’s unsecured notes and revolving credit facilities are capitalized and amortized into expense using the straight-line method, which approximates the effective yield method over the life of the respective facility. See Note 5 - Borrowings for details on the credit facilities and unsecured notes.

Distributions

    The Company’s Board of Directors authorizes and declares cash distributions payable on a quarterly basis to stockholders of record on each record date. The amount of each such distribution is subject to the discretion of the Board of Directors and applicable legal restrictions related to the payment of distributions. The Company calculates each stockholder’s specific distribution amount for the quarter using record and declaration dates. The distributions are payable by the fifth day following each record date. From time to time, the Company may also pay interim distributions, including capital gains distributions, at the discretion of the Company’s Board of Directors. The Company’s distributions may exceed earnings, especially during the period before it has substantially invested the proceeds from the offering. As a result, a portion of the distributions made by the Company may represent a return of capital for U.S. federal income tax purposes. A return of capital is a return of each stockholder’s investment rather than earnings or gains derived from the Company’s investment activities.

    The Company may fund cash distributions to stockholders from any sources of funds available to the Company, including advances from the Adviser that are subject to reimbursement, as well as offering proceeds, borrowings, net investment income from operations, capital gain proceeds from the sale of assets, and non-capital gain proceeds from the sale of assets. The Company has not established limits on the amount of funds it may use from available sources to make distributions. See Note 14 - Income Tax Information and Distributions to Stockholders for additional information.

Revenue Recognition

Interest Income

    Investment transactions are accounted for on the trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discount and amortization of premium on investments.

    The Company has a number of investments in Collateralized Securities. Interest income from investments in the “equity” class of these Collateralized Securities (in the Company's case, preferred shares or subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC 325-40-35, Beneficial Interests in Securitized Financial Assets ("ASC 325-40-35"). The Company monitors the expected cash inflows from its equity investments in Collateralized Securities, including the expected principal repayments. The effective yield is determined and updated quarterly. In accordance with ASC 325-40, investments in CLOs are periodically assessed for other-than-temporary impairment ("OTTI"). When the Company determines that a CLO has OTTI, the amortized cost basis of the CLO is written down as of the date of the determination based on events and information evaluated and that write-down is recognized as a realized loss.

35

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Dividend Income

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies.

Dividend income from SLF is recorded on accrual basis once dividends are declared by SLF's board of directors. Distributions from SLF are evaluated at the time of distribution to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions as dividend income unless there are sufficient accumulated tax-basis earnings and profit in SLF prior to distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

Fee Income

    Fee income, such as structuring fees, origination, closing, amendment fees, commitment, termination, and other upfront fees are generally non-recurring and are recognized as income when earned, either upon receipt or amortized into income. Upon the re-payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment, and other upfront fees are recorded as income.

Payment-in-Kind Interest/Dividends

    The Company may hold debt and equity investments in its portfolio that contain payment-in-kind (“PIK”) interest and dividend provisions. PIK interest and PIK dividend, which represent contractually deferred interest or dividends that add to the investment balance that is generally due at maturity, are recorded on accrual basis to the extent such amounts are expected to be collected.

Non-accrual Income

    Investments may be placed on non-accrual status when principal or interest payments are past due and/or when there is reasonable doubt that principal or interest will be collected. Accrued interest which may include un-capitalized PIK interest is generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.

Net Realized Gain or Loss and Net Change in Unrealized Appreciation or Depreciation

    Gain or loss on the sale of investments is calculated using the specific identification method. The Company measures realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when a gain or loss is realized.

Income Taxes

    The Company has elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Code. Generally, a RIC is not subject to federal income taxes in respect of each taxable year if it distributes dividends for federal income tax purposes to stockholders of an amount generally equal to at least 90% of ‘‘investment company taxable income,’’ as defined in the Code, and determined without regard to any deduction for dividends paid. Distributions declared prior to the filing of the previous year's tax return and paid up to twelve months after the previous tax year can be carried back to the prior tax year in determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its ability to be subject to be taxed as a RIC each year. The Company may be subject to federal excise tax imposed at a rate of 4% on certain undistributed amounts. See Note 14 - Income Tax Information and Distributions to Stockholders for additional information.

36

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Note 3 — Fair Value of Financial Instruments

    The Company’s fair value measurements are classified into a fair value hierarchy in accordance with ASC Topic 820, Fair Value Measurement, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

    The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, if any, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:

•Level 1—Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

•Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

•Level 3—Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

    The determination of where an asset or liability falls in the above hierarchy requires significant judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter.

    For investments for which Level 1 inputs, such as quoted prices, were not available at June 30, 2022 and December 31, 2021, the investments were valued at fair value as determined in good faith using the valuation policy approved by the Board of Directors using Level 2 and Level 3 inputs. The Company evaluates the source of inputs, including any markets in which the Company's investments are trading, in determining fair value. Due to the inherent uncertainty in the valuation process, the estimate of fair value of the Company’s investment portfolio at June 30, 2022 and December 31, 2021 may differ materially from values that would have been used had a ready market for the securities existed.

    In addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the Board of Directors. Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis the Company performs an analysis of each investment to determine fair value as described below.

    Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. The Company may also obtain quotes with respect to certain of the Company's investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, the Company uses the quote obtained.

37

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

    Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the Company may take into account in fair value pricing the Company's investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

    For an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC Topic 946, as of the Company's measurement date.

    For investments in Collateralized Securities, the Adviser models both the assets and liabilities of each Collateralized Securities' capital structure. The model uses a waterfall engine to store the collateral data, generate cash flows from the assets, and distribute the cash flows to the liability structure based on the contractual priority of payments. The cash flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk, among others. In addition, the Adviser considers broker quotations and/or comparable trade activity, which are considered as inputs to determining fair value when available.

    As part of the Company's quarterly valuation process, the Adviser may be assisted by one or more independent valuation firms engaged by the Company. The Board of Directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the independent valuation firm(s) (to the extent applicable).

    Determination of fair values involves subjective judgments and estimates. Accordingly, the notes to the consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations on the consolidated financial statements.

    For discussion of the fair value measurement of the Company's borrowings, refer to Note 5 - Borrowings.

    For discussion of the fair value measurement of the Company's foreign currency contracts, refer to Note 6 - Derivatives.

    The following table presents fair value measurements of investments, by major class, as of June 30, 2022, according to the fair value hierarchy:

			Fair Value Measurements
			Level 1						Level 2						Level 3						Measured at Net Asset Value (1)						Total
Senior Secured First Lien Debt			$	—					$	45,233					$	1,799,415					$	—					$	1,844,648
Senior Secured Second Lien Debt			—						22,149						214,724						—						236,873
Subordinated Debt			—						—						111,514						—						111,514
Collateralized Securities			—						—						31,850						—						31,850
Equity/Other			3,881						4,958						207,389						10,908						227,136
FBLC Senior Loan Fund, LLC			—						—						304,934						—						304,934
Total			$	3,881					$	72,340					$	2,669,826					$	10,908					$	2,756,955

______________

(1) In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient election have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and liabilities.

38

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

    The following table presents fair value measurements of investments, by major class, as of December 31, 2021, according to the fair value hierarchy:

			Fair Value Measurements
			Level 1						Level 2						Level 3						Measured at Net Asset Value (1)						Total
Senior Secured First Lien Debt			$	—					$	51,854					$	1,779,316					$	—					$	1,831,170
Senior Secured Second Lien Debt			—						24,909						219,023						—						243,932
Subordinated Debt			—						—						118,077						—						118,077
Collateralized Securities			—						—						37,097						—						37,097
Equity/Other			4,687						5,442						218,444						15,181						243,754
FBLC Senior Loan Fund, LLC			—						—						304,934						—						304,934
Total			$	4,687					$	82,205					$	2,676,891					$	15,181					$	2,778,964

______________

(1) In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient election have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and liabilities.

    The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended June 30, 2022:

			Senior Secured First Lien Debt						Senior Secured Second Lien Debt						Subordinated Debt						Collateralized Securities						Equity/Other (1)						Total
Balance as of December 31, 2021			$	1,779,316					$	219,023					$	118,077					$	37,097					$	523,378					$	2,676,891
Purchases and other adjustments to cost			191,672						827						9,020						237						489						202,245
Sales and repayments			(159,537)						(2,981)						(15,537)						(2,533)						(15,892)						(196,480)
Net realized gain (loss)			318						(129)						—						—						10,601						10,790
Transfers in			10,243						10,882						—						—						—						21,125
Transfers out			(21,710)						(8,541)						—						—						—						(30,251)
Net change in unrealized depreciation on investments			(887)						(4,357)						(46)						(2,951)						(6,253)						(14,494)
Balance as of June 30, 2022			$	1,799,415					$	214,724					$	111,514					$	31,850					$	512,323					$	2,669,826
Net change in unrealized appreciation (depreciation) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:			$	(313)					$	(4,622)					$	(46)					$	(2,951)					$	1,004					$	(6,928)

_______________

(1) Includes FBLC's investment in FBLC Senior Loan Fund, LLC.

For the six months ended June 30, 2022, transfers from Level 2 to Level 3 were due to current assessments of investment liquidity and a decrease in the number of observable market inputs. For the six months ended June 30, 2022, transfers from Level 3 to Level 2 were due to an increase in the number of observable market inputs.

39

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

    The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended December 31, 2021:

			Senior Secured First Lien Debt						Senior Secured Second Lien Debt						Subordinated Debt						Collateralized Securities						Equity/Other						Total
Balance as of December 31, 2020			$	1,307,957					$	186,899					$	108,610					$	106,525					$	208,793					$	1,918,784
Purchases and other adjustments to cost			1,077,201						83,554						115,838						422						395,008			(1)			1,672,023
Sales and repayments			(664,874)						(68,648)						(106,646)						(84,250)						(119,493)						(1,043,911)
Net realized gain (loss)			(12,043)						382						2,561						(4,677)						25,959						12,182
Transfers in			90,853						25,018						—						—						—						115,871
Transfers out			(63,570)						(13,094)						—						—						(1,224)						(77,888)
Net change in unrealized appreciation (depreciation) on investments			43,792						4,912						(2,286)						19,077						14,335						79,830
Balance as of December 31, 2021			$	1,779,316					$	219,023					$	118,077					$	37,097					$	523,378					$	2,676,891
Net change in unrealized appreciation (depreciation) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:			$	18,655					$	4,052					$	504					$	10,436					$	18,515					$	52,162

_______________

(1) Includes $304.9 million of purchases related to FBLC Senior Loan Fund, LLC.

For the year ended December 31, 2021, transfers from Level 2 to Level 3 were due to current assessments of investment liquidity and a decrease in the number of observable market inputs. For the year ended December 31, 2021, transfers from Level 3 to Level 2 were due to an increase in the number of observable market inputs.

The composition of the Company’s investments as of June 30, 2022, at amortized cost and fair value, were as follows:

			Investments at Amortized Cost						Investments at Fair Value						Fair Value Percentage of Total Portfolio
Senior Secured First Lien Debt			$	1,882,170					$	1,844,648					66.9		%
Senior Secured Second Lien Debt			249,245						236,873						8.6
Subordinated Debt			111,110						111,514						4.0
Collateralized Securities			48,787						31,850						1.2
Equity/Other			185,438						227,136						8.2
FBLC Senior Loan Fund, LLC			304,934						304,934						11.1
Total			$	2,781,684					$	2,756,955					100.0		%

    

40

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

The composition of the Company’s investments as of December 31, 2021, at amortized cost and fair value, were as follows:

			Investments at Amortized Cost						Investments at Fair Value						Fair Value Percentage of Total Portfolio
Senior Secured First Lien Debt			$	1,865,403					$	1,831,170					65.9		%
Senior Secured Second Lien Debt			251,149						243,932						8.8
Subordinated Debt			117,627						118,077						4.2
Collateralized Securities			51,083						37,097						1.3
Equity/Other			193,421						243,754						8.8
FBLC Senior Loan Fund, LLC			304,934						304,934						11.0
Total			$	2,783,617					$	2,778,964					100.0		%

41

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Significant Unobservable Inputs

    The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of June 30, 2022. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.

Range

Asset Category

Fair Value

Primary Valuation Technique

Unobservable Inputs

Minimum

Maximum

Weighted Average (a)

Senior Secured First Lien Debt

$

951,737

Discounted Cash Flow

Market Yield

6.75%

22.85%

10.05%

Senior Secured First Lien Debt

727,509

Yield Analysis

Market Yield

7.46%

15.94%

9.52%

Senior Secured First Lien Debt (c)

93,831

N/A

N/A

N/A

N/A

N/A

Senior Secured First Lien Debt

17,759

Waterfall Analysis

EBITDA Multiple

2.80x

8.80x

6.67x

Senior Secured First Lien Debt

8,579

Waterfall Analysis

Revenue Multiple

0.24x

0.75x

0.30x

Senior Secured Second Lien Debt

140,979

Discounted Cash Flow

Market Yield

9.25%

13.34%

10.56%

Senior Secured Second Lien Debt

67,429

Yield Analysis

Market Yield

9.63%

14.03%

12.96%

Senior Secured Second Lien Debt

6,316

Waterfall Analysis

EBITDA Multiple

5.08x

6.75x

6.36x

Subordinated Debt

107,328

Waterfall Analysis

Tangible Net Asset Value Multiple

1.61x

1.94x

1.75x

Subordinated Debt (b)

4,186

Yield Analysis

Market Yield

22.88%

22.88%

22.88%

Collateralized Securities

31,850

Discounted Cash Flow

Discount Rate

12.50%

19.50%

17.00%

Equity/Other

159,003

Waterfall Analysis

Tangible Net Asset Value Multiple

1.61x

1.94x

1.78x

Equity/Other

17,173

Waterfall Analysis

EBITDA Multiple

3.00x

20.82x

8.57x

Equity/Other

14,427

Waterfall Analysis

Discount Rate

22.00%

22.00%

22.00%

Equity/Other (b)

8,467

Discounted Cash Flow

Discount Rate

20.00%

20.00%

20.00%

Equity/Other (b)

2,676

Waterfall Analysis

TBV Multiple

4.60x

4.60x

4.60x

Equity/Other

2,381

Waterfall Analysis

Revenue Multiple

0.30x

2.54x

2.52x

Equity/Other

1,592

Discounted Cash Flow

Market Yield

8.80%

10.50%

9.64%

Equity/Other (b)(d)

1,552

Waterfall Analysis

Asset Recovery

$191.00

$191.00

$191.00

Equity/Other (b)(c)

118

N/A

N/A

N/A

N/A

N/A

FBLC Senior Loan Fund, LLC (b)

304,934

Discounted Cash Flow

Discount Rate

14.90%

14.90%

14.90%

Total

$

2,669,826

______________

(a)Weighted averages are calculated based on fair value of investments.

(b)This asset category contains one investment.

(c)Investment(s) were valued based on recent or pending transactions expected to close after the valuation date.

(d)Values shown in millions.

    There were no significant changes in valuation approach or technique as of June 30, 2022.

42

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of December 31, 2021. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.

Range

Asset Category

Fair Value

Primary Valuation Technique

Unobservable Inputs

Minimum

Maximum

Weighted Average (a)

Senior Secured First Lien Debt

$

1,258,128

Discounted Cash Flow

Market Yield

5.00%

23.71%

8.15%

Senior Secured First Lien Debt (c)

272,647

N/A

N/A

N/A

N/A

N/A

Senior Secured First Lien Debt

214,761

Yield Analysis

Market Yield

1.82%

14.14%

7.93%

Senior Secured First Lien Debt

27,022

Waterfall Analysis

EBITDA Multiple

4.30x

10.16x

8.08x

Senior Secured First Lien Debt

6,758

Waterfall Analysis

Revenue Multiple

0.24x

0.24x

0.24x

Senior Secured Second Lien Debt

120,275

Discounted Cash Flow

Market Yield

7.00%

19.54%

9.17%

Senior Secured Second Lien Debt

64,578

Yield Analysis

Market Yield

8.03%

24.78%

10.92%

Senior Secured Second Lien Debt (c)

31,387

N/A

N/A

N/A

N/A

N/A

Senior Secured Second Lien Debt

2,783

Waterfall Analysis

EBITDA Multiple

6.26x

6.30x

6.29x

Subordinated Debt (b)

75,000

Waterfall Analysis

Tangible Net Asset Value Multiple

1.65x

1.65x

1.65x

Subordinated Debt (b) (c)

37,963

N/A

N/A

N/A

N/A

N/A

Subordinated Debt (b)

3,577

Waterfall Analysis

EBITDA Multiple

11.12x

11.12x

11.12x

Subordinated Debt (b)

1,537

Discounted Cash Flow

Discount Rate

8.75%

8.75%

8.75%

Collateralized Securities

37,097

Discounted Cash Flow

Discount Rate

9.00%

17.00%

14.62%

Equity/Other (c)

89,678

N/A

N/A

N/A

N/A

N/A

Equity/Other (b)

65,609

Waterfall Analysis

Tangible Net Asset Value Multiple

1.65x

1.65x

1.65x

Equity/Other

26,981

Waterfall Analysis

Discount Rate

17.50%

17.50%

17.50%

Equity/Other

15,209

Waterfall Analysis

EBITDA Multiple

2.75x

12.00x

7.01x

Equity/Other

13,204

Discounted Cash Flow

Discount Rate

8.75%

12.50%

11.23%

Equity/Other

3,030

Waterfall Analysis

Revenue Multiple

0.15x

2.70x

2.58x

Equity/Other (b)

2,676

Waterfall Analysis

TBV Multiple

5.50x

5.50x

5.50x

Equity/Other

2,057

Discounted Cash Flow

Market Yield

9.75%

12.54%

11.48%

FBLC Senior Loan Fund, LLC (b)

304,934

Discounted Cash Flow

Discount Rate

13.03%

13.03%

13.03%

Total

$

2,676,891

______________

(a)Weighted averages are calculated based on fair value of investments.

(b)This asset category contains one investment.

(c)Investment(s) were valued based on recent or pending transactions expected to close after the valuation date.

    There were no significant changes in valuation approach or technique as of December 31, 2021.

Level 3 Inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category include investments in privately held entities where the fair value is based on unobservable inputs.

Increases or decreases in any of the above unobservable inputs in isolation would result in a lower or higher fair value measurement for such assets.

    The income and market approaches were used in the determination of fair value of certain Level 3 assets as of June 30, 2022 and December 31, 2021. The significant unobservable inputs used in the income approach are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates is risk of default, rating of the investment, call provisions and comparable company investments. The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies. Increases or decreases in market comparable transactions or market multiples would result in an increase or decrease, respectively, in the fair value.

43

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

    Valuations of loans, corporate debt, and other debt obligations are generally based on discounted cash flow techniques, for which the significant inputs are the amount and timing of expected future cash flows, market yields and recovery assumptions. The significant inputs are generally determined based on relative value analysis, which incorporate comparisons to other debt instruments for which observable prices or broker quotes are available. Other valuation methodologies are used as appropriate including market comparables, transactions in similar instruments and recovery/liquidation analysis. The Company also considers the use of EBITDA multiples, revenue multiples, tangible net asset value multiples, TBV multiples, and other relevant multiples on its debt and equity investments to determine any credit gains or losses in certain instances. Increases or decreases in either of these inputs in isolation may result in a significantly lower or higher fair value measurement of the respective subject instrument.

As of June 30, 2022, the Company had five portfolio companies on non-accrual with a total amortized cost of $44.7 million and fair value of $10.0 million, which represented 1.6% and 0.4% of the investment portfolio's total amortized cost and fair value, respectively. As of December 31, 2021, the Company had six portfolio companies on non-accrual with a total amortized cost of $42.5 million and fair value of $12.2 million, which represented 1.5%, and 0.4% of the investment portfolio's total amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - for additional details regarding the Company’s non-accrual policy.

44

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

FBLC Senior Loan Fund, LLC

On January 20, 2021, FBLC and Cliffwater Corporate Lending Fund (“CCLF”) formed a joint venture, FBLC Senior Loan Fund, LLC (the “SLF”), that invests primarily in senior secured loans, and to a lesser extent may invest in mezzanine loans, unsecured loans and equity of predominantly private U.S. middle-market companies. SLF was formed as a Delaware limited liability company and is not consolidated by FBLC for financial reporting purposes. FBLC provides capital to SLF in the form of LLC equity interests. At formation, FBLC and CCLF owned 87.5% and 12.5%, respectively, of the LLC equity interests of SLF. As of June 30, 2022 and December 31, 2021, FBLC and CCLF owned 79.8% and 20.2%, respectively, of the LLC equity interests of SLF. Profit and loss are allocated based on each members' ownership percentage of the joint venture's net asset value. SLF has an Administrative and Loan Services Agreement with BSP, an affiliate of the Company, pursuant to which BSP provides certain operational and valuation services for SLF's investments; as well as certain agreements with third-party service providers. FBLC and CCLF each appoint two members to SLF's four-person board of members. All material decisions with respect to SLF, including those involving its investment portfolio, require unanimous approval of a quorum of the board of members. Quorum is defined as (i) the presence of two members of the board of members; provided that at least one individual is present that was elected, designated or appointed by each member; (ii) the presence of three members of the board of members; provided that the individual that was elected, designated or appointed by the member with only one individual present shall be entitled to cast two votes on each matter; and (iii) the presence of four members of the board of members; provided that two individuals are present that were elected, designated or appointed by each member.

As part of the initial contribution to SLF, FBLC contributed $751.8 million of assets, including $664.2 million of investments and $42.4 million of cash, as well as $446.9 million worth of liabilities, including the Citi Credit Facility (as defined in Note 5) debt of $344.4 million in exchange for $304.9 million of equity in SLF. As of June 30, 2022 and December 31, 2021, FBLC’s investment in SLF consisted of equity contributions of $304.9 million. FBLC’s investment in SLF is classified as “Equity/Other” on the Consolidated Schedule of Investments, and other disclosures unless otherwise indicated. Subsequent to the initial contribution, FBLC may sell investments to SLF. For the three and six months ended June 30, 2022, FBLC had not sold any investments to SLF. For the year ended December 31, 2021, FBLC had sold $322.7 million of investments to SLF. As of June 30, 2022, $0.2 million of net accounts payable relates to investments sold by FBLC to SLF, which is reflected on the Consolidated Statements of Assets and Liabilities. As of December 31, 2021, $0.1 million of net accounts receivable relates to investments sold by FBLC to SLF, which is reflected on the Consolidated Statements of Assets and Liabilities.

Below is a summary of SLF’s portfolio as of June 30, 2022 and December 31, 2021. A listing of the individual investments in SLF’s portfolio as of such dates can be found below:

						June 30, 2022						December 31, 2021
Total assets						$	1,069,210					$	1,195,960
Total investments (1)						$	971,257					$	1,088,337
Weighted Average Current Yield for Total Portfolio (2)						7.1		%				5.4		%
Number of Portfolio companies in SLF						174						172
Largest portfolio company investment (1)						$	20,558					$	27,965
Total of five largest portfolio company investments (1)						$	93,622					$	113,297

_____________________

(1) At fair value.

(2) Includes the effect of the amortization or accretion of loan premiums or discounts.

SLF may invest in portfolio companies in the same industries in which FBLC directly invests.

Below is a listing of SLF’s individual investments as of June 30, 2022:

June 30, 2022 (Unaudited)
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
Senior Secured First Lien Debt
Accentcare, Inc. (b)						Healthcare						L+4.00% (6.08%)						6/22/2026						$	9,979					$	9,979					$	8,657					2.6		%
Access Cig, LLC (b)						Business Services						L+3.75% (5.33%)						2/27/2025						4,210						4,200						3,961						1.2		%
Acrisure, LLC (b)						Financials						L+3.50% (5.17%)						2/15/2027						20,216						19,830						18,497						5.5		%
Adtalem Global Education, Inc.						Education						5.50%						3/1/2028						1,042						1,042						936						0.3		%

45

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

June 30, 2022 (Unaudited)
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
Adtalem Global Education, Inc. (f)						Education						L+4.00% (5.60%)						8/11/2028						$	1,034					$	1,034					$	984					0.3		%
Advisor Group, Inc. (f)						Financials						L+4.50% (6.17%)						7/31/2026						7,863						7,863						7,466						2.2		%
Alchemy US Holdco 1, LLC (b)						Industrials						L+5.50% (7.17%)						10/10/2025						15,555						15,426						14,865						4.4		%
Altice Financing, SA						Telecom						5.00%						1/15/2028						2,000						1,932						1,585						0.5		%
Alvogen Pharma US, Inc. (b)						Healthcare						L+5.25% (7.50%)						12/31/2023						12,177						12,098						10,911						3.3		%
Amentum Government Services Holdings, LLC (f)						Industrials						L+3.75% (5.42%)						1/29/2027						1,980						1,969						1,880						0.6		%
Amentum Government Services Holdings, LLC (b)						Industrials						S+4.00% (4.78%)						2/15/2029						5,000						4,930						4,750						1.4		%
American Airlines Inc/AAdvantage Loyalty IP, Ltd. (b)						Transportation						L+4.75% (5.81%)						4/20/2028						8,316						8,244						7,918						2.4		%
American Rock Salt Company, LLC (f)						Chemicals						L+4.00% (5.67%)						6/9/2028						4,753						4,754						4,278						1.3		%
AmWINS Group, Inc. (f)						Financials						L+2.25% (3.92%)						2/19/2028						4,950						4,890						4,666						1.4		%
AP Gaming I, LLC (f)						Gaming/Lodging						S+4.00% (6.20%)						2/9/2029						7,448						7,323						7,094						2.1		%
Apollo Commercial Real Estate Finance, Inc.						Financials						4.63%						6/15/2029						3,000						3,000						2,221						0.7		%
AppLovin Corp. (b)						Media/Entertainment						L+3.00% (5.25%)						10/25/2028						8,978						8,958						8,501						2.5		%
Artera Services, LLC (f)						Utilities						L+3.50% (5.75%)						3/6/2025						2,475						2,463						1,950						0.6		%
Ascensus Holidngs, Inc. (b)						Business Services						L+3.50% (5.81%)						8/2/2028						7,960						7,955						7,403						2.2		%
Astoria Energy, LLC (f)						Utilities						L+3.50% (5.17%)						12/10/2027						1,949						1,949						1,831						0.6		%
Astro AB Merger Sub, Inc. (f)						Financials						L+4.25% (6.50%)						4/30/2024						3,823						3,821						3,792						1.1		%
Asurion, LLC (b)						Business Services						L+3.25% (4.92%)						12/23/2026						4,950						4,876						4,476						1.3		%
Athenahealth, Inc. (b)						Healthcare						S+3.50% (5.01%)						2/15/2029						12,484						12,424						11,462						3.4		%
Athletico Management, LLC (f)						Healthcare						S+4.25% (5.16%)						2/15/2029						5,000						4,976						4,734						1.4		%
Avaya Holdings Corp. (b)						Technology						L+4.00% (5.32%)						12/15/2027						12,475						12,475						9,419						2.8		%
Avis Budget Car Rental, LLC (b)						Transportation						S+3.50% (5.13%)						3/8/2029						4,988						4,843						4,763						1.4		%
Bally's Corp. (b)						Gaming/Lodging						L+3.25% (4.37%)						10/2/2028						2,716						2,692						2,515						0.8		%
BBB Industries, LLC (b)						Transportation						L+4.50% (6.17%)						8/1/2025						11,791						11,714						11,679						3.5		%
BCP Renaissance, LLC (f)						Energy						L+3.50% (5.17%)						10/31/2024						1,986						1,973						1,911						0.6		%
Bella Holding Company, LLC (f)						Healthcare						L+3.75% (5.42%)						5/10/2028						2,966						2,941						2,772						0.8		%
Blackstone CQP Holdco, LP (b)						Industrials						L+3.75% (6.00%)						6/5/2028						7,927						7,893						7,455						2.2		%
BMC Software Finance, Inc. (b)						Technology						L+3.75% (5.42%)						10/2/2025						12,674						12,702						11,777						3.5		%
Bomgar Corp. (f)						Technology						L+4.00% (5.67%)						4/18/2025						3,869						3,880						3,705						1.1		%
Cablevision Lightpath, LLC						Telecom						3.88%						9/15/2027						2,000						1,930						1,640						0.5		%
CareCentrix, Inc. (b)						Healthcare						L+4.50% (6.75%)						4/3/2025						20,558						19,949						20,558						6.1		%
CDK Global, Inc. (f)						Software/Services						S+4.50% (5.68%)						6/8/2029						2,625						2,546						2,474						0.7		%
CLP Health Services, Inc. (b)						Healthcare						L+4.25% (7.13%)						12/31/2026						12,850						12,808						12,080						3.6		%
Cnt Holdings I Corp (f)						Consumer						L+3.50% (4.69%)						11/8/2027						3,456						3,456						3,274						1.0		%
CommerceHub, Inc. (f)						Technology						L+4.00% (6.25%)						12/29/2027						9,590						9,602						8,415						2.5		%
Community Care Health Network, LLC (b)						Healthcare						L+4.75% (6.42%)						2/17/2025						9,712						9,688						8,456						2.5		%
Compass Power Generation, LLC (b)						Utilities						S+4.25% (5.89%)						4/14/2029						4,882						4,739						4,659						1.4		%
Connect Finco SARL (f)						Telecom						L+3.50% (5.17%)						12/11/2026						7,500						7,521						6,881						2.1		%
Connectwise, LLC (f)						Software/Services						L+3.50% (5.75%)						9/29/2028						6,965						6,957						6,361						1.9		%
Conservice Midco, LLC (b)						Business Services						L+4.25% (5.92%)						5/13/2027						7,661						7,674						7,552						2.3		%
Conterra Ultra Broadband, LLC (b)						Telecom						S+4.75% (6.38%)						4/30/2026						6,676						6,676						6,676						2.0		%
Corelogic, Inc. (b)						Business Services						L+3.50% (5.19%)						6/2/2028						7,940						7,927						6,582						2.0		%
Directv Financing, LLC (b)						Media/Entertainment						L+5.00% (6.67%)						8/2/2027						4,663						4,622						4,280						1.3		%
Dish Dbs Corp.						Cable						5.25%						12/1/2026						700						700						549						0.2		%
Dish Dbs Corp.						Cable						5.75%						12/1/2028						1,000						1,000						740						0.2		%

46

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

June 30, 2022 (Unaudited)
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
Division Holding Corp. (b)						Business Services						L+4.75% (6.42%)						5/27/2028						$	8,695					$	8,705					$	8,152					2.4		%
Dynasty Acquisition Co., Inc. (e)						Industrials						L+3.50% (5.17%)						4/6/2026						2,810						2,656						2,583						0.8		%
Dynasty Acquisition Co., Inc. (e)						Industrials						L+3.50% (5.17%)						4/6/2026						5,226						4,940						4,805						1.4		%
Echo Global Logistics, Inc. (b)						Transportation						L+3.50% (5.17%)						11/23/2028						3,322						3,315						3,089						0.9		%
Edelman Financial Services, LLC (b)						Financials						L+3.50% (5.17%)						4/7/2028						1,990						1,951						1,837						0.6		%
Edgewater Generation, LLC (b)						Utilities						L+3.75% (5.42%)						12/13/2025						2,440						2,427						2,062						0.6		%
Emerald 2, Ltd. (b)						Industrials						L+3.50% (5.17%)						7/12/2028						515						513						491						0.1		%
Flex Acquisition Company, Inc. (f)						Paper & Packaging						S+4.25% (5.88%)						3/30/2029						2,500						2,439						2,335						0.7		%
Florida Food Products, LLC (f)						Food & Beverage						L+5.00% (6.67%)						10/18/2028						7,980						7,870						7,860						2.3		%
Foley Products Co, LLC (b)						Industrials						S+4.75% (6.95%)						12/29/2028						3,192						3,161						3,136						0.9		%
Frontier Communications Corp.						Telecom						5.00%						5/1/2028						1,240						1,298						1,061						0.3		%
Frontier Communications Corp. (b)						Telecom						L+3.75% (6.06%)						5/1/2028						19,327						19,313						18,042						5.4		%
Geon Performance Solutions, LLC (b)						Chemicals						L+4.50% (6.17%)						8/18/2028						4,682						4,651						4,661						1.4		%
Gordian Medical, Inc. (b)						Healthcare						L+6.25% (8.50%)						1/31/2027						11,005						10,943						10,135						3.0		%
Greeneden U.S. Holdings I, LLC (b)						Software/Services						L+4.00% (5.67%)						12/1/2027						4,915						4,819						4,686						1.4		%
GVC Holdings Gibraltar, Ltd. (f)						Gaming/Lodging						L+2.25% (3.74%)						3/29/2027						4,950						4,944						4,728						1.4		%
HAH Group Holding Company, LLC (b)						Healthcare						S+5.00% (7.21%)						10/29/2027						734						734						723						0.2		%
HAH Group Holding Company, LLC (b)						Healthcare						S+5.00% (7.05%)						10/29/2027						5,798						5,725						5,711						1.7		%
Hamilton Projects Acquiror, LLC (f)						Utilities						L+4.50% (6.75%)						6/17/2027						5,608						5,585						5,363						1.6		%
Heartland Dental, LLC (e)						Healthcare						L+3.50% (5.17%)						4/30/2025						4,132						3,942						3,828						1.1		%
Hertz Corp. (b) (f)						Transportation						L+3.25% (4.92%)						6/30/2028						4,164						4,150						3,913						1.2		%
Hertz Corp. (b) (f)						Transportation						L+3.25% (4.92%)						6/30/2028						793						791						746						0.2		%
HireRight, Inc. (f)						Business Services						L+3.75% (5.42%)						7/11/2025						5,207						5,190						4,942						1.5		%
Hudson River Trading, LLC (b)						Financials						S+3.00% (4.64%)						3/20/2028						5,419						5,354						5,055						1.5		%
ICP Industrial, Inc. (f)						Chemicals						L+3.75% (6.00%)						12/29/2027						6,940						6,932						6,043						1.8		%
IDERA, Inc. (f)						Technology						L+3.75% (5.47%)						3/2/2028						6,948						6,957						6,387						1.9		%
Ineos Us Finance, LLC (f)						Chemicals						L+2.50% (4.17%)						11/8/2028						3,990						3,985						3,788						1.1		%
Intelsat Jackson Holdings, SA						Telecom						S+4.25% (4.92%)						2/1/2029						9,237						9,147						8,450						2.5		%
Iri Holdings, Inc. (b)						Business Services						L+4.25% (5.92%)						12/1/2025						7,779						7,762						7,779						2.3		%
Jack Ohio Finance, LLC (f)						Gaming/Lodging						L+4.75% (6.42%)						10/4/2028						3,980						3,963						3,841						1.1		%
Jane Street Group, LLC						Financials						4.50%						11/15/2029						5,000						4,855						4,398						1.3		%
Jump Financial, LLC (b)						Financials						S+4.50% (6.82%)						8/7/2028						7,456						7,327						6,897						2.1		%
Kissner Milling Co., Ltd.						Industrials						4.88%						5/1/2028						9,000						8,878						7,486						2.2		%
LABL, Inc. (b)						Paper & Packaging						L+5.00% (6.67%)						10/29/2028						3,980						3,925						3,668						1.1		%
Lightstone Holdco, LLC (f)						Utilities						S+5.75% (7.02%)						1/29/2027						413						366						369						0.1		%
Lightstone Holdco, LLC (f)						Utilities						S+5.75% (7.02%)						1/29/2027						7,314						6,486						6,546						2.0		%
Liquid Tech Solutions Holdings, LLC (b) (f)						Industrials						L+4.75% (7.00%)						3/20/2028						10,164						10,117						9,809						2.9		%
Luxembourg Investment Co., 428 SARL (b)						Chemicals						S+5.00% (7.05%)						1/3/2029						3,864						3,829						3,699						1.1		%
Madison IAQ, LLC						Industrials						4.13%						6/30/2028						2,000						1,984						1,652						0.5		%
Medallion Midland Acquisition, LP (f)						Energy						L+3.75% (5.42%)						10/18/2028						5,600						5,570						5,359						1.6		%
MH Sub I, LLC (f)						Business Services						L+3.75% (5.42%)						9/13/2024						8,597						8,592						8,079						2.4		%
Michael Baker International, LLC (b)						Industrials						L+5.00% (6.67%)						12/1/2028						3,317						3,287						3,219						1.0		%
MicroStrategy, Inc.						Software/Services						6.13%						6/15/2028						1,500						1,500						1,193						0.4		%
Monitronics International, Inc. (b)						Business Services						L+7.50% (8.75%)						3/29/2024						5,480						5,314						3,544						1.1		%
MPH Acquisition Holdings, LLC						Healthcare						5.50%						9/1/2028						2,000						1,991						1,783						0.5		%
MPH Acquisition Holdings, LLC (b)						Healthcare						L+4.25% (5.83%)						9/1/2028						4,963						4,876						4,556						1.4		%
MYOB US Borrower, LLC (f)						Business Services						L+4.00% (5.67%)						5/6/2026						5,439						5,427						5,004						1.5		%
Naked Juice, LLC (f)						Food & Beverage						S+3.25% (5.40%)						1/24/2029						1,430						1,427						1,328						0.4		%
National Mentor Holdings, Inc. (f)						Healthcare						L+3.75% (6.01%)						3/2/2028						179						178						155						0.0		%

47

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

June 30, 2022 (Unaudited)
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
National Mentor Holdings, Inc. (b) (f)						Healthcare						L+3.75% (6.01%)						3/2/2028						$	5,473					$	5,449					$	4,727					1.4		%
Nexus Buyer, LLC (f)						Business Services						L+3.75% (5.42%)						11/9/2026						4,466						4,466						4,202						1.3		%
Nouryon Finance B.V. (e)						Chemicals						L+3.00% (5.25%)						10/1/2025						2,326						2,247						2,196						0.7		%
Novae, LLC (f)						Industrials						S+5.00% (5.92%)						12/22/2028						1,111						1,111						1,050						0.3		%
Novae, LLC (f)						Industrials						S+5.00% (5.75%)						12/22/2028						3,879						3,843						3,666						1.1		%
Pathway Vet Alliance, LLC (b)						Healthcare						L+3.75% (6.00%)						3/31/2027						2,985						2,992						2,765						0.8		%
Paysafe Finance, PLC						Software/Services						4.00%						6/15/2029						400						400						286						0.1		%
Peabody Energy Corp. (f)						Energy						L+2.75% (4.37%)						3/31/2025						5,565						5,276						5,160						1.5		%
Peraton Corp. (b)						Industrials						L+3.75% (5.42%)						2/1/2028						2,931						2,899						2,755						0.8		%
Perstorp Holding Ab (b)						Chemicals						L+4.75% (6.25%)						2/27/2026						8,732						8,331						8,552						2.6		%
PG&E Corp. (f)						Utilities						L+3.00% (4.69%)						6/23/2025						10,644						10,676						10,010						3.0		%
Polaris Newco, LLC (f)						Business Services						L+4.00% (5.67%)						6/2/2028						1,990						1,937						1,833						0.5		%
Power Stop, LLC (f)						Transportation						L+4.75% (5.99%)						1/26/2029						3,990						3,952						3,412						1.0		%
Project Accelerate Parent, LLC (e)						Technology						L+4.25% (5.92%)						1/2/2025						16,026						15,504						15,825						4.7		%
Proofpoint, Inc. (b)						Software/Services						L+3.25% (4.83%)						8/31/2028						6,470						6,424						5,999						1.8		%
Protective Industrial Products, Inc. (b)						Industrials						L+4.00% (5.67%)						12/29/2027						9,081						9,045						8,925						2.7		%
Pug, LLC (f)						Technology						L+3.50% (5.17%)						2/12/2027						4,937						4,829						4,443						1.3		%
Quikrete Holdings, Inc. (f)						Industrials						L+3.00% (4.67%)						6/11/2028						7,980						7,940						7,511						2.2		%
Regionalcare Hospital Partners Holdings, Inc.						Healthcare						4.38%						2/15/2027						2,000						2,000						1,752						0.5		%
Regionalcare Hospital Partners Holdings, Inc. (b)						Healthcare						L+3.75% (5.42%)						11/16/2025						5,195						5,212						4,832						1.4		%
Renaissance Learning, Inc. (f)						Software/Services						S+4.50% (5.58%)						3/30/2029						2,000						1,942						1,905						0.6		%
RXB Holdings, Inc. (f)						Healthcare						L+4.50% (6.61%)						12/20/2027						10,154						10,187						9,342						2.8		%
S&S Holdings, LLC (f)						Consumer						L+5.00% (6.75%)						3/11/2028						6,913						6,736						6,913						2.1		%
Safe Fleet Holdings, LLC (b)						Industrials						S+3.75% (4.77%)						2/17/2029						7,481						7,444						6,954						2.1		%
Safety Products/JHC Acquisition Corp. (b)						Industrials						L+4.50% (6.17%)						6/28/2026						934						890						887						0.3		%
Safety Products/JHC Acquisition Corp. (b)						Industrials						L+4.50% (6.17%)						6/28/2026						17,271						16,544						16,408						4.9		%
Schenectady International Group, Inc. (b)						Chemicals						L+4.75% (6.01%)						10/15/2025						19,911						19,808						18,169						5.4		%
SCIH Salt Holdings, Inc. (f)						Industrials						L+4.00% (4.75%)						3/16/2027						3,712						3,686						3,304						1.0		%
SFR Group, SA (b) (e)						Telecom						L+4.00% (5.41%)						8/14/2026						12,640						12,335						11,522						3.4		%
Sierra Acquisition, Inc. (b)						Food & Beverage						L+4.00% (5.67%)						11/11/2024						4,877						4,719						4,657						1.4		%
Sophia, LP (f)						Software/Services						L+3.25% (5.50%)						10/7/2027						2,989						2,991						2,781						0.8		%
Spirit Aerosystems, Inc. (b)						Industrials						L+3.75% (5.42%)						1/15/2025						2,542						2,567						2,473						0.8		%
SSH Group Holdings, Inc. (e)						Education						L+4.25% (6.50%)						7/30/2025						10,464						9,730						9,716						2.9		%
Staples, Inc. (b)						Business Services						L+5.00% (6.29%)						4/16/2026						4,924						4,877						4,269						1.3		%
Station Casinos, LLC (f)						Gaming/Lodging						L+2.25% (3.92%)						2/8/2027						2,266						2,256						2,127						0.6		%
Team Health Holdings, Inc. (e) (f)						Healthcare						S+5.25% (6.78%)						3/2/2027						5,464						5,105						4,569						1.4		%
Tecta America Corp. (f)						Industrials						L+4.25% (5.92%)						4/10/2028						8,999						8,977						8,392						2.5		%
Tenneco, Inc. (e)						Transportation						L+3.00% (4.67%)						10/1/2025						2,954						2,802						2,836						0.8		%
The Dun & Bradstreet Corp. (f)						Business Services						L+3.25% (4.87%)						2/6/2026						4,839						4,856						4,556						1.4		%
TransDigm, Inc. (f)						Industrials						L+2.25% (3.92%)						12/9/2025						2,955						2,940						2,799						0.8		%
Traverse Midstream Partners, LLC (b)						Energy						S+4.25% (5.95%)						9/27/2024						14,532						14,511						13,830						4.1		%
Triton Water Holdings, Inc. (f)						Food & Beverage						L+3.50% (5.75%)						3/31/2028						7,425						7,410						6,547						2.0		%
Truck Hero, Inc. (f)						Transportation						L+3.50% (5.17%)						1/31/2028						1,481						1,478						1,321						0.4		%
TSL Engineered Products, LLC (b)						Industrials						S+4.75% (6.38%)						1/7/2028						7,818						7,752						7,818						2.3		%
United Airlines, Inc. (f)						Transportation						L+3.75% (5.39%)						4/21/2028						3,775						3,764						3,506						1.0		%
University Support Services, LLC (f)						Education						L+3.25% (4.92%)						2/10/2029						4,975						4,958						4,677						1.4		%

48

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

June 30, 2022 (Unaudited)
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
Urban One, Inc.						Media/Entertainment						7.38%						2/1/2028						$	6,000					$	6,182					$	5,138					1.5		%
Venga Finance Sarl (b)						Telecom						L+4.75% (6.71%)						12/4/2028						4,000						3,880						3,807						1.2		%
Veritext Corp. (f)						Business Services						L+3.25% (4.26%)						8/1/2025						3,476						3,440						3,294						1.0		%
Virgin Media Bristol, LLC (f)						Telecom						L+3.25% (4.57%)						1/31/2029						2,500						2,497						2,390						0.7		%
Vyaire Medical, Inc. (f)						Healthcare						L+4.75% (5.75%)						4/16/2025						7,392						6,357						5,623						1.7		%
WaterBridge Midstream Operating, LLC (b)						Energy						L+5.75% (7.39%)						6/22/2026						8,698						7,888						8,201						2.5		%
Watlow Electric Manufacturing Co. (b)						Industrials						L+3.75% (5.42%)						3/2/2028						9,426						9,383						8,797						2.6		%
Western Dental Services, Inc. (f)						Healthcare						L+4.50% (5.28%)						8/18/2028						9,029						9,024						8,392						2.5		%
Western Dental Services, Inc. (f)						Healthcare						L+4.50% (6.17%)						8/18/2028						894						894						831						0.2		%
Wilsonart, LLC (b)						Consumer						L+3.25% (5.51%)						12/31/2026						7,412						7,408						6,546						2.0		%
YI, LLC (e)						Healthcare						L+4.00% (5.67%)						11/7/2024						8,927						8,614						8,838						2.6		%
Subtotal Senior Secured First Lien Debt																														$	906,300					$	851,003					253.9		%
Senior Secured Second Lien Debt
American Rock Salt Company, LLC (b)						Chemicals						L+7.25% (8.92%)						6/11/2029						$	1,943					$	1,924					$	1,858					0.6		%
Asurion, LLC (b)						Business Services						L+5.25% (6.92%)						1/31/2028						7,632						7,603						6,487						1.9		%
Barracuda Networks, Inc. (b)						Software/Services						L+6.75% (7.99%)						10/30/2028						3,540						3,559						3,540						1.1		%
CDS U.S. Intermediate Holdings, Inc.						Media/Entertainment						L+8.00% (10.23%) 7.00% PIK						11/24/2027						5,270						5,253						5,146						1.5		%
Edelman Financial Services, LLC (b) (e)						Financials						L+6.75% (8.42%)						7/20/2026						7,972						7,607						7,257						2.2		%
IDERA, Inc. (b) (e)						Technology						L+6.75% (7.82%)						3/2/2029						1,545						1,504						1,518						0.4		%
Tecta America Corp. (b)						Industrials						L+8.50% (10.17%)						4/9/2029						4,998						4,973						4,998						1.5		%
TIBCO Software, Inc. (b)						Technology						L+7.25% (8.31%)						3/3/2028						13,020						13,161						12,740						3.8		%
Subtotal Senior Secured Second Lien Debt																														$	45,584					$	43,544					13.0		%
Collateralized Securities
Collateralized Securities - Debt Investments
AIG CLO, Ltd. 21-1A F						Diversified Investment Vehicles						L+6.90% (8.04%)						4/22/2034						$	1,410					$	1,288					$	1,054					0.3		%
Battalion CLO, Ltd. 21-17A F						Diversified Investment Vehicles						L+7.50% (8.56%)						3/9/2034						1,224						1,135						935						0.3		%
Carlyle GMS CLO, 16-3A FRR						Diversified Investment Vehicles						L+8.60% (9.66%)						7/20/2034						2,100						1,988						1,646						0.5		%
Covenant Credit Partners CLO, Ltd. 17 1A E						Diversified Investment Vehicles						L+6.45% (7.49%)						10/15/2029						2,500						2,288						2,094						0.6		%
Eaton Vance CDO, Ltd. 15-1A FR						Diversified Investment Vehicles						L+7.97% (9.03%)						1/20/2030						2,000						1,747						1,565						0.5		%
Elevation CLO, Ltd. 13-1A D2						Diversified Investment Vehicles						L+7.65% (9.06%)						8/15/2032						2,000						1,962						1,824						0.6		%
Fortress Credit BSL, Ltd. 22-1A E						Diversified Investment Vehicles						S+8.15% (9.27%)						10/23/2034						1,000						980						948						0.3		%
Great Lakes CLO, Ltd. 21-6A E (f)						Diversified Investment Vehicles						L+8.03% (9.07%)						1/15/2034						5,150						4,953						4,464						1.3		%
Greywolf CLO, Ltd. 20-3RA ER						Diversified Investment Vehicles						S+9.00% (9.91%)						4/15/2033						1,000						876						819						0.2		%
Hayfin Kingsland XI, Ltd. 19-2A ER						Diversified Investment Vehicles						L+7.72% (8.78%)						10/20/2034						2,500						2,428						2,165						0.6		%
Highbridge Loan Management, Ltd. 11A-17 E (f)						Diversified Investment Vehicles						L+6.10% (7.51%)						5/6/2030						3,000						2,703						2,598						0.8		%

49

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

June 30, 2022 (Unaudited)
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
Jamestown CLO, Ltd. 22-18A E						Diversified Investment Vehicles						S+7.87% (9.40%)						7/25/2035						$	3,000					$	2,730					$	2,740					0.8		%
KKR Financial CLO, Ltd. 15 FR						Diversified Investment Vehicles						L+8.50% (9.54%)						1/18/2032						2,000						1,896						1,592						0.5		%
LCM, Ltd. Partnership 16A ER2 (f)						Diversified Investment Vehicles						L+6.38% (7.42%)						10/15/2031						2,500						2,288						2,174						0.6		%
Marble Point CLO, Ltd. 20-1A E (f)						Diversified Investment Vehicles						L+6.82% (7.88%)						4/20/2033						4,500						4,404						3,975						1.2		%
Medalist Partners Corporate Finance CLO, Ltd. 21-1A D (f)						Diversified Investment Vehicles						L+7.48% (8.54%)						10/20/2034						3,000						2,857						2,543						0.8		%
Northwoods Capital, Ltd. 17-15A ER						Diversified Investment Vehicles						L+7.64% (9.74%)						6/20/2034						3,000						2,921						2,617						0.8		%
Ocean Trails CLO 22-12A E						Diversified Investment Vehicles						S+8.11% (9.98%)						7/20/2035						3,460						3,184						3,115						0.9		%
OCP CLO, Ltd. 14-5A DR (f)						Diversified Investment Vehicles						L+5.70% (6.91%)						4/26/2031						2,200						2,083						1,830						0.5		%
OZLM, Ltd. 16-15A DR (f)						Diversified Investment Vehicles						L+6.75% (7.81%)						4/20/2033						2,000						1,907						1,611						0.5		%
Palmer Square CLO, Ltd. 21-4A F						Diversified Investment Vehicles						L+7.66% (8.70%)						10/15/2034						1,500						1,429						1,160						0.3		%
Regatta II Funding, LP 13-2A DR2 (f)						Diversified Investment Vehicles						L+6.95% (7.99%)						1/15/2029						2,000						1,928						1,720						0.5		%
Saranac CLO, Ltd. 20-8A E						Diversified Investment Vehicles						L+8.12% (9.60%)						2/20/2033						1,455						1,441						1,303						0.4		%
Sculptor CLO, Ltd. 27A E						Diversified Investment Vehicles						L+7.05% (8.11%)						7/20/2034						1,500						1,459						1,239						0.4		%
Sound Point CLO, Ltd. 17-1A E (f)						Diversified Investment Vehicles						L+5.96% (7.14%)						1/23/2029						4,000						3,611						3,502						1.0		%
Sound Point CLO, Ltd. 17-2A E (f)						Diversified Investment Vehicles						L+6.10% (7.28%)						7/25/2030						2,400						2,079						2,015						0.6		%
Sound Point CLO, Ltd. 18-3A D (f)						Diversified Investment Vehicles						L+5.79% (7.00%)						10/26/2031						1,000						902						803						0.2		%
Symphony CLO, Ltd. 2012-9A ER2 (f)						Diversified Investment Vehicles						L+6.95% (7.99%)						7/16/2032						3,000						2,776						2,644						0.8		%
Trimaran CAVU 2021-2A, Ltd. 21-2A E (f)						Diversified Investment Vehicles						L+7.20% (8.38%)						10/25/2034						3,000						2,944						2,609						0.8		%
Trysail CLO, Ltd. 21-1A E						Diversified Investment Vehicles						L+7.38% (8.44%)						7/20/2032						1,500						1,447						1,308						0.4		%
Venture CDO, Ltd. 16-23A ER2 (f)						Diversified Investment Vehicles						L+7.55% (8.59%)						7/19/2034						3,000						2,915						2,597						0.8		%
Venture CDO, Ltd. 16-25A E (f)						Diversified Investment Vehicles						L+7.20% (8.26%)						4/20/2029						2,000						1,946						1,708						0.5		%
Venture CDO, Ltd. 20-39A E						Diversified Investment Vehicles						L+7.63% (8.67%)						4/15/2033						4,995						4,963						4,466						1.3		%
Venture CLO 43, Ltd. 21-43A E (f)						Diversified Investment Vehicles						L+7.15% (8.19%)						4/15/2034						3,000						2,916						2,609						0.8		%
Wind River CLO, Ltd. 14-2A FR						Diversified Investment Vehicles						L+7.87% (8.91%)						1/15/2031						3,000						2,513						2,138						0.7		%
Zais CLO 13, Ltd. 19-13A D1 (f)						Diversified Investment Vehicles						L+4.52% (5.56%)						7/15/2032						3,000						2,732						2,580						0.8		%
Subtotal Collateralized Securities																														$	84,619					$	76,710					22.9		%
TOTAL INVESTMENTS																														$	1,036,503					$	971,257					289.8		%

______________

(a)The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L"), Secured Overnight Financing Rate ("SOFR" or "S"), or Prime ("P") and which reset daily, monthly, quarterly, or semiannually. For each, SLF has provided the spread over the relevant reference rate and the current

50

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

interest rate in effect at June 30, 2022. Certain investments are subject to reference rate floors. For fixed rate loans, a spread above a reference rate is not applicable. For floating rate securities the all-in rate is disclosed within parentheses.

(b)SLF's investment or a portion thereof is pledged as collateral under the Citi Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.

(c)Percentages are based on SLF members' capital as of June 30, 2022.

(d)SLF has various unfunded commitments to portfolio companies.

(e)SLF's investment or a portion thereof is held through a total return swap with J.P. Morgan.

(f)SLF's investment or a portion thereof is pledged as collateral under a credit facility with CIBC. Individual investments can be divided into parts which are pledged to separate credit facilities.

SLF had $2.1 million of unfunded commitments on delayed draw term loans as of June 30, 2022.

Below is a listing of SLF’s individual investments as of December 31, 2021:

December 31, 2021
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
Senior Secured First Lien Debt
ABC Financial Intermediate, LLC (e)						Technology						L+4.25% (5.25%)						1/2/2025						$	19,109					$	19,038					$	19,014					4.8		%
Accentcare, Inc. (b)						Healthcare						L+4.00% (4.18%)						6/22/2026						10,030						10,030						9,976						2.5		%
Access Cig, LLC (b)						Business Services						L+3.75% (3.84%)						2/27/2025						4,233						4,220						4,200						1.1		%
Acrisure, LLC (b) (f)						Financials						L+3.50% (3.72%)						2/16/2027						28,319						27,836						27,965						7.0		%
Adtalem Global Education, Inc.						Education						5.50%						3/1/2028						2,000						2,000						1,959						0.5		%
Adtalem Global Education, Inc. (f)						Education						L+4.50% (5.25%)						8/12/2028						2,000						2,000						2,003						0.5		%
Advisor Group, Inc. (f)						Financials						L+4.50% (4.60%)						7/31/2026						7,903						7,902						7,925						2.0		%
Alchemy US Holdco 1, LLC (b)						Industrials						L+5.50% (5.60%)						10/10/2025						15,555						15,403						15,555						3.9		%
Alvogen Pharma US, Inc. (b)						Healthcare						L+5.25% (6.25%)						12/29/2023						12,497						12,388						11,935						3.0		%
Amentum Government Services Holdings, LLC (f)						Industrials						L+3.50% (3.60%)						2/1/2027						1,990						1,978						1,956						0.5		%
American Airlines Inc/AAdvantage Loyalty IP, Ltd. (b)						Transportation						L+4.75% (5.50%)						4/20/2028						6,316						6,259						6,534						1.6		%
American Rock Salt Company, LLC (f)						Chemicals						L+4.00% (4.75%)						6/9/2028						4,777						4,780						4,759						1.2		%
AmWINS Group, Inc. (f)						Financials						L+2.25% (3.00%)						2/22/2028						4,975						4,909						4,933						1.2		%
AP Gaming I, LLC (f)						Gaming/Lodging						L+3.50% (4.50%)						2/15/2024						7,467						7,327						7,410						1.9		%
APLP Holdings, LP (b)						Utilities						L+3.75% (4.75%)						5/14/2027						3,245						3,215						3,265						0.8		%
Apollo Commercial Real Estate Finance, Inc.						Financials						4.63%						6/15/2029						3,000						3,000						2,922						0.7		%
AppLovin Corp. (b)						Media/Entertainment						L+3.00% (3.50%)						10/25/2028						8,978						8,955						8,953						2.2		%
Artera Services, LLC (f)						Utilities						L+3.50% (4.50%)						3/6/2025						2,488						2,473						2,404						0.6		%
Ascensus Holidngs, Inc. (b)						Business Services						L+3.50% (4.00%)						8/2/2028						5,000						4,982						4,974						1.2		%
Asp Navigate Acquisition Corp. (f)						Healthcare						L+4.50% (5.50%)						10/6/2027						3,276						3,284						3,276						0.8		%
Astoria Energy, LLC (f)						Utilities						L+3.50% (4.50%)						12/10/2027						1,985						1,985						1,976						0.5		%
Astro AB Merger Sub, Inc. (f)						Financials						L+4.25% (5.25%)						4/30/2024						3,902						3,898						3,907						1.0		%
Asurion, LLC (b)						Business Services						L+3.25% (3.35%)						12/23/2026						4,975						4,892						4,938						1.2		%
Athenahealth, Inc. (e)						Healthcare						L+4.25% (4.38%)						2/11/2026						14,233						14,197						14,219						3.6		%
Avaya Holdings Corp. (b)						Technology						L+4.00% (4.11%)						12/15/2027						17,770						17,770						17,743						4.5		%
Aveanna Healthcare, LLC						Healthcare						L+3.75% (4.25%)						7/17/2028						5,465						5,457						5,432						1.4		%
Bally's Corp. (b)						Gaming/Lodging						L+3.25% (3.75%)						10/2/2028						2,730						2,704						2,729						0.6		%
BBB Industries, LLC (b)						Transportation						L+4.50% (4.60%)						8/1/2025						12,855						12,754						12,855						3.2		%
BCP Raptor, LLC (b)						Energy						L+4.25% (5.25%)						6/24/2024						13,604						12,835						13,572						3.4		%

51

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

December 31, 2021
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
BCP Renaissance, LLC (f)						Energy						L+3.50% (4.50%)						10/31/2024						$	5,896					$	5,852					$	5,880					1.5		%
Beasley Mezzanine Holdings, LLC						Broadcasting						8.63%						2/1/2026						2,174						2,225						2,151						0.5		%
Bella Holding Company, LLC (f)						Healthcare						L+3.75% (4.50%)						5/10/2028						7,481						7,411						7,469						1.9		%
Blackstone CQP Holdco, LP (f)						Industrials						L+3.75% (4.25%)						6/5/2028						7,967						7,931						7,944						2.0		%
BMC Software Finance, Inc. (b)						Technology						L+3.75% (3.97%)						10/2/2025						12,748						12,782						12,659						3.2		%
Bomgar Corp. (f)						Technology						L+4.00% (4.10%)						4/18/2025						1,922						1,926						1,916						0.5		%
CareCentrix, Inc. (b)						Healthcare						L+4.50% (4.72%)						4/3/2025						20,845						20,127						20,715						5.2		%
Clover Technologies Group, LLC (e)						Industrials						L+7.50% (8.50%)						2/5/2024						1,445						1,375						1,369						0.3		%
CLP Health Services, Inc. (b)						Healthcare						L+4.25% (5.00%)						12/31/2026						12,915						12,867						12,882						3.2		%
Cnt Holdings I Corp (f)						Consumer						L+3.50% (4.25%)						11/8/2027						3,474						3,474						3,473						0.9		%
CommerceHub, Inc. (f)						Technology						L+4.00% (4.75%)						12/29/2027						7,639						7,649						7,551						1.9		%
Community Care Health Network, LLC (b)						Healthcare						L+4.75% (4.85%)						2/17/2025						9,755						9,726						9,368						2.3		%
Compass Power Generation, LLC (f)						Utilities						L+3.50% (4.50%)						12/20/2024						4,777						4,765						4,753						1.2		%
Connect Finco SARL (f)						Telecom						L+3.50% (4.50%)						12/11/2026						7,538						7,560						7,534						1.9		%
Connectwise, LLC (f)						Software/Services						L+3.50% (4.00%)						9/29/2028						4,000						3,980						3,986						1.0		%
Conservice Midco, LLC (b)						Business Services						L+4.25% (4.47%)						5/13/2027						7,700						7,713						7,679						1.9		%
CONSOL Energy, Inc. (b)						Energy						L+4.50% (4.60%)						9/27/2024						3,612						3,328						3,502						0.9		%
Conterra Ultra Broadband, LLC (b)						Telecom						L+4.75% (5.75%)						4/30/2026						6,710						6,710						6,710						1.7		%
Corelogic, Inc. (b)						Business Services						L+3.50% (4.00%)						6/2/2028						7,980						7,965						7,964						2.0		%
CVENT, Inc. (e)						Technology						L+3.75% (3.83%)						11/29/2024						2,700						2,628						2,695						0.6		%
Dealer Tire, LLC (e)						Retail						L+4.25% (4.33%)						12/12/2025						3,952						3,927						3,946						1.0		%
Directv Financing, LLC (b)						Media/Entertainment						L+5.00% (5.75%)						8/2/2027						4,888						4,842						4,889						1.2		%
Dish DBS Corp.						Cable						5.25%						12/1/2026						700						700						711						0.2		%
Dish DBS Corp.						Cable						5.75%						12/1/2028						1,000						1,000						1,009						0.3		%
Division Holding Corp. (b)						Business Services						L+4.75% (5.50%)						5/26/2028						8,739						8,749						8,745						2.2		%
Dunn Paper, Inc. (b)						Paper & Packaging						L+5.25% (6.25%)						8/26/2022						578						562						555						0.1		%
Dynasty Acquisition Co., Inc. (e)						Industrials						L+3.50% (3.63%)						4/6/2026						2,824						2,736						2,743						0.7		%
Dynasty Acquisition Co., Inc. (e)						Industrials						L+3.50% (3.63%)						4/6/2026						5,253						5,089						5,102						1.3		%
Echo Global Logistics, Inc. (b)						Transportation						L+3.75% (4.25%)						11/23/2028						3,330						3,322						3,313						0.8		%
Edgewater Generation, LLC (b)						Utilities						L+3.75% (3.85%)						12/12/2025						2,491						2,476						2,349						0.6		%
Emerald 2, Ltd. (b)						Industrials						L+3.25% (3.47%)						7/12/2028						518						515						514						0.1		%
Fastlane Parent Co, Inc. (b)						Transportation						L+4.50% (4.60%)						2/4/2026						1,569						1,569						1,567						0.4		%
Flex Acquisition Company, Inc. (f)						Paper & Packaging						L+3.50% (4.00%)						3/2/2028						6,957						6,920						6,939						1.7		%
Florida Food Products, LLC (f)						Food & Beverage						L+5.00% (5.75%)						10/18/2028						8,000						7,881						7,860						2.0		%
Frontier Communications Corp.						Telecom						5.00%						5/1/2028						1,240						1,303						1,276						0.3		%
Frontier Communications Corp. (b)						Telecom						L+3.75% (4.50%)						5/1/2028						19,425						19,407						19,386						4.9		%
Geon Performance Solutions, LLC (b)						Chemicals						L+4.75% (5.50%)						8/18/2028						4,705						4,671						4,739						1.2		%
Gogo Intermediate Holdings, LLC (f)						Telecom						L+3.75% (4.50%)						4/28/2028						8,381						8,381						8,373						2.1		%
Golden Nugget, LLC (b) (f)						Gaming/Lodging						L+2.50% (3.25%)						10/4/2023						3,960						3,932						3,933						1.0		%
Gordian Medical, Inc. (b)						Healthcare						L+6.25% (7.00%)						1/31/2027						11,060						10,987						10,968						2.8		%
Greenway Health, LLC (f)						Healthcare						L+3.75% (4.75%)						2/16/2024						4,733						4,462						4,496						1.1		%

52

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

December 31, 2021
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
GVC Holdings Gibraltar, Ltd. (f)						Gaming/Lodging						L+2.50% (3.00%)						3/29/2027						$	4,975					$	4,969					$	4,958					1.2		%
HAH Group Holding Company, LLC (b)						Healthcare						L+5.00% (6.00%)						10/29/2027						737						737						737						0.2		%
HAH Group Holding Company, LLC (b)						Healthcare						L+5.00% (6.00%)						10/29/2027						5,827						5,748						5,827						1.5		%
Hamilton Projects Acquiror, LLC (f)						Utilities						L+4.50% (5.25%)						6/17/2027						5,718						5,694						5,710						1.4		%
Heartland Dental, LLC (e)						Healthcare						L+3.50% (3.58%)						4/30/2025						4,154						4,076						4,109						1.0		%
Hertz Corp. (b) (f)						Transportation						L+3.25% (3.75%)						6/30/2028						4,186						4,170						4,185						1.0		%
Hertz Corp. (b) (f)						Transportation						L+3.25% (3.75%)						6/30/2028						793						790						793						0.2		%
HireRight, Inc. (f)						Business Services						L+3.75% (3.85%)						7/11/2025						7,237						7,197						7,203						1.8		%
Hudson River Trading, LLC (b)						Financials						L+3.00% (3.10%)						3/20/2028						4,975						4,910						4,933						1.2		%
ICP Industrial, Inc. (f)						Chemicals						L+3.75% (4.50%)						12/29/2027						4,975						4,971						4,900						1.2		%
IDERA, Inc. (f)						Technology						L+3.75% (4.50%)						3/2/2028						6,983						6,994						6,972						1.7		%
Ineos Us Finance, LLC (f)						Chemicals						L+2.50% (3.00%)						11/6/2028						4,000						3,995						3,977						1.0		%
Iri Holdings, Inc. (b)						Business Services						L+4.25% (4.35%)						12/1/2025						7,819						7,800						7,809						2.0		%
Jack Ohio Finance, LLC (f)						Gaming/Lodging						L+4.75% (5.50%)						10/4/2028						4,000						3,980						3,980						1.0		%
Jane Street Group, LLC (f)						Financials						L+2.75% (2.85%)						1/26/2028						4,938						4,932						4,895						1.2		%
Jump Financial, LLC (b)						Financials						L+3.50% (4.00%)						8/7/2028						2,494						2,482						2,475						0.6		%
Kissner Milling Co., Ltd.						Industrials						4.88%						5/1/2028						5,000						5,035						4,814						1.2		%
LABL, Inc. (b)						Paper & Packaging						L+5.00% (5.50%)						10/30/2028						5,000						4,925						4,988						1.3		%
Liquid Tech Solutions Holdings, LLC (b) (f)						Industrials						L+4.75% (5.50%)						3/20/2028						10,216						10,166						10,216						2.6		%
Luxembourg Investment Co., 428 SARL (b)						Chemicals						S+5.00% (5.50%)						1/3/2029						3,864						3,825						3,827						1.0		%
Medallion Midland Acquisition, LP (f)						Energy						L+3.75% (4.50%)						10/18/2028						3,614						3,579						3,594						0.9		%
Meridian Adhesives Group, Inc. (b)						Chemicals						L+4.00% (4.75%)						7/24/2028						5,000						4,953						5,000						1.3		%
MH Sub I, LLC (f)						Business Services						L+3.75% (4.75%)						9/13/2024						8,641						8,636						8,650						2.2		%
Michael Baker International, LLC (b)						Industrials						L+5.00% (5.75%)						12/1/2028						3,334						3,301						3,301						0.8		%
MicroStrategy, Inc.						Software/Services						6.13%						6/15/2028						1,500						1,500						1,508						0.4		%
Monitronics International, Inc. (b)						Business Services						L+6.50% (7.75%)						3/29/2024						5,508						5,301						5,164						1.3		%
MPH Acquisition Holdings, LLC (b)						Healthcare						L+4.25% (4.75%)						9/1/2028						4,988						4,895						4,860						1.2		%
MSG National Properties, LLC (b)						Media/Entertainment						L+6.25% (7.00%)						11/12/2025						12,188						12,431						12,188						3.1		%
MYOB US Borrower, LLC (f)						Business Services						L+4.00% (4.10%)						5/6/2026						5,468						5,453						5,422						1.4		%
National Mentor Holdings, Inc. (b) (f)						Healthcare						L+3.75% (4.50%)						3/2/2028						7,370						7,336						7,282						1.8		%
National Mentor Holdings, Inc. (f)						Healthcare						L+3.75% (4.50%)						3/2/2028						233						232						230						0.1		%
Navitas Midstream Midland Basin, LLC (b)						Energy						L+4.00% (4.75%)						12/13/2024						10,676						10,676						10,639						2.7		%
Nexus Buyer, LLC (f)						Business Services						L+3.75% (3.85%)						11/9/2026						1,489						1,485						1,480						0.4		%
Nouryon USA, LLC (e)						Chemicals						L+3.00% (3.10%)						10/1/2025						2,342						2,310						2,332						0.6		%
Paysafe Finance, PLC						Software/Services						4.00%						6/15/2029						400						400						373						0.1		%
Perstorp Holding Ab (b)						Chemicals						L+4.75% (4.91%)						2/27/2026						8,777						8,325						8,777						2.2		%
PG&E Corp. (f)						Utilities						L+3.00% (3.50%)						6/23/2025						10,698						10,735						10,569						2.7		%
Proofpoint, Inc. (b)						Software/Services						L+3.25% (3.75%)						8/31/2028						2,500						2,494						2,488						0.6		%
Protective Industrial Products, Inc. (b)						Industrials						L+4.00% (4.75%)						12/29/2027						9,127						9,091						9,087						2.3		%
Pug, LLC (f)						Technology						L+3.50% (3.60%)						2/12/2027						4,962						4,843						4,843						1.2		%

53

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

December 31, 2021
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
Pug, LLC (f)						Technology						L+4.25% (4.75%)						2/13/2027						$	1,995					$	1,986					$	1,983					0.5		%
Quikrete Holdings, Inc. (f)						Industrials						L+3.00% (3.19%)						6/11/2028						8,000						7,959						7,978						2.0		%
Regionalcare Hospital Partners Holdings, Inc.						Healthcare						4.38%						2/15/2027						2,000						2,000						2,025						0.5		%
Regionalcare Hospital Partners Holdings, Inc. (b)						Healthcare						L+3.75% (3.85%)						11/14/2025						5,195						5,214						5,186						1.3		%
RXB Holdings, Inc. (f)						Healthcare						L+4.50% (5.25%)						12/20/2027						10,205						10,244						10,205						2.6		%
S&S Holdings, LLC (f)						Consumer						L+5.00% (5.50%)						3/10/2028						6,948						6,759						6,948						1.7		%
Safe Fleet Holdings, LLC (f)						Industrials						L+3.00% (4.00%)						2/3/2025						2,374						2,359						2,357						0.6		%
Safety Products/JHC Acquisition Corp. (b)						Industrials						L+4.50% (4.60%)						6/28/2026						938						891						892						0.2		%
Safety Products/JHC Acquisition Corp. (b)						Industrials						L+4.50% (4.60%)						6/28/2026						17,360						16,549						16,492						4.1		%
Schenectady International Group, Inc. (b)						Chemicals						L+4.75% (4.87%)						10/15/2025						19,911						19,791						19,911						5.0		%
SCIH Salt Holdings, Inc. (b) (f)						Industrials						L+4.00% (4.75%)						3/16/2027						18,735						18,671						18,532						4.6		%
SFR Group, SA (b) (e)						Telecom						L+4.00% (4.13%)						8/14/2026						12,705						12,640						12,629						3.2		%
Sierra Acquisition, Inc. (b)						Food & Beverage						L+4.00% (5.00%)						11/11/2024						4,902						4,712						4,890						1.2		%
Sophia, LP (f)						Software/Services						L+3.50% (4.00%)						10/7/2027						3,004						3,007						3,001						0.8		%
Spirit Aerosystems, Inc. (b)						Industrials						L+3.75% (4.25%)						1/15/2025						2,555						2,584						2,556						0.6		%
SSH Group Holdings, Inc. (e)						Education						L+4.25% (4.40%)						7/30/2025						10,518						10,064						10,134						2.5		%
Staples, Inc. (b)						Business Services						L+5.00% (5.13%)						4/16/2026						4,949						4,896						4,774						1.2		%
Station Casinos, LLC (f)						Gaming/Lodging						L+2.25% (2.50%)						2/8/2027						2,278						2,267						2,257						0.6		%
Team Health Holdings, Inc. (e)						Healthcare						L+2.75% (3.75%)						2/6/2024						2,969						2,808						2,830						0.7		%
Tecta America Corp. (f)						Industrials						L+4.25% (5.00%)						4/6/2028						9,045						9,018						9,033						2.3		%
Tenneco, Inc.						Transportation						5.13%						4/15/2029						3,846						3,846						3,773						0.9		%
Tenneco, Inc. (e)						Transportation						L+3.00% (3.08%)						10/1/2025						2,969						2,911						2,921						0.7		%
The Dun & Bradstreet Corp. (f)						Business Services						L+3.25% (3.35%)						2/6/2026						4,863						4,884						4,841						1.2		%
TransDigm, Inc. (f)						Industrials						L+2.25% (2.35%)						12/9/2025						2,970						2,953						2,926						0.7		%
Traverse Midstream Partners, LLC (b)						Energy						S+4.25% (5.25%)						9/27/2024						14,962						14,936						14,878						3.7		%
Triton Water Holdings, Inc. (f)						Food & Beverage						L+3.50% (4.00%)						3/31/2028						7,463						7,445						7,374						1.8		%
Truck Hero, Inc. (f)						Transportation						L+3.25% (4.00%)						1/31/2028						1,489						1,485						1,479						0.4		%
TSL Engineered Products, LLC (b)						Industrials						L+4.75% (5.50%)						1/7/2028						7,858						7,785						7,858						2.0		%
United Airlines, Inc. (f)						Transportation						L+3.75% (4.50%)						4/21/2028						3,794						3,782						3,800						1.0		%
University Support Services, LLC (f)						Education						L+3.25% (3.75%)						6/29/2028						5,000						4,983						4,975						1.2		%
Urban One, Inc.						Media/Entertainment						7.38%						2/1/2028						6,000						6,194						6,200						1.6		%
Venga Finance Sarl (b)						Telecom						L+4.75% (5.25%)						12/4/2028						4,000						3,880						3,913						1.0		%
Veritext Corp. (f)						Business Services						L+3.25% (3.35%)						8/1/2025						3,505						3,463						3,472						0.9		%
Virgin Media Bristol, LLC (f)						Telecom						L+3.25% (3.36%)						1/31/2029						2,500						2,497						2,497						0.6		%
Vyaire Medical, Inc. (f)						Healthcare						L+4.75% (5.75%)						4/16/2025						7,831						6,573						6,695						1.7		%
WaterBridge Midstream Operating, LLC (b)						Energy						L+5.75% (6.75%)						6/22/2026						10,748						9,572						10,462						2.6		%
Watlow Electric Manufacturing Co. (b)						Industrials						L+3.75% (4.25%)						3/2/2028						9,473						9,431						9,447						2.4		%
Western Dental Services, Inc. (f)						Healthcare						L+4.50% (5.25%)						8/18/2028						9,075						9,067						9,070						2.3		%
Western Dental Services, Inc. (f)						Healthcare						L+4.50% (5.25%)						8/18/2028						389						389						388						0.1		%
Wilsonart, LLC (b)						Consumer						L+3.50% (4.50%)						12/31/2026						7,450						7,444						7,444						1.9		%

54

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

December 31, 2021
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
Wrench Group, LLC (f)						Consumer						L+4.00% (4.22%)						4/30/2026						$	3,151					$	3,098					$	3,151					0.8		%
YI, LLC (e)						Healthcare						L+4.00% (5.00%)						11/7/2024						8,974						8,891						8,974						2.3		%
Subtotal Senior Secured First Lien Debt																														$	945,196					$	947,148					237.6		%
Senior Secured Second Lien Debt
American Rock Salt Company, LLC (b)						Chemicals						L+7.25% (8.00%)						6/11/2029						$	4,943					$	4,894					$	4,955					1.2		%
Asp Ls Acquisition Corp. (b)						Transportation						L+7.50% (8.25%)						4/30/2029						2,065						2,075						2,074						0.5		%
Asurion, LLC (b)						Business Services						L+5.25% (5.35%)						1/31/2028						15,632						15,564						15,671						3.9		%
Barracuda Networks, Inc. (b)						Software/Services						L+6.75% (7.50%)						10/30/2028						4,698						4,724						4,749						1.2		%
CDS U.S. Intermediate Holdings, Inc. (b)						Media/Entertainment						L+8.00% (9.00%) 7.00% PIK						11/24/2027						5,088						5,070						5,058						1.3		%
Edelman Financial Services, LLC (b) (e)						Financials						L+6.75% (6.84%)						7/20/2026						9,972						9,929						9,989						2.5		%
IDERA, Inc. (b) (e)						Technology						L+6.75% (7.50%)						3/2/2029						1,545						1,537						1,545						0.4		%
Tecta America Corp. (b)						Industrials						L+8.50% (9.25%)						4/6/2029						4,998						4,973						4,998						1.3		%
TIBCO Software, Inc. (b)						Technology						L+7.25% (7.36%)						3/3/2028						13,020						13,166						13,047						3.3		%
Subtotal Senior Secured Second Lien Debt																														$	61,932					$	62,086					15.6		%
Collateralized Securities
Collateralized Securities - Debt Investments
AIG CLO, Ltd. 21‐1A F						Diversified Investment Vehicles						L+6.90% (7.03%)						4/22/2034						$	1,410					$	1,285					$	1,270					0.3		%
Avery Point CLO, Ltd. 15-6A E1 (f)						Diversified Investment Vehicles						L+5.50% (5.64%)						8/6/2027						3,500						3,124						3,380						0.9		%
Battalion CLO, Ltd. 21-17A F						Diversified Investment Vehicles						L+7.50% (7.63%)						3/9/2034						1,224						1,132						1,123						0.3		%
Carlyle GMS CLO, 16-3A FRR (f)						Diversified Investment Vehicles						L+8.60% (8.73%)						7/20/2034						2,100						1,984						1,983						0.5		%
Eaton Vance CDO, Ltd. 15-1A FR (f)						Diversified Investment Vehicles						L+7.97% (8.10%)						1/20/2030						2,000						1,736						1,829						0.5		%
Elevation CLO, Ltd. 13-1A D2						Diversified Investment Vehicles						L+7.65% (7.80%)						8/15/2032						2,000						1,961						1,973						0.5		%
Great Lakes CLO, Ltd. 21-6A E						Diversified Investment Vehicles						L+8.03% (8.25%)						1/15/2034						5,150						4,945						4,906						1.2		%
Greywolf CLO, Ltd. 20-3RA ER (f)						Diversified Investment Vehicles						L+8.74% (8.87%)						4/15/2033						1,000						873						949						0.2		%
Hayfin Kingsland XI, Ltd. 19‐2A ER						Diversified Investment Vehicles						L+7.72% (7.85%)						10/20/2034						2,500						2,426						2,412						0.6		%
Highbridge Loan Management, Ltd. 11A-17 E (f)						Diversified Investment Vehicles						L+6.10% (6.24%)						5/6/2030						3,000						2,689						2,825						0.7		%
Jamestown CLO, Ltd. 17-10A D (f)						Diversified Investment Vehicles						L+6.70% (6.82%)						7/17/2029						1,200						1,120						1,153						0.3		%
KKR Financial CLO, Ltd. 15 FR						Diversified Investment Vehicles						L+8.50% (8.62%)						1/18/2032						2,000						1,892						1,880						0.5		%
LCM, Ltd. Partnership 16A ER2 (f)						Diversified Investment Vehicles						L+6.38% (6.50%)						10/15/2031						2,500						2,280						2,373						0.6		%
Marble Point CLO, Ltd. 20-1A E (f)						Diversified Investment Vehicles						L+6.82% (6.95%)						4/20/2033						4,500						4,400						4,392						1.1		%
Medalist Partners Corporate Finance CLO, Ltd. 21-1A D (f)						Diversified Investment Vehicles						L+7.48% (7.69%)						10/20/2034						3,000						2,852						2,833						0.7		%
Northwoods Capital, Ltd. 17-15A ER						Diversified Investment Vehicles						L+7.64% (7.85%)						6/20/2034						3,000						2,920						2,909						0.7		%

55

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

December 31, 2021
Portfolio Company (d)						Industry						Investment Coupon Rate (a)						Maturity						Principal/ Number of Shares						Amortized Cost						Fair Value						% of Members' Capital (c)
OCP CLO, Ltd. 14-5A DR (f)						Diversified Investment Vehicles						L+5.70% (5.82%)						4/26/2031						$	2,200					$	2,077					$	2,118					0.5		%
OZLM, Ltd. 16-15A DR (f)						Diversified Investment Vehicles						L+6.75% (6.88%)						4/20/2033						2,000						1,903						1,922						0.5		%
Palmer Square CLO, Ltd. 21‐4A F						Diversified Investment Vehicles						L+7.66% (7.80%)						10/15/2034						1,500						1,426						1,413						0.4		%
Regatta II Funding, LP 13-2A DR2 (f)						Diversified Investment Vehicles						L+6.95% (7.07%)						1/15/2029						2,000						1,923						1,968						0.5		%
Saranac CLO, Ltd. 20-8A E						Diversified Investment Vehicles						L+8.12% (8.28%)						2/20/2033						1,455						1,441						1,433						0.4		%
Sound Point CLO, Ltd. 17-1A E (f)						Diversified Investment Vehicles						L+5.96% (6.08%)						1/23/2029						4,000						3,589						3,736						0.9		%
Sound Point CLO, Ltd. 17-2A E (f)						Diversified Investment Vehicles						L+6.10% (6.22%)						7/25/2030						2,400						2,065						2,173						0.6		%
Sound Point CLO, Ltd. 18-3A D (f)						Diversified Investment Vehicles						L+5.79% (5.91%)						10/26/2031						1,000						899						895						0.2		%
Symphony CLO, Ltd. 2012-9A ER2 (f)						Diversified Investment Vehicles						L+6.95% (7.07%)						7/16/2032						3,000						2,769						2,937						0.7		%
Trimaran CAVU 2021-2A, Ltd. 21-2A E (f)						Diversified Investment Vehicles						L+7.20% (7.33%)						10/25/2034						3,000						2,941						2,915						0.7		%
Trysail CLO, Ltd. 21‐1A E						Diversified Investment Vehicles						L+7.38% (7.52%)						7/20/2032						1,500						1,444						1,445						0.4		%
Venture CDO, Ltd. 16-23A ER2 (f)						Diversified Investment Vehicles						L+7.55% (7.67%)						7/19/2034						3,000						2,912						2,892						0.7		%
Venture CDO, Ltd. 16-25A E (f)						Diversified Investment Vehicles						L+7.20% (7.33%)						4/20/2029						2,000						1,943						1,936						0.5		%
Venture CDO, Ltd. 20-39A E						Diversified Investment Vehicles						L+7.63% (7.75%)						4/15/2033						4,995						4,961						4,922						1.2		%
Venture CLO 43, Ltd. 21-43A E (f)						Diversified Investment Vehicles						L+7.15% (7.27%)						4/15/2034						3,000						2,913						2,901						0.7		%
Wind River CLO, Ltd. 14-2A FR						Diversified Investment Vehicles						L+7.87% (7.99%)						1/15/2031						3,000						2,495						2,489						0.6		%
Zais CLO 13, Ltd. 19-13A D1 (f)						Diversified Investment Vehicles						L+4.52% (4.64%)						7/15/2032						3,000						2,722						2,818						0.7		%
Subtotal Collateralized Securities																														$	78,042					$	79,103					19.8		%
TOTAL INVESTMENTS																														$	1,085,170					$	1,088,337					273.0		%

______________

(a)The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L"), Secured Overnight Financing Rate ("SOFR" or "S"), or Prime ("P") and which reset daily, monthly, quarterly, or semiannually. For each, SLF has provided the spread over the relevant reference rate and the current interest rate in effect at December 31, 2021. Certain investments are subject to reference rate floors. For fixed rate loans, a spread above a reference rate is not applicable. For floating rate securities the all-in rate is disclosed within parentheses.

(b)SLF's investment or a portion thereof is pledged as collateral under the Citi Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.

(c)Percentages are based on SLF members' capital as of December 31, 2021.

(d)SLF has various unfunded commitments to portfolio companies.

(e)SLF's investment or a portion thereof is held through a total return swap with J.P. Morgan.

(f)SLF's investment or a portion thereof is pledged as collateral under a credit facility with CIBC. Individual investments can be divided into parts which are pledged to separate credit facilities.

SLF had $2.2 million of unfunded commitments on delayed draw term loans as of December 31, 2021.

56

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Below is certain summarized financial information for SLF as of June 30, 2022 and December 31, 2021 and for the periods ended June 30, 2022 and June 30, 2021:

Selected Statement of Assets and Liabilities Information			June 30,						December 31,
			2022						2021
			(Unaudited)
ASSETS
Investments, at fair value (amortized cost of $1,036,503 and $1,085,170, respectively)			$	971,257					$	1,088,337
Cash and other assets			97,953						107,623
Total assets			$	1,069,210					$	1,195,960
LIABILITIES
Revolving credit facilities (net of deferred financing costs of $1,991 and $2,488, respectively)			$	641,559					$	631,562
Secured borrowings			65,016						94,737
Other liabilities			27,473						71,008
Total liabilities			$	734,048					$	797,307
MEMBERS' CAPITAL
Total members' capital			$	335,162					$	398,653
Total liabilities and members' capital			$	1,069,210					$	1,195,960

Selected Statements of Operations Information									For the three months ended June 30,						For the three months ended June 30,						For the six months ended June 30,						For the period January 20, 2021 through June 30,
									2022						2021						2022						2021
									(Unaudited)						(Unaudited)						(Unaudited)						(Unaudited)
Investment income:
Total investment income									$	15,747					$	10,874					$	30,176					$	19,326
Operating expenses:
Interest and credit facility financing expenses									3,910						2,381						7,278						3,975
Other expenses									708						480						1,342						763
Total expenses									4,618						2,861						8,620						4,738
Net investment income									11,129						8,013						21,556						14,588
Realized and unrealized gain (loss):
Net realized and unrealized gain (loss)									(56,584)						8,581						(69,833)						12,058
Net increase (decrease) in net assets resulting from operations									$	(45,455)					$	16,594					$	(48,277)					$	26,646

57

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Unconsolidated Significant Subsidiaries

In accordance with Rules 3-09 and 4-08(g) of Regulation S-X (“Rule 3-09” and “Rule 4-08(g),” respectively), the Company must determine which of its unconsolidated controlled affiliated investments are considered significant subsidiaries, if any. The Company had certain unconsolidated controlled affiliated investments for the six months ended June 30, 2022 that met at least one of the significance considerations under Regulation S-X. Accordingly, the summarized financial information for FBLC Senior Loan Fund, LLC is provided above in Note 3. Included below is the summarized financial information for Siena Capital Finance, LLC.

Selected Balance Sheet Information									As of June 30,						As of December 31,
									2022						2021
									(Unaudited)
Total Assets									$	530,126					$	470,781
Total Liabilities									470,535						414,464

Selected Income Statement Information																		For the three months ended June 30,						For the three months ended June 30,						For the six months ended June 30,						For the six months ended June 30,
																		2022						2021						2022						2021
																		(Unaudited)												(Unaudited)
Revenues																		$	15,266					$	9,287					$	27,167					$	17,147
Net income																		5,530						2,137						8,475						4,405

Note 4 — Related Party Transactions and Arrangements

Investment Advisory Agreement

    Pursuant to the Investment Advisory Agreement and for the investment advisory and management services provided thereunder, the Company pays the Adviser a base management fee and an incentive fee.

    Prior to February 1, 2019, the Adviser provided investment advisory and management services under the investment advisory and management services agreement, effective November 1, 2016 (the “Prior Investment Advisory Agreement”), and most recently re-approved by the Board in August 2018. The terms of the Prior Investment Advisory Agreement were materially identical to the Investment Advisory Agreement. The Prior Investment Advisory Agreement automatically terminated on February 1, 2019 upon the indirect change of control of the Adviser on the consummation of Franklin Templeton's acquisition of BSP. The Investment Advisory Agreement was approved by the Board, including a majority of independent directors, on October 22, 2018, and by stockholders at a special meeting held on January 11, 2019 and took effect February 1, 2019. The Board renewed the Investment Advisory Agreement on January 31, 2022.

Base Management Fee

    The base management fee is calculated at an annual rate of 1.5% of the Company's average gross assets (including assets purchased with borrowed funds). The Company's gross assets increase or decrease with any appreciation or depreciation associated with a derivative contract. Average gross assets is calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters. The base management fee is payable quarterly in arrears and is appropriately pro-rated for any partial month or quarter. All or any part of the base management fee not taken as to any quarter may be deferred without interest and may be taken in such other quarter as the Adviser will determine within three years.

    As of June 30, 2022 and December 31, 2021, $10.5 million and $10.5 million was payable to the Adviser for base management fees, respectively.

For the three and six months ended June 30, 2022, the Company incurred $10.5 million and $21.0 million, respectively, in base management fees under the Investment Advisory Agreement. For the three and six months ended June 30, 2021, the Company incurred $9.5 million and $19.0 million, respectively, in base management fees under the Investment Advisory Agreement.

58

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Incentive Fees

    The incentive fee consists of two parts. The first part is referred to as the incentive fee on income and it is calculated and payable quarterly in arrears based on the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter. “Pre-Incentive Fee Net Investment Income” means interest income, dividend income, and any other income (including any other fees, other than fees for providing managerial assistance, such as commitment, origination, structuring, diligence, and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount debt instruments with payment-in-kind interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains or losses, or unrealized capital appreciation or depreciation. The payment of the incentive fee on income is subject to payment of a preferred return to investors each quarter, expressed as a quarterly rate of return on the value of the Company's net assets at the end of the most recently completed calendar quarter, of 1.75% (7.00% annualized), subject to a “catch up” feature (as described below). The calculation of the incentive fee on income for each quarter is as follows:

•No incentive fee on income will be payable to the Adviser in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the preferred return rate of 1.75% or 7.00% annualized (the “Preferred Return”) on net assets;

•100% of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds the preferred return but is less than or equal to 2.1875% in any calendar quarter (8.75% annualized) will be payable to the Adviser. This portion of the Company’s incentive fee on income is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 20% on all of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s Pre-Incentive Fee Net Investment Income reaches 2.1875% (8.75% annualized) in any calendar quarter; and

•For any quarter in which the Company's Pre-Incentive Fee Net Investment Income exceeds 2.1875% (8.75% annualized), the incentive fee on income will be equal to 20% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, as the Preferred Return and catch-up will have been achieved.

    As of June 30, 2022 and December 31, 2021, $7.7 million and $7.2 million was payable to the Adviser for the incentive fee on income, respectively.

    For the three and six months ended June 30, 2022, the Company incurred $7.1 million and $14.4 million, respectively, in incentive fees on income under the Investment Advisory Agreement. For the three and six months ended June 30, 2021, the Company incurred $6.9 million and $13.5 million, respectively, in incentive fees on income under the Investment Advisory Agreement.

    The second part of the incentive fee, referred to as the “incentive fee on capital gains during operations,” is an incentive fee on capital gains earned on liquidated investments from the portfolio during operations prior to the Company’s liquidation and is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, if earlier). This fee equals 20% of the Company’s incentive fee capital gains, which equals the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. For the three and six months ended June 30, 2022 and 2021, the Company did not incur incentive fees on capital gains during operations under the Investment Advisory Agreement.

Administration Agreement

    In connection with the Administration Agreement, BSP provides the Company with office facilities and administrative services. As of June 30, 2022 and December 31, 2021, $0.8 million and $1.6 million was payable to BSP under the Administration Agreement, respectively.

    For the three and six months ended June 30, 2022, the Company incurred $0.4 million and $0.8 million, respectively, in administrative service fees under the Administration Agreement. For the three and six months ended June 30, 2021, the Company incurred $0.4 million and $0.9 million, respectively, in administrative service fees under the Administration Agreement.

59

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Co-Investment Relief

    The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC. The SEC staff has granted the Company exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside with other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with its investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of its eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to the Company and the Company's stockholders and do not involve overreaching in respect of the Company or the Company's stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objective and strategies.    

Due To/From Affiliated Funds

Included within Prepaid and Other Assets on the Consolidated Statements of Assets and Liabilities as of June 30, 2022 and December 31, 2021 are $0.0 and $2.6 million, respectively of receivables from Affiliated Funds related to investment transactions.

Note 5 — Borrowings

Wells Fargo Credit Facility

    On August 28, 2020, the Company entered into a $300.0 million revolving credit facility with the Company, as collateral manager, Funding I, a wholly owned, consolidated special purpose financing subsidiary, as borrower, the lenders party thereto, Wells Fargo, as administrative agent, and U.S. Bank, as collateral agent and collateral custodian (the “Wells Fargo Credit Facility”).

    The Wells Fargo Credit Facility provides for borrowings through August 28, 2023, and any amounts borrowed under the Wells Fargo Credit Facility will mature on August 28, 2025. Prior to the Second Amendment (defined below), the Wells Fargo Credit Facility was priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 2.75% per annum. Interest is payable quarterly in arrears. Funding I will be subject to a non-usage fee to the extent the commitments available under the Wells Fargo Credit Facility have not been borrowed. The non-usage fee per annum is 0.50% for the first 25% of the unused balance and up to 2.0% for the remaining unused balance. Funding I paid a structuring fee and incurred other customary costs and expenses in connection with the Wells Fargo Credit Facility. Pursuant to an amendment entered into on April 6, 2021, the commitment fee for any unused portion of the Wells Fargo Credit Facility was temporarily reduced until September 30, 2021 (the "First Amendment"). Additionally, pursuant to the First Amendment, the maximum spread was reduced from 2.75% to 2.50% as a result of this amendment. The other terms of the Wells Fargo Credit Facility were unchanged. Pursuant to an amendment entered into on May 27, 2022 (the "Second Amendment"), the benchmark rate was transitioned from LIBOR to SOFR. After the Second Amendment, the Wells Fargo Credit Facility is priced at Daily Simple SOFR, with a Daily Simple SOFR floor of zero, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 2.60% per annum.

    Funding I’s obligations under the Wells Fargo Credit Facility are secured by a first priority security interest in substantially all of the assets of Funding I, including its portfolio of investments and the Company’s equity interest in Funding I. The obligations of Funding I under the Wells Fargo Credit Facility are non-recourse to the Company.

    In connection with the Wells Fargo Credit Facility, the Company and Funding I have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The Wells Fargo Credit Facility contains customary default provisions pursuant to which the administrative agent and the lenders under the Wells Fargo Credit Facility may terminate the Company in its capacity as collateral manager/portfolio manager under the Wells Fargo Credit Facility. Upon the occurrence of an event of default under the Wells Fargo Credit Facility, the administrative agent or the lenders may declare the outstanding advances and all other obligations under the Wells Fargo Credit Facility immediately due and payable.

JPM Credit Facility

    On August 28, 2020, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, 57th Street, entered into a $300.0 million revolving credit facility with JPMorgan Chase Bank, National Association, as

60

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

administrative agent (“JPM”), and U.S. Bank, as collateral agent, collateral administrator and securities intermediary (the “JPM Credit Facility”).

The JPM Credit Facility provides for borrowings through August 28, 2023, and any amounts borrowed under the JPM Credit Facility will mature on August 28, 2023 unless the administrative agent exercises its option to extend the maturity date to August 28, 2024. The JPM Credit Facility is priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread of 2.75% per annum. Interest is payable quarterly in arrears. 57th Street will be subject to a non-usage fee to the extent the commitments available under the JPM Credit Facility have not been borrowed. The non-usage fee per annum is 0.50% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance until August 28, 2021, when the non-usage fee per annum is 0.75% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance. 57th Street paid a structuring fee and incurred other customary costs and expenses in connection with the JPM Credit Facility. On January 21, 2021, the Company entered into an amendment (the “JPM Amendment”) to the JPM Credit Facility. The JPM Amendment, among other things, increases the amount that the Company is permitted to borrow under the JPM Credit Agreement from $300.0 million to $400.0 million. On April 12, 2021, the Company, through 57th Street, amended and restated the JPM Credit Facility. The amendment and restatement temporarily reduced the previous minimum funding amount until October 13, 2021. The other material terms of the JPM Credit Facility were unchanged.

    57th Street’s obligations under the JPM Credit Facility are secured by a first priority security interest in substantially all of the assets of 57th Street, including its portfolio of investments and the Company’s equity interest in 57th Street. The obligations of 57th Street under the JPM Credit Facility are non-recourse to the Company.

    In connection with the JPM Credit Facility, the Company and 57th Street have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The JPM Credit Facility contains customary default provisions pursuant to which the administrative agent and the lenders under the JPM Credit Facility may terminate the Company in its capacity as collateral manager/portfolio manager under the JPM Credit Facility. Upon the occurrence of an event of default under the JPM Credit Facility, the administrative agent or the lenders may declare the outstanding advances and all other obligations under the JPM Credit Facility immediately due and payable.

JPM Revolver Facility

On June 10, 2022, the Company entered into a $495.0 million revolving credit facility with JPMorgan Chase Bank, as administrative agent and as collateral agent, MUFG Union Bank, N.A., Sumitomo Mitsui Banking Corporation, and Wells Fargo Bank, National Association as syndication agents, as well as other Lender parties (the “JPM Revolver Facility”).

The JPM Revolver Facility provides for borrowings through June 10, 2026, and any amounts borrowed under the JPM Revolver Facility will mature on June 10, 2027. The JPM Revolver Facility is priced at three-month Term SOFR, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 1.98% per annum. Interest is payable quarterly in arrears. The Company will be subject to a non-usage fee of 0.38% to the extent the commitments available under the JPM Revolver Facility have not been borrowed. The Company paid a structuring fee and incurred other customary costs and expenses in connection with the JPM Revolver Facility.

In connection with the JPM Revolver Facility, the Company has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The JPM Revolver Facility contains customary events of default for similar financing transactions. Upon the occurrence and during the continuation of an event of default, JPMorgan Chase Bank, N.A. may declare the outstanding advances and all other obligations under the JPM Revolver Facility immediately due and payable.

61

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Citi Credit Facility

On June 27, 2014, the Company, through a wholly-owned, special purpose financing subsidiary, CB Funding, entered into a credit facility (as amended from time to time, the “Citi Credit Facility”) with Citibank, N.A. ("Citi") as administrative agent and U.S. Bank as collateral agent, account bank, and collateral custodian. From January 1, 2020 to January 20, 2021 the Citi Credit Facility provided for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis, with a reinvestment period ending on May 31, 2021 and maturity date of May 31, 2022. On January 20, 2021, SLF, the Company's joint venture with CCLF entered into an amendment to the Citi Credit Facility (the “Citi Credit Agreement”). The amendment, among other things, (i) replaces the Company with SLF as the collateral manager under the Citi Credit Agreement, (ii) extends the end of the reinvestment period from May 31, 2021 to May 31, 2023 and (iii) extends the final maturity date from May 31, 2022 to May 31, 2024. As a result of this amendment to the Citi Credit Facility, the Company incurred a realized loss on extinguishment of debt of $1.3 million. In connection with the Citi Credit Facility, CB Funding has made certain representations and warranties, is required to comply with various covenants, reporting requirements, and other customary requirements for similar facilities and is subject to certain customary events of default. Upon the occurrence and during the continuation of an event of default, Citi may declare the outstanding advances and all other obligations under the Citi Credit Facility immediately due and payable. During the continuation of an event of default, CB Funding must pay interest at a default rate.

    The Citi Credit Facility contains customary default provisions for facilities of this type pursuant to which Citi may terminate the rights, obligations, power, and authority of the Company, in its capacity as servicer of the portfolio assets under the Citi Credit Facility, including, but not limited to, non-performance of Citi Credit Facility obligations, insolvency, defaults of certain financial covenants, and other events with respect to the Company that may be adverse to Citi and the secured parties under the Citi Credit Facility.

    The Citi Credit Facility is priced at three-month LIBOR plus a spread of 1.60% per annum through and including the last day of the investment period and 2.00% per annum thereafter. Interest is payable quarterly in arrears. CB Funding is subject to a non-usage fee to the extent the aggregate principal amount available under the Citi Credit Facility has not been borrowed. The non-usage fee per annum is 0.50%. Any amounts borrowed under the Citi Credit Facility along with any accrued and unpaid interest thereunder will mature, and will be due and payable, in three years.

MassMutual Credit Facility

    On July 7, 2020, the Company and a wholly-owned, special purpose financing subsidiary, BDCA Asset Financing, entered into a loan and servicing agreement (the “MassMutual Credit Facility”) with Massachusetts Mutual Life Insurance Company (“MassMutual”) as facility servicer and a lender and U.S. Bank National Association as collateral custodian, collateral administrator and administrative agent. The MassMutual Credit Facility provides for borrowings of up to $100.0 million on a committed basis, and, subject to satisfaction of certain conditions, contains an accordion feature whereby the Mass Mutual Credit Facility can be expanded to $150.0 million.

    BDCA Asset Financing’s obligations under the MassMutual Credit Facility are secured by a first priority security interest in substantially all of the assets of BDCA Asset Financing, including its portfolio of investments and the Company’s equity interest in BDCA Asset Financing. The obligations of BDCA Asset Financing under the MassMutual Credit Facility are non-recourse to the Company.

    The MassMutual Credit Facility provides for borrowings through December 31, 2021 and matures on December 31, 2025.

    The MassMutual Credit Facility is priced at three-month LIBOR, with a LIBOR floor of 0.75%, plus a spread of 5.0% per annum. Interest is payable quarterly in arrears. BDCA Asset Financing will be subject to a non-usage fee of 0.50% to the extent the aggregate principal amount available under the MassMutual Credit Facility has not been borrowed. BDCA Asset Financing paid a structuring fee and incurred other customary costs and expenses in connection with the MassMutual Credit Facility.

    In connection with the MassMutual Credit Facility, the Company and BDCA Asset Financing have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The MassMutual Credit Facility contains customary default provisions pursuant to which MassMutual may terminate the Company in its capacity as portfolio asset servicer of the portfolio assets under the MassMutual Credit Facility. Upon the occurrence of an event of default, MassMutual may declare the outstanding advances and all other obligations under the MassMutual Credit Facility immediately due and payable.

62

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Effective February 18, 2022, the Company terminated the Mass Mutual Credit Facility. As a result of this termination, the Company incurred a realized loss on extinguishment of debt of $1.8 million.

2022 Notes

    On December 14, 2017, the Company entered into a Purchase Agreement (the “2022 Notes Purchase Agreement”) with Sandler O'Neill & Partners, L.P. (the "Initial Purchaser") relating to the Company's sale of $150.0 million aggregate principal amount of its 4.75% fixed rate notes due 2022 (the “2022 Notes”) to the Initial Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act and for initial resale by the Initial Purchaser to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act and to institutional accredited investors under Rule 501(a)(1), (2), (3), or (7) under the Securities Act. The Company relied upon these exemptions from registration based in part on representations made by the Initial Purchaser. The 2022 Notes Purchase Agreement also includes customary representations, warranties, and covenants by the Company. Under the terms of the 2022 Notes Purchase Agreement, the Company has agreed to indemnify the Initial Purchaser against certain liabilities under the Securities Act. The 2022 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The net proceeds from the sale of the 2022 Notes was approximately $147.0 million, after deducting an offering price discount of approximately $0.8 million, as well as Initial Purchaser’s discounts and commissions of approximately $1.7 million and offering expenses of approximately $0.6 million, each payable by the Company. The Company used the net proceeds to repay outstanding indebtedness, to make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes.

    The 2022 Notes were issued pursuant to the Indenture dated as of December 19, 2017 (the “2017 Indenture”), between the Company and the Trustee, and a Supplemental Indenture, dated as of December 19, 2017 (the “Supplemental Indenture”), between the Company and the Trustee. The 2022 Notes will mature on December 30, 2022, unless repurchased or redeemed in accordance with their terms prior to such date. The 2022 Notes bear interest at a rate of 4.75% per year payable semi-annually on June 30 and December 30 of each year, commencing on June 30, 2018. The 2022 Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company's existing and future indebtedness that is expressly subordinated in right of payment to the 2022 Notes. The 2022 Notes will rank equally in right of payment with all of the Company's existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company's secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company's subsidiaries, financing vehicles, or similar facilities, including credit facilities entered into by the Company's wholly owned, special purpose financing subsidiaries.

    The 2017 Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements of the 1940 Act, whether or not it is subject to those requirements, and (ii) provide financial information to the holders of the 2022 Notes and the Trustee if the Company is no longer 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 2017 Indenture.

    In addition, if a change of control repurchase event, as defined in the 2017 Indenture, occurs prior to maturity, holders of the 2022 Notes will have the right, at their option, to require the Company to repurchase for cash some or all of the 2022 Notes at a repurchase price equal to 100% of the principal amount of the 2022 Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

63

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

2023 Notes

    On May 11, 2018, the Company entered into a Purchase Agreement (the “2023 Notes Purchase Agreement”) with the Initial Purchaser relating to the Company’s sale of $60.0 million aggregate principal amount of its 5.38% fixed rate notes due 2023 (the “2023 Notes”) to the Initial Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, and for initial resale by the Initial Purchaser to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act and to institutional accredited investors under Rule 501 (a)(1), (2), (3), or (7) under the Securities Act. The Company relied upon these exemptions from registration based in part on representations made by the Initial Purchaser. The 2023 Notes Purchase Agreement also includes customary representations, warranties, and covenants by the Company. Under the terms of the 2023 Notes Purchase Agreement, the Company has agreed to indemnify the Initial Purchaser against certain liabilities under the Securities Act. The 2023 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The net proceeds from the sale of the 2023 Notes were approximately $58.7 million, after deducting an offering price discount of approximately $0.3 million, as well as Initial Purchaser’s discounts and commissions of approximately $0.6 million and estimated offering expenses of approximately $0.4 million, each payable by the Company. The Company used the net proceeds to repay outstanding indebtedness, to make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes. The 2023 Notes were issued pursuant to the 2017 Indenture between the Company and The Trustee, and a Second Supplemental Indenture, dated as of May 16, 2018, between the Company and the Trustee. The 2023 Notes will mature on May 30, 2023, unless repurchased or redeemed in accordance with their terms prior to such date. The 2023 Notes bear interest at a rate of 5.375% per year payable semi-annually on May 30 and November 30 of each year, commencing on November 30, 2018. The 2023 Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the 2023 Notes. The 2023 Notes will rank equally in right of payment with all of the Company’s existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles, or similar facilities, including credit facilities entered into by the Company’s wholly owned, special purpose financing subsidiaries. The 2017 Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements of the 1940 Act, whether or not it is subject to those requirements, and (ii) provide financial information to the holders of the 2023 Notes and the Trustee if the Company is no longer 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 2017 Indenture. In addition, if a change of control repurchase event, as defined in the 2017 Indenture, occurs prior to maturity, holders of the 2023 Notes will have the right, at their option, to require the Company to repurchase for cash some or all of the 2023 Notes at a repurchase price equal to 100% of the principal amount of the 2023 Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

64

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

2024 Notes

    On December 3, 2019, the Company entered into a Purchase Agreement (the “2024 Notes Purchase Agreement”) with the Initial Purchaser relating to the Company’s sale of $100.0 million aggregate principal amount of its 4.85% fixed rate notes due 2024 (the “2024 Notes”) to the Initial Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, and for initial resale by the Initial Purchaser to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act and to institutional accredited investors under Rule 501 (a)(1), (2), (3), or (7) under the Securities Act. The Company relied upon these exemptions from registration based in part on representations made by the Initial Purchaser. The 2024 Notes Purchase Agreement also includes customary representations, warranties, and covenants by the Company. Under the terms of the 2024 Notes Purchase Agreement, the Company has agreed to indemnify the Initial Purchaser against certain liabilities under the Securities Act. The 2024 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The net proceeds from the sale of the 2024 Notes were approximately $98.4 million, after deducting the Initial Purchaser’s discounts and commissions of approximately $1.2 million and estimated offering expenses of approximately $0.4 million, each payable by the Company. The Company used the net proceeds to repay outstanding indebtedness, to make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes. The 2024 Notes were issued pursuant to the 2017 Indenture between the Company and The Trustee, and a Third Supplemental Indenture, dated as of December 5, 2019, between the Company and the Trustee. The 2024 Notes will mature on December 15, 2024, unless repurchased or redeemed in accordance with their terms prior to such date. The 2024 Notes bear interest at a rate of 4.85% per year payable semi-annually on June 15 and December 15 of each year, commencing on June 15, 2020. The 2024 Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the 2024 Notes. The 2024 Notes will rank equally in right of payment with all of the Company’s existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles, or similar facilities, including credit facilities entered into by the Company’s wholly owned, special purpose financing subsidiaries. The 2017 Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements of the 1940 Act, whether or not it is subject to those requirements, and (ii) provide financial information to the holders of the 2024 Notes and the Trustee if the Company is no longer 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 2017 Indenture. In addition, if a change of control repurchase event, as defined in the 2017 Indenture, occurs prior to maturity, holders of the 2024 Notes will have the right, at their option, to require the Company to repurchase for cash some or all of the 2024 Notes at a repurchase price equal to 100% of the principal amount of the 2024 Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

2026 Notes

On March 24, 2021, the Company entered into a Purchase Agreement (the “2026 Notes Purchase Agreement”) with the initial purchaser listed therein relating to the Company’s sale of $300.0 million aggregate principal amount of its 3.25% fixed rate notes due 2026 (the “Restricted 2026 Notes”) to the Initial Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, and for initial resale by the Initial Purchaser to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act and to certain non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The Company relied upon these exemptions from registration based in part on representations made by the Initial Purchaser. The 2026 Notes Purchase Agreement also includes customary representations, warranties, and covenants by the Company. Under the terms of the 2026 Notes Purchase Agreement, the Company has agreed to indemnify the Initial Purchaser against certain liabilities under the Securities Act. The Restricted 2026 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The net proceeds from the sale of the 2026 Notes were approximately $296.0 million, after deducting the Initial Purchaser’s discounts and commissions and estimated offering expenses. The Company used the net proceeds to repay outstanding indebtedness, to make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes. The Restricted 2026 Notes were issued pursuant to the Indenture dated as of March 29, 2021 (the “2021 Indenture”), between the Company and the Trustee, and a Supplemental Indenture, dated as of March 29, 2021 (the “First Supplemental Indenture”), between the Company and the Trustee. The 2026 Notes (as defined below) will mature on March 30, 2026, unless repurchased or redeemed in accordance with their terms prior to such date. The 2026 Notes bear interest at a rate of 3.25% per year payable semi-annually on March 30 and September 30 of

65

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

each year, commencing on September 30, 2021. The 2026 Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the 2026 Notes. The 2026 Notes will rank equally in right of payment with all of the Company’s existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles, or similar facilities, including credit facilities entered into by the Company’s wholly owned, special purpose financing subsidiaries. The 2021 Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements of the 1940 Act, whether or not it is subject to those requirements, and (ii) provide financial information to the holders of the 2026 Notes and the Trustee if the Company is no longer 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 2021 Indenture. In addition, if a change of control repurchase event, as defined in the 2021 Indenture, occurs prior to maturity, holders of the 2026 Notes will have the right, at their option, to require the Company to repurchase for cash some or all of the 2026 Notes at a repurchase price equal to 100% of the principal amount of the 2026 Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. Pursuant to a Registration Statement on Form N-14 (File No. 333-257321), on September 22, 2021, the Company closed an exchange offer in which holders of the Restricted 2026 Notes were offered the opportunity to exchange their Restricted 2026 Notes for new registered notes with substantially identical terms (the “Unrestricted 2026 Notes” and, together with the Restricted 2026 Notes, the 2026 Notes), through which holders representing 99.88% of the outstanding principal of the then Restricted 2026 Notes obtained Unrestricted 2026 Notes.

    The weighted average annualized interest cost for all borrowings for the six months ended June 30, 2022 and 2021 was 3.60% and 3.53%, respectively. The average daily debt outstanding for the six months ended June 30, 2022 and 2021 was $1.3 billion, and 1.0 billion, respectively. The maximum debt outstanding for the six months ended June 30, 2022 and 2021 was $1.3 billion and 1.2 billion, respectively.

    The following table represents borrowings as of June 30, 2022:

						Maturity Date						Total Aggregate Borrowing Capacity						Total Principal Outstanding						Less Deferred Financing Costs						Amount per Consolidated Statements of Assets and Liabilities
Wells Fargo Credit Facility						8/28/2025						$	300,000					$	267,000					$	(4,819)					$	262,181
JPM Credit Facility						8/28/2023						400,000						321,600						(524)						321,076
JPM Revolver Facility						6/10/2027						495,000						5,000						(3,873)						1,127
2026 Notes						3/30/2026						300,000						297,075						(409)						296,666
2024 Notes						12/15/2024						100,000						99,413						(91)						99,322
2023 Notes						5/30/2023						60,000						59,941						(172)						59,769
2022 Notes						12/30/2022						150,000						149,918						(228)						149,690
Totals												$	1,805,000					$	1,199,947					$	(10,116)					$	1,189,831

    

66

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

The following table represents borrowings as of December 31, 2021:

						Maturity Date						Total Aggregate Borrowing Capacity						Total Principal Outstanding						Less Deferred Financing Costs						Amount per Consolidated Statements of Assets and Liabilities
Wells Fargo Credit Facility						8/28/2025						$	300,000					$	285,000					$	(5,575)					$	279,425
JPM Credit Facility						8/28/2023						400,000						391,100						(734)						390,366
MassMutual Credit Facility						12/31/2025						100,000						—						(1,807)						(1,807)
2026 Notes						3/30/2026						300,000						296,688						(607)						296,081
2024 Notes						12/15/2024						100,000						99,295						(110)						99,185
2023 Notes						5/30/2023						60,000						59,908						(266)						59,642
2022 Notes						12/30/2022						150,000						149,836						(454)						149,382
Totals												$	1,410,000					$	1,281,827					$	(9,553)					$	1,272,274

    The following table represents interest and debt fees for the three and six months ended June 30, 2022:

			Three months ended June 30, 2022																														Six months ended June 30, 2022
			Interest Rate						Non-Usage Rate						Interest Expense						Deferred Financing Costs (7)						Other Fees (8)						Interest Rate						Non-Usage Rate						Interest Expense						Deferred Financing Costs (7)						Other Fees (8)
Wells Fargo Credit Facility			(1)						(2)						$	2,268					$	380					$	92					(1)						(2)						$	4,215					$	756					$	141
JPM Credit Facility			(3)						(4)						3,494						106						119						(3)						(4)						6,421						210						187
JPM Revolver Facility			(5)						0.38%						10						45						108						(5)						0.38%						10						45						108
MassMutual Credit Facility (9)			—						—						—						—						—						(6)						0.50%						—						38						26
2026 Notes			3.25%						n/a						2,632						33						2						3.25%						n/a						5,262						68						2
2024 Notes			4.85%						n/a						1,272						9						9						4.85%						n/a						2,543						18						9
2023 Notes			5.38%						n/a						822						47						—						5.38%						n/a						1,644						94						—
2022 Notes			4.75%						n/a						1,822						114						9						4.75%						n/a						3,644						227						9
Totals															$	12,320					$	734					$	339																	$	23,739					$	1,456					$	482

______________

(1) From April 6, 2021 through May 26, 2022, the Wells Fargo Credit Facility had an interest rate priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread calculated based upon the composition of the loans in the collateral pool, which will not exceed 2.50% per annum. From May 27, 2022 through June 30, 2022, the Wells Fargo Credit Facility had an interest rate priced at Daily Simple SOFR, with a Daily Simple SOFR floor of zero, plus a spread calculated based upon the composition of the loans in the collateral pool, which will not exceed 2.60% per annum.

(2) The non-usage fee per annum is 0.50% for the first 25% of the unused balance and up to 2.0% for the remaining unused balance.

(3) Interest rate is priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread of 2.75% per annum.

(4) The non-usage fee per annum is 0.75% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance.

67

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

(5) Interest rate is priced at three-month Term SOFR, plus a spread calculated based upon the composition of the loans in the collateral pool,which will not exceed 1.98% per annum.

(6) Interest rate is priced at three-month LIBOR, with a LIBOR floor of 0.75%, plus a spread of 5.0% per annum.

(7) Amortization of deferred financing costs.

(8) Includes non-usage fees and custody fees.

(9) Amounts presented represent activity prior to termination on February 18, 2022.

    The following table represents interest and debt fees for the three and six months ended June 30, 2021:

			Three months ended June 30, 2021																														Six months ended June 30, 2021
			Interest Rate						Non-Usage Rate						Interest Expense						Deferred Financing Costs (6)						Other Fees (7)						Interest Rate						Non-Usage Rate						Interest Expense						Deferred Financing Costs (6)						Other Fees (7)
Wells Fargo Credit Facility			(1)						(2)						$	1,184					$	380					$	194					(1)						(2)						$	3,122					$	756					$	254
JPM Credit Facility			(3)						(4)						1,814						106						334						(3)						(4)						3,986						210						517
Citi Credit Facility (8)			—						—						—						—						—						L+1.60%						0.50%						277						49						48
MassMutual Credit Facility			(5)						0.50%						—						112						145						(5)						0.50%						—						223						283
2026 Notes			3.25%						n/a						2,633						28						15						3.25%						n/a						2,693						29						15
2024 Notes			4.85%						n/a						1,272						9						—						4.85%						n/a						2,543						18						—
2023 Notes			5.38%						n/a						823						47						—						5.38%						n/a						1,645						94						—
2022 Notes			4.75%						n/a						1,822						114						—						4.75%						n/a						3,644						226						—
Totals															$	9,548					$	796					$	688																	$	17,910					$	1,605					$	1,117

______________

(1) From August 28, 2020 through March 31, 2021, the Wells Fargo Credit Facility had an interest rate priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread calculated based upon the composition of the loans in the collateral pool, which will not exceed 2.75% per annum. From April 6, 2021 through June 30, 2021, the Wells Fargo Credit Facility had an interest rate priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread calculated based upon the composition of the loans in the collateral pool, which will not exceed 2.50% per annum.

(2) The non-usage fee per annum is 0.50% for the first 25% of the unused balance and up to 2.0% for the remaining unused balance.

(3) Interest rate is priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread of 2.75% per annum.

(4) The non-usage fee per annum is 0.50% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance.

(5) Interest rate is priced at three-month LIBOR, with a LIBOR floor of 0.75%, plus a spread of 5.0% per annum.

(6) Amortization of deferred financing costs.

(7) Includes non-usage fees and custody fees.

(8) Amounts presented represent activity prior to the Citi Credit Agreement on January 20, 2021.

    The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate fair value. The fair value of short-term financial instruments such as cash and cash equivalents, due to affiliates, and accounts payable approximate their carrying value on the accompanying consolidated statements of assets and liabilities due to their short-term nature. The fair value of the Company's 2022 Notes, 2023 Notes, 2024 Notes, and 2026 Notes are derived from market indications provided by Bloomberg Finance L.P. at June 30, 2022 and December 31, 2021.

68

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

    At June 30, 2022, the carrying amount of the Company's secured borrowings approximated their fair value. The fair values of the Company's debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Company's borrowings is estimated based upon market interest rates for the Company's own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. As of June 30, 2022 and December 31, 2021, the Company's borrowings would be deemed to be Level 3, as defined in Note 3 - Fair Value of Financial Instruments.

    The fair values of the Company’s remaining financial instruments that are not reported at fair value on the accompanying consolidated statements of assets and liabilities are reported below:

			Level						Carrying Amount at June 30, 2022						Fair Value at June 30, 2022
Wells Fargo Credit Facility			3						$	267,000					$	267,000
JPM Credit Facility			3						321,600						321,600
JPM Revolver Facility			3						5,000						5,000
2026 Notes			3						297,075						273,741
2024 Notes			3						99,413						96,727
2023 Notes			3						59,941						60,364
2022 Notes			3						149,918						150,677
									$	1,199,947					$	1,175,109

			Level						Carrying Amount at December 31, 2021						Fair Value at December 31, 2021
Wells Fargo Credit Facility			3						$	285,000					$	285,000
JPM Credit Facility			3						391,100						391,100
MassMutual Credit Facility			3						—						—
2026 Notes			3						296,688						300,243
2024 Notes			3						99,295						105,163
2023 Notes			3						59,908						62,113
2022 Notes			3						149,836						153,732
									$	1,281,827					$	1,297,351

Note 6 — Derivatives

Foreign Currency

    The Company may enter into forward foreign currency contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies or to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company's investments denominated in foreign currencies. A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date (usually the security transaction settlement date) at a negotiated forward rate. These contracts are marked-to-market by recognizing the difference between the contract exchange rate and the current market rate as unrealized appreciation or depreciation. Realized gains or losses are recognized when contracts are settled. The Company's forward foreign currency contracts generally have terms of approximately three months. The volume of open contracts at the end of each reporting period is reflective of the typical volume of transactions during each calendar quarter. Risks may arise as a result of the potential inability of the counterparties to meet the terms of their contracts. The Company attempts to limit this risk by dealing with creditworthy counterparties.

    At June 30, 2022 and December 31, 2021, the forward foreign currency contracts were classified within Level 2 of the fair value hierarchy. The foreign currency forward contracts held as of June 30, 2022, and December 31, 2021 were subject to ISDA Master Agreements or similar agreements.

    The Company is operated by a person who has claimed an exclusion from the definition of the "commodity pool operator" under the Commodity Exchange Act, and, therefore, who is not subject to registration or regulation as a pool operator under such Act.

69

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Note 7 — Commitments and Contingencies

Commitments

    In the ordinary course of business, the Company may enter into future funding commitments. As of June 30, 2022, the Company had unfunded commitments on delayed draw term loans of $153.7 million, unfunded commitments on revolver term loans of $111.0 million, unfunded equity capital discretionary commitments of $11.1 million, and unfunded commitments on term loans of $0.6 million. As of December 31, 2021, the Company had unfunded commitments on delayed draw term loans of $163.6 million, unfunded commitments on revolver term loans of $102.9 million, unfunded equity capital discretionary commitments of $11.1 million, and unfunded commitments on term loans of $0.8 million. The Company maintains sufficient cash on hand and available borrowing capacity to fund such unfunded commitments.

As of June 30, 2022, the Company's unfunded commitments consisted of the following:

June 30, 2022

Portfolio Company Name

Investment Type

Commitment Type

Total Commitment

Remaining Commitment

ADCS Clinics Intermediate Holdings, LLC

Senior Secured First Lien Debt

Delayed draw term loan

$

6,552

$

3,740

ADCS Clinics Intermediate Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

1,264

1,264

Arch Global Precision, LLC

Senior Secured First Lien Debt

Revolver term loan

1,008

1,008

Arctic Holdco, LLC

Senior Secured First Lien Debt

Revolver term loan

4,574

2,744

Armada Parent, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

4,517

4,517

Armada Parent, Inc.

Senior Secured First Lien Debt

Revolver term loan

5,420

5,420

Aventine Holdings, LLC

Senior Secured First Lien Debt

Delayed draw term loan

10,188

1,072

BCPE Oceandrive Buyer, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

11,417

11,417

BCPE Oceandrive Buyer, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,425

2,283

Capstone Logistics

Senior Secured First Lien Debt

Revolver term loan

1,804

1,804

Chudy Group, LLC

Senior Secured First Lien Debt

Delayed draw term loan

3,442

2,868

Chudy Group, LLC

Senior Secured First Lien Debt

Revolver term loan

860

860

Cobblestone Intermediate Holdco, LLC

Senior Secured First Lien Debt

Delayed draw term loan

7,010

881

Communication Technology Intermediate, LLC

Senior Secured First Lien Debt

Revolver term loan

2,363

2,158

CRS-SPV, Inc.

Senior Secured First Lien Debt

Revolver term loan

224

162

Dynagrid Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

2,262

1,810

Eliassen Group, LLC

Senior Secured First Lien Debt

Delayed draw term loan

2,932

2,932

Encina Equipment Finance, LLC

Subordinated Debt

Delayed draw term loan

24,000

15,771

FGT Purchaser, LLC

Senior Secured First Lien Debt

Revolver term loan

2,144

2,144

Galway Borrower, LLC

Senior Secured First Lien Debt

Delayed draw term loan

2,798

2,798

Galway Borrower, LLC

Senior Secured First Lien Debt

Revolver term loan

1,894

1,894

Geosyntec Consultants, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

13,005

13,005

Geosyntec Consultants, Inc.

Senior Secured First Lien Debt

Revolver term loan

4,769

4,769

Gogo Intermediate Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

1,053

1,053

Health Plan One, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,458

1,458

Higginbotham Insurance Agency, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

6,857

5,901

Hospice Care Buyer, Inc.

Senior Secured First Lien Debt

Revolver term loan

2,775

634

ICR Operations, LLC

Senior Secured First Lien Debt

Revolver term loan

6,178

4,633

Ideal Tridon Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

2,810

2,810

IG Investments Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

1,390

1,008

Indigo Buyer, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

9,078

9,078

Indigo Buyer, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,630

3,025

Integrated Efficiency Solutions, Inc.

Senior Secured First Lien Debt

Revolver term loan

600

420

Integrated Global Services, Inc.

Senior Secured First Lien Debt

Revolver term loan

2,028

608

IQN Holding Corp.

Senior Secured First Lien Debt

Delayed draw term loan

2,540

2,540

IQN Holding Corp.

Senior Secured First Lien Debt

Revolver term loan

1,017

1,017

Knowledge Pro Buyer, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

5,061

5,061

Knowledge Pro Buyer, Inc.

Senior Secured First Lien Debt

Revolver term loan

2,531

2,065

Manna Pro Products, LLC

Senior Secured First Lien Debt

Revolver term loan

2,706

947

70

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Portfolio Company Name

Investment Type

Commitment Type

Total Commitment

Remaining Commitment

McDonald Worley, P.C.

Senior Secured First Lien Debt

Term loan

$

12,887

$

591

Medical Management Resource Group, LLC

Senior Secured First Lien Debt

Delayed draw term loan

6,631

5,623

Medical Management Resource Group, LLC

Senior Secured First Lien Debt

Revolver term loan

1,326

1,326

Midwest Can Company, LLC

Senior Secured First Lien Debt

Revolver term loan

2,019

2,019

Miller Environmental Group, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

1,131

1,131

Miller Environmental Group, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,324

1,324

Mirra-Primeaccess Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

7,827

1,957

Muth Mirror Systems, LLC

Senior Secured First Lien Debt

Revolver term loan

1,299

1,299

Norvax, LLC

Senior Secured First Lien Debt

Revolver term loan

1,152

259

Odessa Technologies, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

2,676

2,676

Odessa Technologies, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,747

3,747

ORG GC Holdings, LLC

Senior Secured First Lien Debt

Delayed draw term loan

584

584

Pie Buyer, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

13,311

7,213

Pie Buyer, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,840

1,840

Pluralsight, LLC

Senior Secured First Lien Debt

Revolver term loan

1,602

1,602

Point Broadband Acquisition, LLC

Senior Secured First Lien Debt

Delayed draw term loan

8,058

8,058

Premier Global Services, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,042

73

Prototek, LLC

Senior Secured First Lien Debt

Delayed draw term loan

2,257

2,257

Prototek, LLC

Senior Secured First Lien Debt

Revolver term loan

1,693

339

Questex, Inc.

Senior Secured First Lien Debt

Revolver term loan

2,584

2,584

Reddy Ice Corp.

Senior Secured First Lien Debt

Revolver term loan

1,762

1,322

Relativity Oda, LLC

Senior Secured First Lien Debt

Revolver term loan

464

464

REP TEC Intermediate Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,354

1,354

Roadsafe Holdings, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

10,183

4,887

Roadsafe Holdings, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

5,072

5,072

RSC Acquisition, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

4,216

4,216

Saturn SHC Buyer Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

8,886

8,886

SCIH Salt Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,746

3,746

Sherlock Buyer Corp.

Senior Secured First Lien Debt

Delayed draw term loan

3,209

3,209

Sherlock Buyer Corp.

Senior Secured First Lien Debt

Revolver term loan

1,284

1,284

Simplifi Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,782

3,782

St. Croix Hospice Acquisition Corp.

Senior Secured First Lien Debt

Delayed draw term loan

5,639

4,060

St. Croix Hospice Acquisition Corp.

Senior Secured First Lien Debt

Revolver term loan

2,256

2,256

Subsea Global Solutions, LLC

Senior Secured First Lien Debt

Revolver term loan

963

340

SunMed Group Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

601

313

Tap Rock Resources, LLC (1)

Equity/Other

Equity

29,470

11,114

Therapy Brands Holdings, LLC

Senior Secured First Lien Debt

Delayed draw term loan

889

889

Therapy Brands Holdings, LLC

Senior Secured Second Lien Debt

Delayed draw term loan

1,379

1,379

Trinity Air Consultants Holdings Corp.

Senior Secured First Lien Debt

Delayed draw term loan

6,974

3,138

Trinity Air Consultants Holdings Corp.

Senior Secured First Lien Debt

Revolver term loan

1,993

1,993

Triple Lift, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,300

2,035

University of St. Augustine Acquisition Corp.

Senior Secured First Lien Debt

Revolver term loan

2,615

2,615

US Oral Surgery Management Holdco, LLC

Senior Secured First Lien Debt

Delayed draw term loan

4,821

4,393

US Oral Surgery Management Holdco, LLC

Senior Secured First Lien Debt

Revolver term loan

1,167

1,167

US Salt Investors, LLC

Senior Secured First Lien Debt

Revolver term loan

2,169

2,169

Vensure Employer Services, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

379

379

Victors CCC Buyer, LLC

Senior Secured First Lien Debt

Delayed draw term loan

4,391

4,391

Victors CCC Buyer, LLC

Senior Secured First Lien Debt

Revolver term loan

3,179

2,782

Westwood Professional Services, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

3,023

2,016

Westwood Professional Services, Inc.

Senior Secured First Lien Debt

Revolver term loan

378

378

WHCG Purchaser III, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

13,692

6,579

71

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Portfolio Company Name						Investment Type						Commitment Type						Total Commitment						Remaining Commitment
WHCG Purchaser III, Inc.						Senior Secured First Lien Debt						Revolver term loan						$	4,224					$	4,224
WIN Holdings III Corp.						Senior Secured First Lien Debt						Revolver term loan						4,448						3,558
Total																		$	386,482					$	276,471

_____________

(1) The commitment related to this investment is discretionary.

As of December 31, 2021, the Company's unfunded commitments consisted of the following:

December 31, 2021

Portfolio Company Name

Investment Type

Commitment Type

Total Commitment

Remaining Commitment

ADCS Clinics Intermediate Holdings, LLC

Senior Secured First Lien Debt

Delayed draw term loan

$

3,604

$

1,485

ADCS Clinics Intermediate Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

1,264

1,264

Arch Global Precision, LLC

Senior Secured First Lien Debt

Delayed draw term loan

2,380

164

Arch Global Precision, LLC

Senior Secured First Lien Debt

Revolver term loan

1,008

1,008

Arctic Holdco, LLC

Senior Secured First Lien Debt

Delayed draw term loan

10,632

3,694

Arctic Holdco, LLC

Senior Secured First Lien Debt

Revolver term loan

5,074

4,059

Armada Parent, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

4,517

4,517

Armada Parent, Inc.

Senior Secured First Lien Debt

Revolver term loan

5,420

4,968

Aventine Holdings, LLC

Senior Secured First Lien Debt

Delayed draw term loan

10,063

10,063

BCPE Oceandrive Buyer, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

11,417

11,417

BCPE Oceandrive Buyer, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

3,425

3,425

BCPE Oceandrive Buyer, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,425

3,425

Capstone Logistics

Senior Secured First Lien Debt

Delayed draw term loan

2,945

1,818

Capstone Logistics

Senior Secured First Lien Debt

Revolver term loan

1,804

1,526

Chudy Group, LLC

Senior Secured First Lien Debt

Delayed draw term loan

3,442

3,442

Chudy Group, LLC

Senior Secured First Lien Debt

Revolver term loan

860

860

Cobblestone Intermediate Holdco, LLC

Senior Secured First Lien Debt

Delayed draw term loan

7,015

5,899

Communication Technology Intermediate, LLC

Senior Secured First Lien Debt

Revolver term loan

2,363

2,363

CRS-SPV, Inc.

Senior Secured First Lien Debt

Revolver term loan

224

162

Dynagrid Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

2,262

1,583

Encina Equipment Finance, LLC

Subordinated Debt

Delayed draw term loan

24,000

24,000

FGT Purchaser, LLC

Senior Secured First Lien Debt

Revolver term loan

2,144

1,501

Galway Borrower, LLC

Senior Secured First Lien Debt

Delayed draw term loan

3,977

3,977

Galway Borrower, LLC

Senior Secured First Lien Debt

Revolver term loan

1,894

1,894

Gogo Intermediate Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

1,053

1,053

Health Plan One, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,458

1,458

Higginbotham Insurance Agency, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

10,113

6,022

Hospice Care Buyer, Inc.

Senior Secured First Lien Debt

Revolver term loan

2,775

1,070

ICR Operations, LLC

Senior Secured First Lien Debt

Revolver term loan

6,178

3,089

Ideal Tridon Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

2,810

1,927

IG Investments Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

1,390

695

Integrated Efficiency Solutions, Inc.

Senior Secured First Lien Debt

Revolver term loan

600

469

Integrated Global Services, Inc.

Senior Secured First Lien Debt

Revolver term loan

2,028

406

Knowledge Pro Buyer, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

5,061

5,061

Knowledge Pro Buyer, Inc.

Senior Secured First Lien Debt

Revolver term loan

2,531

1,924

Lakeview Health Holdings, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

514

100

Manna Pro Products, LLC

Senior Secured First Lien Debt

Revolver term loan

2,706

1,962

McDonald Worley, P.C.

Senior Secured First Lien Debt

Term loan

12,887

807

72

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Portfolio Company Name

Investment Type

Commitment Type

Total Commitment

Remaining Commitment

Medical Management Resource Group, LLC

Senior Secured First Lien Debt

Delayed draw term loan

$

6,631

$

6,631

Medical Management Resource Group, LLC

Senior Secured First Lien Debt

Revolver term loan

1,326

1,326

Midwest Can Company, LLC

Senior Secured First Lien Debt

Revolver term loan

2,019

1,454

Miller Environmental Group, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

1,131

1,131

Miller Environmental Group, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,324

1,324

Mintz Group, LLC

Senior Secured First Lien Debt

Delayed draw term loan

1,344

1,344

Mintz Group, LLC

Senior Secured First Lien Debt

Revolver term loan

630

630

Mirra-Primeaccess Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

7,827

7,827

Muth Mirror Systems, LLC

Senior Secured First Lien Debt

Revolver term loan

1,299

1,299

Norvax, LLC

Senior Secured First Lien Debt

Revolver term loan

1,152

259

Odessa Technologies, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

2,676

2,676

Odessa Technologies, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,747

3,747

Olaplex, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,908

1,908

ORG GC Holdings, LLC

Senior Secured First Lien Debt

Delayed draw term loan

584

584

Pie Buyer, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

6,129

4,658

Pie Buyer, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,840

1,840

Pluralsight, LLC

Senior Secured First Lien Debt

Revolver term loan

1,602

1,602

Point Broadband Acquisition, LLC

Senior Secured First Lien Debt

Delayed draw term loan

8,058

8,058

Premier Global Services, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,042

73

Prototek, LLC

Senior Secured First Lien Debt

Delayed draw term loan

2,257

2,257

Prototek, LLC

Senior Secured First Lien Debt

Revolver term loan

1,693

451

PT Network, LLC

Senior Secured First Lien Debt

Revolver term loan

1,316

921

Questex, Inc.

Senior Secured First Lien Debt

Revolver term loan

2,584

1,034

Reddy Ice Corp.

Senior Secured First Lien Debt

Delayed draw term loan

4,863

19

Reddy Ice Corp.

Senior Secured First Lien Debt

Revolver term loan

1,762

1,762

Refresh Parent Holdings, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

3,120

85

Refresh Parent Holdings, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

1,859

1,859

Refresh Parent Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,127

721

Relativity Oda, LLC

Senior Secured First Lien Debt

Revolver term loan

464

464

REP TEC Intermediate Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

1,354

1,354

Roadsafe Holdings, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

4,433

1,554

RSC Acquisition, Inc.

Senior Secured First Lien Debt

Delayed draw term loan

9,236

7,943

Saturn SHC Buyer Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

8,886

5,554

SCIH Salt Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,746

2,716

Sherlock Buyer Corp.

Senior Secured First Lien Debt

Delayed draw term loan

3,209

3,209

Sherlock Buyer Corp.

Senior Secured First Lien Debt

Revolver term loan

1,284

1,284

Simplifi Holdings, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,782

3,782

St. Croix Hospice Acquisition Corp.

Senior Secured First Lien Debt

Delayed draw term loan

5,639

5,639

St. Croix Hospice Acquisition Corp.

Senior Secured First Lien Debt

Revolver term loan

2,256

2,256

SunMed Group Holdings, LLC

Senior Secured First Lien Debt

Revolver term loan

601

505

Tap Rock Resources, LLC (1)

Equity/Other

Equity

29,470

11,114

Therapy Brands Holdings, LLC

Senior Secured First Lien Debt

Delayed draw term loan

889

889

Therapy Brands Holdings, LLC

Senior Secured Second Lien Debt

Delayed draw term loan

1,379

1,379

Trinity Air Consultants Holdings Corp.

Senior Secured First Lien Debt

Delayed draw term loan

6,974

6,974

Trinity Air Consultants Holdings Corp.

Senior Secured First Lien Debt

Revolver term loan

1,993

399

Triple Lift, Inc.

Senior Secured First Lien Debt

Revolver term loan

3,300

3,300

University of St. Augustine Acquisition Corp.

Senior Secured First Lien Debt

Revolver term loan

2,615

2,615

US Oral Surgery Management Holdco, LLC

Senior Secured First Lien Debt

Delayed draw term loan

4,821

4,393

US Oral Surgery Management Holdco, LLC

Senior Secured First Lien Debt

Revolver term loan

1,167

1,167

73

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Portfolio Company Name						Investment Type						Commitment Type						Total Commitment						Remaining Commitment
US Salt Investors, LLC						Senior Secured First Lien Debt						Revolver term loan						$	2,169					$	2,169
Vensure Employer Services, Inc.						Senior Secured First Lien Debt						Delayed draw term loan						2,384						2,384
Westwood Professional Services, Inc.						Senior Secured First Lien Debt						Delayed draw term loan						3,023						2,016
Westwood Professional Services, Inc.						Senior Secured First Lien Debt						Revolver term loan						378						378
WHCG Purchaser III, Inc.						Senior Secured First Lien Debt						Delayed draw term loan						13,728						12,809
WHCG Purchaser III, Inc.						Senior Secured First Lien Debt						Revolver term loan						4,224						4,224
WIN Holdings III Corp.						Senior Secured First Lien Debt						Revolver term loan						4,448						3,892
Total																		$	367,965					$	278,399

_____________

(1) The commitment related to this investment is discretionary.

Litigation and Regulatory Matters

In the ordinary course of business, the Company may become subject to litigation, claims, and regulatory matters. The Company has no knowledge of material legal or regulatory proceedings pending or known to be contemplated against the Company at this time.

Indemnifications

In the ordinary course of its business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote.

Note 8 — Economic Dependency

    Under various agreements, the Company has engaged or will engage the Adviser and its affiliates to provide certain services that are essential to the Company, including asset management services, asset acquisition and disposition decisions, the sale of shares of the Company’s common stock available for issuance, as well as other administrative responsibilities for the Company including accounting services and investor relations.

    As a result of these relationships, the Company is dependent upon the Adviser and its affiliates. In the event that these companies were unable to provide the Company with the respective services, the Company would be required to find alternative providers of these services.

Note 9 — Common Stock

    On August 25, 2011, the Company had raised sufficient funds to break escrow on its IPO. On July 1, 2014, the Company's registration statement on Form N-2 (File No. 333-193241) for its Follow-on was declared effective by the SEC. Simultaneously with the effectiveness of the registration statement of the Follow-on, the Company's IPO terminated. Through June 30, 2022, the Company issued 244.8 million shares of common stock for gross proceeds of $2.5 billion, including the shares purchased by an affiliate of BSP and shares issued under the Company's DRIP. Following the time the Company's updated registration statement was declared effective on June 30, 2015, the Company issued shares for subscription agreements that had been accepted through that date. The Company suspended the DRIP from March 29, 2020 through June 26, 2020. While the DRIP was suspended, participants and all other holders of the Company's common stock received distributions paid by the Company in cash. From inception of the Company's DRIP plan to June 30, 2022, the Company had repurchased 34.0 million shares of common stock through its share repurchase program for payments of $282.8 million. As of December 31, 2021, the Company had repurchased 30.8 million shares of common stock for payments of $259.2 million. Amounts include additional shares tendered for death and disability as permitted.

    On April 1, 2022, April 12, 2022 and May 13, 2022, the Company entered into stock purchase agreements with certain investors (collectively, the “Purchase Agreements”) and associated subscription agreements (collectively, the “Subscription Agreements”), totaling $234.8 million, for the sale of the Company’s common stock at the net asset value of each drawdown date. Investors are required to make capital contributions to purchase the Company’s common stock each time the Company delivers a drawdown notice in an aggregate amount not to exceed their respective capital commitments. All purchases will generally be made subject to the terms and conditions set forth in the Purchase Agreements and Subscription Agreements, at a per-share price as determined by the Company’s Board, which price will be determined prior to the issuance of the Company’s

74

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

common stock and in accordance with the limitations under Section 23 of the 1940 Act. As of the date of this filing, the Company has called $79.4 million of capital commitments.

In connection with the Purchase Agreements, the Adviser has sold and will sell additional shares of the Company to such investors at a discounted price or contribute other consideration in connection with each drawdown. The Company is not obligated to reimburse the Adviser for the shares that were sold at a discounted price or the other consideration that was provided by the Adviser.

    

The following table reflects the common stock activity for the six months ended June 30, 2022:

						Shares						Value
Shares Sold						10,540,388						$	79,441
Shares Issued through DRIP						1,817,333						13,630
Share Repurchases						(3,159,305)						(23,571)
						9,198,416						69,500

The following table reflects the common stock activity for the year ended December 31, 2021:

						Shares						Value
Shares Sold						—						$	—
Shares Issued through DRIP						3,130,965						22,822
Share Repurchases						(2,910,936)						(19,532)
						220,029						$	3,290

    The following table reflects the stockholders' equity activity for the six months ended June 30, 2022:

			Common stock - shares						Common stock - par						Additional paid in capital						Total distributable earnings (loss)												Total Stockholders' Equity
Balance as of December 31, 2021			201,610,757						$	202					$	1,913,365					$	(404,075)											$	1,509,492
Net investment income			—						—						—						29,026												29,026
Net realized gain from investment transactions			—						—						—						3,444												3,444
Net change in unrealized appreciation on investments and foreign exchange currency contracts, net of change in deferred taxes			—						—						—						2,457												2,457
Repurchases			(3,091,177)						(3)						(23,062)						—												(23,065)
Distributions to stockholders			—						—						—						(29,778)												(29,778)
Reinvested dividends			908,625						—						6,806						—												6,806
Balance as of March 31,2022			199,428,205						$	199					$	1,897,109					$	(398,926)											$	1,498,382
Net investment income			—						—						—						28,496												28,496
Net realized gain from investment transactions			—						—						—						6,287												6,287
Net change in unrealized depreciation on investments and foreign exchange currency contracts, net of change in deferred taxes			—						—						—						(22,736)												(22,736)
Issuance of common stock, net of issuance costs			10,540,388						11						79,430						—												79,441
Repurchases			(68,128)						—						(506)						—												(506)
Distributions to stockholders			—						—						—						(31,485)												(31,485)
Reinvested dividends			908,708						1						6,823						—												6,824
Balance as of June 30, 2022			210,809,173						$	211					$	1,982,856					$	(418,364)											$	1,564,703

75

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

The following table reflects the stockholders' equity activity for the six months ended June 30, 2021:

			Common stock - shares						Common stock - par						Additional paid in capital						Total distributable earnings (loss)												Total Stockholders' Equity
Balance as of December 31, 2020			201,390,728						$	201					$	1,908,116					$	(508,562)											$	1,399,755
Net investment income			—						—						—						26,618												26,618
Net realized loss from investment transactions			—						—						—						(2,563)												(2,563)
Net change in unrealized appreciation on investments and foreign exchange currency contracts, net of change in deferred taxes			—						—						—						42,924												42,924
Repurchases			(2,801,712)						(3)						(18,796)						—												(18,799)
Distributions to stockholders			—						—						—						(19,757)												(19,757)
Reinvested dividends			658,852						1						4,578						—												4,579
Balance as of March 31, 2021			199,247,868						$	199					$	1,893,898					$	(461,340)											$	1,432,757
Net investment income			—						—						—						27,507												27,507
Net realized gain from investment transactions			—						—						—						27,149												27,149
Net change in unrealized appreciation on investments and foreign exchange currency contracts, net of change in deferred taxes			—						—						—						12,065												12,065
Repurchases			(109,223)						—						(733)						—												(733)
Distributions to stockholders			—						—						—						(19,900)												(19,900)
Reinvested dividends			634,996						1						4,565						—												4,566
Balance as of June 30, 2021			199,773,641						$	200					$	1,897,730					$	(414,519)											$	1,483,411

Note 10 — Capital

Investor Commitments

As of June 30, 2022, the Company had $234.8 million in total capital commitments, of which $155.3 million was unfunded, in connection with the Purchase Agreements and Subscription Agreements (as defined in Note 9). As of December 31, 2021, the Company did not have any capital commitments in connection with the Purchase Agreements and Subscription Agreements.

Capital Drawdowns

The following table summarizes the total shares issued and proceeds received, net of issuance costs, related to capital drawdowns of Common Stock in connection with the Purchase Agreements and Subscription Agreements for the six months ended June 30, 2022:

Share Issue Date						Shares Issued						Net Proceeds Received
For the six months ended June 30, 2022
April 14, 2022						5,548,128						$	41,500
June 3, 2022						4,992,260						37,941
Total Capital Drawdowns						10,540,388						$	79,441

There were no shares issued or proceeds received related to capital drawdowns of Common Stock in connection with the Purchase Agreements and Subscription Agreements for the year ended December 31, 2021.

The issuances of Common Stock described above were exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) thereof and Regulation D thereunder. The Company relied, in part, upon representations from investors in the relevant Subscription Agreements that each investor is an "accredited investor," as defined in Regulation D under the Securities Act.

76

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Note 11 — Share Repurchase Program

The Company intends to conduct annual tender offers pursuant to its share repurchase program (“SRP”). The Company’s Board of Directors considers the following factors in making its determination regarding whether to cause the Company to offer to repurchase shares and under what terms:

•the effect of such repurchases on the Company's qualification as a RIC (including the consequences of any necessary asset sales);

•the liquidity of the Company's assets (including fees and costs associated with disposing of assets);

•the Company's investment plans and working capital requirements;

•the relative economies of scale with respect to the Company's size;

•the Company's history in repurchasing shares or portions thereof;

•the condition of the securities markets.

    On June 26, 2020, the Company's Board of Directors amended the Company's SRP. The Company intends to conduct tender offers on an annual basis, instead of on a semi-annual basis as was done previously. The Company intends to continue to limit the number of shares to be repurchased in any calendar year to the lesser of (i) 10% of the weighted average number of shares outstanding in the prior calendar year or (ii) the number of shares of common stock the Company is able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during the relevant redemption period. In addition, in the event of a stockholder’s death or disability, the Company may, in its sole discretion, accept up to the full amount tendered by such stockholder of the current net asset value per share. Any repurchases of shares made in connection with a stockholder’s death or disability may be included within the overall limitation imposed on tender offers during the relevant redemption period, which provides that the Company may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock the Company is able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period. The Company's ten most recent tender offers were oversubscribed.

Offer Date						Repurchase Date						Shares Tendered						Shares Repurchased						Repurchase Price Per Share						Aggregate Consideration for Repurchased Shares (in thousands)
December 15, 2020						January 26, 2021						39,794,155						2,776,140						$	6.71					$	18,627.86
December 14, 2021						February 24, 2022						45,067,174						2,927,837						$	7.46					$	21,841.64

    Share amounts in the table above represent amounts filed in the tender offer.

Note 12 — Earnings Per Share

    Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company had no potentially dilutive securities for the periods ended June 30, 2022 and 2021.

    The following information sets forth the computation of the weighted average basic and diluted net increase in net assets per share resulting from operations for the three and six months ended June 30, 2022 and 2021.

			For the three months ended June 30,												For the six months ended June 30,
			2022						2021						2022						2021
Basic and diluted
Net increase in net assets resulting from operations			$	12,047					$	66,721					$	46,974					$	133,700
Weighted average shares outstanding			205,577,018						199,172,026						203,038,687						199,753,150
Net increase in net assets resulting from operations per share			$	0.06					$	0.33					$	0.23					$	0.67

77

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Note 13 — Distributions

The following table reflects the distributions declared on shares of the Company’s Common Stock during the six months ended June 30, 2022:    

Date Declared

Record Date

Payment Date

Amount Per Share

For the Six Months Ended June 30, 2022

March 10, 2022

March 31, 2022

April 5, 2022

$

0.13

March 10, 2022 (special)

March 31, 2022

April 5, 2022

$

0.02

May 11, 2022

June 30, 2022

July 1, 2022

$

0.13

May 11, 2022 (special)

June 30, 2022

July 1, 2022

$

0.02

The following table reflects the distributions declared on shares of the Company’s Common Stock during the year ended December 31, 2021:

Date Declared

Record Date

Payment Date

Amount Per Share

For the Year Ended December 31, 2021

March 11, 2021

March 31, 2021

April 1, 2021

$

0.10

May 7, 2021

June 30, 2021

July 1, 2021

$

0.10

September 28, 2021

September 30, 2021

October 1, 2021

$

0.13

September 28, 2021 (special)

September 30, 2021

October 1, 2021

$

0.02

November 9, 2021

December 31, 2021

January 3, 2022

$

0.13

November 9, 2021 (special)

December 31, 2021

January 3, 2022

$

0.02

The amount of each such distribution is subject to the discretion of the Board of Directors and applicable legal restrictions related to the payment of distributions. The Company calculates each stockholder’s specific distribution amount for the quarter using record and declaration dates. The distributions are payable by the fifth day following each record date.

    As of June 30, 2022 and December 31, 2021, the Company had accrued $24.7 million and $23.3 million, respectively, in stockholder distributions that were unpaid.

Note 14 — Income Tax Information and Distributions to Stockholders

    The Company has elected to be treated for federal income tax purposes as a RIC under the Code. Generally, a RIC is exempt from federal income taxes if it meets certain quarterly asset diversification requirements, annual income tests, and distributes to stockholders its ‘‘investment company taxable income,’’ as defined in the Code, each taxable year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the previous tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its RIC status each year. The Company may also be subject to federal excise taxes of 4%.

    A RIC is limited in its ability to deduct expenses in excess of its “investment company taxable income” (which is, generally, ordinary income plus net realized short-term capital gains in excess of net realized long-term capital losses). If the Company's expenses in a given taxable year exceed gross taxable income (e.g., as the result of large amounts of equity-based compensation), it would incur a net operating loss for that year. However, a RIC is not permitted to carry forward net operating losses to subsequent taxable years and such net operating losses do not pass through to the RIC’s stockholders. In addition, deductible expenses can be used only to offset investment company taxable income, not net capital gain. A RIC may not use any net capital losses (that is, realized capital losses in excess of realized capital gains) to offset the RIC’s investment company taxable income, but may carry forward such net capital losses, and use them to offset capital gains indefinitely. Due to these limits on the deductibility of expenses and net capital losses, the Company may for tax purposes have aggregate taxable income for several taxable years that it is required to distribute and that is taxable to stockholders even if such taxable income is greater than the aggregate net income the Company actually earned during those taxable years. Such required distributions may be made from the Company cash assets or by liquidation of investments, if necessary. The Company may realize gains or losses from such liquidations. In the event the Company realizes net capital gains from such transactions, the Company may make a larger capital gain distribution than it would have made in the absence of such transactions.

78

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

    Depending on the level of taxable income earned in a tax year, for excise tax purposes the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and incur a 4% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.

    The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes (“ASC Topic 740”), nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company's 2021 tax year and 2020, 2019 and 2018 federal and state tax returns remain subject to examination by the Internal Revenue Service.

    As of June 30, 2022, the Company had a deferred tax asset of $2.0 million and a deferred tax liability of $(3.1) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.0 million. As of December 31, 2021, the Company had a deferred tax asset of $2.0 million and a deferred tax liability of $(4.9) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.0 million.

    The deferred tax asset valuation allowance has been determined pursuant to the provisions of ASC Topic 740, including the Company's estimation of future taxable income, if necessary, and is adequate to reduce the total deferred tax asset to an amount that will more likely than not be realized.

Note 15 — Financial Highlights

The following is a schedule of financial highlights for the six months ended June 30, 2022 and 2021:

			For the six months ended June 30,
			2022						2021
Per share data:
Net asset value, beginning of period			$	7.49					$	6.95
Results of operations (1)
Net investment income			0.28						0.27
Net realized and unrealized gain (loss), net of change in deferred taxes			(0.05)						0.40
Net realized loss on foreign currency transactions			—						(0.01)
Net unrealized appreciation on from forward currency exchange contracts			—						0.01
Net increase in net assets resulting from operations			0.23						0.67
Stockholder distributions (2)
Distributions from net investment income			(0.30)						(0.20)
Net decrease in net assets resulting from stockholder distributions			(0.30)						(0.20)
Other (6)			—						0.01
Net asset value, end of period			$	7.42					$	7.43
Shares outstanding at end of period			210,809,173						199,773,641
Total return (3)			3.14		%				9.88		%
Ratio/Supplemental data:
Total net assets, end of period			$	1,564,703					$	1,483,411
Ratio of net investment income to average net assets (7)			8.57		%				8.54		%
Ratio of total expenses to average net assets (5) (7)			8.26		%				7.53		%
Portfolio turnover rate (4)			7.06		%				37.87		%

______________

(1)The per share data was derived by using the weighted average shares outstanding during the period.

(2)The per share data for distributions reflects the actual amount of distributions declared per share during the period.

79

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

(3)    Total return is calculated assuming a purchase of shares of common stock at the current net asset value on the first day and a sale at the current net asset value on the last day of the periods reported. Distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the DRIP.

(4)    Portfolio turnover rate is calculated using the lesser of year-to-date purchases or sales over the average of the invested assets at fair value.

(5)    Ratio of total expenses to average net assets is calculated using total operating expenses, including income tax expense over average net assets.

(6)    Represents the impact of calculating certain per share amounts based on weighted average shares outstanding during the period and certain per share amounts based on shares outstanding as of period end.

(7)    Ratios are annualized, except for incentive fees.

Note 16 – Schedules of Investments and Advances to Affiliates

    An affiliated company is generally a portfolio company in which FBLC owns 5% or more of its voting securities. A controlled affiliated company is generally a portfolio company in which FBLC owns more than 25% of its voting securities or has the power to exercise control over its management or policies (including through a management agreement.) Transactions related to investments in affiliated and controlled affiliated companies for the six months ended June 30, 2022 were as follows:

Portfolio Company (1)						Type of Asset						Industry						Amount of dividends and interest included in income						Beginning Fair Value at December 31, 2021						Gross additions*						Gross reductions**						Realized Gain/(Loss)						Change in Unrealized Gain (Loss) (7)						Fair Value at June 30, 2022
Control Investments
CRS-SPV, Inc. - (2) (3) (6)						Equity/Other Investments						Industrials						$	—					$	1,266					$	—					$	—					$	—					$	204					$	1,470
CRS-SPV, Inc. - L+4.50% (6.17%), 3/8/2023 (2) (6)						Senior Secured First Lien Debt						Industrials						2						62						—						—						—						—						62
Danish CRJ, Ltd. - (2) (3) (6)						Equity/Other Investments						Transportation						—						—						—						—						—						—						—
Encina Equipment Finance, LLC - L+7.75% (9.00%), 12/31/2028 (2) (6)						Subordinated Debt						Financials						167						—						8,229						—						—						—						8,229
Encina Equipment Finance, LLC - (2) (6)						Equity/Other Investments						Financials						3,582						81,693						—						94						—						(94)						81,693
Encina Equipment Finance, LLC - L+7.75% (9.00%), 12/31/2028 (2) (6)						Subordinated Debt						Financials						1,734						37,964						10						—						—						126						38,100
FBLC Senior Loan Fund, LLC - (2) (4) (6)						Equity/ Other Investments						Diversified Investment Vehicles						12,097						304,934						—						—						—						—						304,934
Integrated Efficiency Solutions, Inc. - 7.50%, 12/31/2025 (2) (6)						Senior Secured First Lien Debt						Industrials						4						131						180						(131)						—						—						180
Integrated Efficiency Solutions, Inc. - 7.50%, 12/31/2025 (2) (6)						Senior Secured First Lien Debt						Industrials						54						1,436						—						(8)						—						—						1,428
Integrated Efficiency Solutions, Inc. - 10.00% PIK, 12/31/2026 (2) (6)						Senior Secured Second Lien Debt						Industrials						138						780						138						—						—						(278)						640
Integrated Efficiency Solutions, Inc. - (2) (3) (6)						Equity/Other Investments						Industrials						—						—						—						—						—						—						—
Integrated Efficiency Solutions, Inc. - (2) (3) (6)						Equity/Other Investments						Industrials						—						—						—						—						—						—						—
Internap Corp - (2) (3) (6)						Equity/Other Investments						Business Services						—						—						1,552						—						—						—						1,552
Internap Corp. - L+6.50% (7.90%), 5/8/2025 (2) (6)						Senior Secured First Lien Debt						Business Services						241						—						5,650						—						—						57						5,707
Kahala Ireland OpCo Designated Activity Company - (2) (6)						Equity/Other Investments						Transportation						11,638						23,732						—						—						—						(12,556)						11,176
Kahala Ireland OpCo Designated Activity Company - (2) (3) (6)						Equity/Other Investments						Transportation						—						3,250						—						—						—						—						3,250
Kahala US OpCo, LLC - (2) (3) (6)						Equity/Other Investments						Transportation						—						—						—						—						—						—						—

80

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Portfolio Company (1)						Type of Asset						Industry						Amount of dividends and interest included in income						Beginning Fair Value at December 31, 2021						Gross additions*						Gross reductions**						Realized Gain/(Loss)						Change in Unrealized Gain (Loss) (7)						Fair Value at June 30, 2022
Lakeview Health Holdings, Inc. - P+6.00% (10.75%) PIK, 10/15/2024 (2) (6)						Senior Secured First Lien Debt						Healthcare						$	24					$	414					$	124					$	—					$	—					$	—					$	538
Lakeview Health Holdings, Inc. - P+4.50% (9.25%) PIK, 10/15/2024 (2) (6)						Senior Secured First Lien Debt						Healthcare						64						584						64						—						—						(130)						518
Lakeview Health Holdings, Inc. - (2) (3) (6)						Equity/Other Investments						Healthcare						—						—						—						—						—						—						—
MGTF Holdco, LLC - (2) (3) (6)						Equity/Other Investments						Media/Entertainment						—						—						—						—						—						—						—
MGTF Radio Company, LLC - L+6.00% (7.67%), 4/1/2024 (2) (6)						Senior Secured First Lien Debt						Media/Entertainment						1,806						42,567						15						(2,325)						3						1,448						41,708
ORG GC Holdings, LLC - L+6.50% (8.76%) PIK, 11/29/2026 (2) (6)						Senior Secured First Lien Debt						Business Services						318						8,343						317						—						—						—						8,660
ORG GC Holdings, LLC - 18.00% PIK, 11/29/2027 (2) (6)						Senior Secured Second Lien Debt						Business Services						318						3,439						319						—						—						(85)						3,673
ORG GC Holdings, LLC - (2) (3) (6)						Equity/Other Investments						Business Services						—						212						—						—						—						(212)						—
ORG GC Holdings, LLC - (2) (3) (6)						Equity/Other Investments						Business Services						—						—						—						—						—						—						—
Park Ave RE Holdings, LLC (2) (5) (6)						Equity/Other Investments						Financials						—						4,461						—						(8,461)						6,838						(2,838)						—
Park Ave RE Holdings, LLC (2) (5) (6)						Subordinated Debt						Financials						31						1,537						—						(1,537)						—						—						—
Siena Capital Finance, LLC - 12.50%, 11/26/2026 (2) (6)						Subordinated Debt						Financials						4,399						75,000						(1)						(14,000)						—						1						61,000
Siena Capital Finance, LLC - (2) (6)						Equity/Other Investments						Financials						4,718						65,609						—						—						—						11,701						77,310
WPNT, LLC - (2) (3) (6)						Equity/Other Investments						Media/Entertainment						—						—						—						—						—						—						—
Total Control Investments																		$	41,335					$	657,414					$	16,597					$	(26,368)					$	6,841					$	(2,656)					$	651,828
Affiliate Investments
Answers Corp. - (3) (6)						Equity/Other Investments						Media/Entertainment						$	—					$	145					$	—					$	(381)					$	—					$	354					$	118
CDS U.S. Intermediate Holdings, Inc. - L+6.00% (8.23%), 11/24/2025						Senior Secured First Lien Debt						Media/Entertainment						204						5,565						6						—						—						(124)						5,447
CDS U.S. Intermediate Holdings, Inc. - L+8.00% (10.23%) 7.00% PIK, 11/24/2027						Senior Secured Second Lien Debt						Media/Entertainment						492						10,262						374						—						—						(196)						10,440
CDS U.S. Intermediate Holdings, Inc. - (3)						Equity/Other Investments						Media/Entertainment						—						5,442						—						—						—						(484)						4,958
CDS U.S. Intermediate Holdings, Inc. - (3) (6)						Equity/Other Investments						Media/Entertainment						—						2,884						—						—						—						(524)						2,360
First Eagle Greenway Fund II, LLC						Equity/Other Investments						Diversified Investment Vehicles						—						464						—						(72)						—						(22)						370
Foresight Energy Operating, LLC - (3) (6)						Equity/Other Investments						Energy						—						3,965						—						—						—						(176)						3,789
Foresight Energy Operating, LLC - L+8.00% (10.25%), 6/30/2027						Senior Secured First Lien Debt						Energy						52						1,102						—						(8)						—						(22)						1,072
Internap Corp - (3) (6)						Equity/Other Investments						Business Services						—						1,552						—						(1,552)						—						—						—
Internap Corp. - L+6.50% (7.90%), 5/8/2025 (6)						Senior Secured First Lien Debt						Business Services						—						5,475						—						(5,475)						—						—						—
Jakks Pacific, Inc. - (3)						Equity/Other Investments						Consumer						—						2,412						—						—						—						594						3,006
Jakks Pacific, Inc. - (6)						Equity/Other Investments						Consumer						18						785						19						—						—						(16)						788

81

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Portfolio Company (1)						Type of Asset						Industry						Amount of dividends and interest included in income						Beginning Fair Value at December 31, 2021						Gross additions*						Gross reductions**						Realized Gain/(Loss)						Change in Unrealized Gain (Loss) (7)						Fair Value at June 30, 2022
NewStar Arlington Senior Loan Program, LLC 14-1A FR - L+11.00% (12.18%), 4/25/2031 (6)						Collateralized Securities						Diversified Investment Vehicles						$	285					$	4,575					$	8					$	—					$	—					$	(253)					$	4,330
NewStar Arlington Senior Loan Program, LLC 14-1A SUB - 20.69%, 4/25/2031 (6)						Collateralized Securities						Diversified Investment Vehicles						1,473						17,114						—						(2,533)						—						(2,680)						11,901
Newstar Fairfield Fund CLO, Ltd. 2015-1RA F - L+7.50% (8.56%), 1/20/2027 (6)						Collateralized Securities						Diversified Investment Vehicles						505						8,237						159						—						—						292						8,688
Newstar Fairfield Fund CLO, Ltd. 2015-1RA SUB - 0.00%, 1/20/2027 (6)						Collateralized Securities						Diversified Investment Vehicles						—						—						—						—						—						—						—
PennantPark Credit Opportunities Fund II, LP						Equity/Other Investments						Diversified Investment Vehicles						—						4,953						—						(3,110)						—						(424)						1,419
Tap Rock Resources, LLC - (6)						Equity/Other Investments						Energy						306						8,742						—						(641)						—						366						8,467
Tax Defense Network, LLC - (3) (6)						Equity/Other Investments						Consumer						—						—						—						—						—						—						—
Tax Defense Network, LLC - (3) (6)						Equity/Other Investments						Consumer						—						—						—						—						—						—						—
Tax Defense Network, LLC - L+6.00% (10.00%) PIK, 3/31/2023 (6)						Senior Secured First Lien Debt						Consumer						—						464						—						—						—						22						486
Tax Defense Network, LLC - 10.00% PIK, 3/31/2023 (6)						Senior Secured First Lien Debt						Consumer						—						3,678						—						—						—						376						4,054
Tax Defense Network, LLC - L+6.00% (10.00%) PIK, 3/31/2023 (6)						Senior Secured First Lien Debt						Consumer						—						2,616						—						—						—						120						2,736
Team Waste, LLC (5) (6)						Equity/Other Investments						Diversified Investment Vehicles						—						3,073						—						(3,073)						504						(504)						—
Tennenbaum Waterman Fund, LP						Equity/Other Investments						Diversified Investment Vehicles						315						9,764						—						—						—						(645)						9,119
Vantage Mobility International, LLC - L+6.00% (7.00%) 4.50% PIK, 3/21/2024 (6)						Senior Secured First Lien Debt						Transportation						9						251						—						—						—						(251)						—
Vantage Mobility International, LLC - L+6.00% (7.07%) 4.50% PIK, 3/21/2024 (6)						Senior Secured First Lien Debt						Transportation						4						244						—						—						—						4						248
Vantage Mobility International, LLC - L+6.00% (7.07%) PIK, 3/21/2024 (6)						Senior Secured Second Lien Debt						Transportation						5						17						—						—						—						(17)						—
Vantage Mobility International, LLC - L+6.00% (7.07%) PIK, 3/21/2024 (6)						Senior Secured Second Lien Debt						Transportation						—						—						—						—						—						—						—
Vantage Mobility International, LLC - (3) (6)						Equity/Other Investments						Transportation						—						—						—						—						—						—						—
Vantage Mobility International, LLC - (3) (6)						Equity/Other Investments						Transportation						—						—						—						—						—						—						—
Vantage Mobility International, LLC - (3) (6)						Equity/Other Investments						Transportation						—						—						—						—						—						—						—
Whitehorse, Ltd. 2014-1A E - L+4.55% (5.84%) PIK, 5/1/2026 (6)						Collateralized Securities						Diversified Investment Vehicles						230						7,171						70						—						—						(310)						6,931
Whitehorse, Ltd. 2014-1A Side Letter - 0.00%, 5/1/2026 (6)						Collateralized Securities						Diversified Investment Vehicles						—						—						—						—						—						—						—
Whitehorse, Ltd. 2014-1A SUB - 0.00%, 5/1/2026 (6)						Collateralized Securities						Diversified Investment Vehicles						—						—						—						—						—						—						—
Total Affiliate Investments																		$	3,898					$	110,952					$	636					$	(16,845)					$	504					$	(4,520)					$	90,727
Total Control & Affiliate Investments																		$	45,233					$	768,366					$	17,233					$	(43,213)					$	7,345					$	(7,176)					$	742,555

82

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

______________________________________________________

*     Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities, and the movement of an existing portfolio company into this category from a different category.

**     Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities, and the movement of an existing portfolio company out of this category into a different category.

(1)The principal amount and ownership detail are shown in the consolidated schedules of investments.

(2)This investment was not deemed significant under Regulation S-X as of June 30, 2022.

(3)Investment is non-income producing at June 30, 2022.

(4)FBLC and CCLF are the members of SLF, a joint venture formed as a Delaware limited liability company that is not consolidated by either member for financial reporting purposes. The members make investments in SLF in the form of LLC equity interests as SLF makes investments, and all portfolio and other material decisions regarding SLF must be submitted to SLF’s board of directors which is comprised of an equal number of members appointed by each of FBLC and CCLF. Because management of SLF is shared equally between us and CCLF, we do not believe we control SLF for purposes of the 1940 Act or otherwise.

(5)Investment no longer held as of June 30, 2022.

(6)The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's Board of Directors as required by the 1940 Act. Such investments are valued using significant unobservable inputs (See Note 3 to the consolidated financial statements).

(7)Gross of net change in deferred taxes in the amount of $0.1 million.

    Dividends and interest for the six months ended June 30, 2022 attributable to Controlled and Affiliated investments no longer held as of June 30, 2022 were $0.0 million.

    Realized gain for the six months ended June 30, 2022 attributable to Controlled and Affiliated investments no longer held as of June 30, 2022 was $7.3 million.

    Change in unrealized loss for the six months ended June 30, 2022 attributable to Controlled and Affiliated investments no longer held as of June 30, 2022 was $(3.3) million.

    The following table presents the Schedule of Investments and Advances to Affiliates as of December 31, 2021:

Portfolio Company (1)						Type of Asset						Industry						Amount of dividends and interest included in income						Beginning Fair Value at December 31, 2020						Gross additions*						Gross reductions**						Realized Gain/(Loss)						Change in Unrealized Gain (Loss) (7)						Fair Value at December 31, 2021
Control Investments
CRD Holdings, LLC - 9.00% (2) (5) (6)						Equity/Other						Energy						$	—					$	14,557					$	—					$	(13,174)					$	(597)					$	(786)					$	—
CRS-SPV, Inc. - L+4.50% (5.50%), 3/8/2022 (2) (6)						Senior Secured First Lien Debt						Industrials						3						62						—						—						—						—						62
CRS-SPV, Inc. (2) (3) (6)						Equity/Other						Industrials						—						1,393						—						—						—						(127)						1,266
Danish CRJ, Ltd. (2) (3) (6)						Equity/Other						Transportation						—						—						—						—						—						—						—
Encina Equipment Finance, LLC - L+7.75% (9.00%), 12/31/2028 (2) (6)						Subordinated Debt						Financials						19						—						37,964						—						—						—						37,964
Encina Equipment Finance, LLC (2) (3) (6)						Equity/Other						Financials						—						—						81,693						—						—						—						81,693
FBLC Senior Loan Fund, LLC (2) (4) (6)						Equity/Other						Diversified Investment Vehicles						24,066						—						304,934						—						—						—						304,934
Integrated Efficiency Solutions, Inc. - 7.50%, 12/31/2025 (2) (6)						Senior Secured First Lien Debt						Industrials						—						—						131						—						—						—						131
Integrated Efficiency Solutions, Inc. - 7.50%, 12/31/2025 (2) (6)						Senior Secured First Lien Debt						Industrials						—						—						1,436						—						—						—						1,436

83

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Portfolio Company (1)						Type of Asset						Industry						Amount of dividends and interest included in income						Beginning Fair Value at December 31, 2020						Gross additions*						Gross reductions**						Realized Gain/(Loss)						Change in Unrealized Gain (Loss) (7)						Fair Value at December 31, 2021
Integrated Efficiency Solutions, Inc. - 10.00% PIK, 12/31/2026 (2) (6)						Senior Secured Second Lien Debt						Industrials						$	1					$	—					$	780					$	—					$	—					$	—					$	780
Kahala Ireland OpCo Designated Activity Company - L+8.00% (13.00%), 12/22/2028 (2) (5) (6)						Senior Secured First Lien Debt						Transportation						950						18,549						—						(18,549)						—						—						—
Kahala Ireland OpCo Designated Activity Company (2) (6)						Equity/Other						Transportation						25,513						42,952						—						—						—						(19,220)						23,732
Kahala Ireland OpCo Designated Activity Company (2) (3) (6)						Equity/Other						Transportation						—						3,250						—						—						—						—						3,250
Kahala US OpCo, LLC - 13.00% (2) (3) (6)						Equity/Other						Transportation						—						—						—						—						—						—						—
KMTEX, LLC - P+3.00% (6.25%) PIK, 6/16/2025 (2) (5) (6)						Senior Secured First Lien Debt						Chemicals						16						218						468						(686)						—						—						—
KMTEX, LLC - P+3.00% (6.25%) PIK, 6/16/2025 (2) (5) (6)						Senior Secured First Lien Debt						Chemicals						92						3,230						102						(1,060)						(2,272)						—						—
KMTEX, LLC - P+3.00% (6.25%) PIK, 6/16/2025 (2) (5) (6)						Senior Secured First Lien Debt						Chemicals						26						829						26						(272)						(583)						—						—
KMTEX, LLC (2) (3) (5) (6)						Equity/Other						Chemicals						—						—						—						—						—						—						—
KMTEX, LLC (2) (3) (5) (6)						Equity/Other						Chemicals						—						2,289						—						—						(2,793)						504						—
Lakeview Health Holdings, Inc. - P+4.50% (7.75%) PIK, 10/15/2024 (2) (6)						Senior Secured First Lien Debt						Healthcare						26						—						600						—						—						(16)						584
Lakeview Health Holdings, Inc. - P+6.00% (9.25%), 10/15/2024 (2) (6)						Senior Secured First Lien Debt						Healthcare						28						—						414						—						—						—						414
MGTF Holdco, LLC (2) (3) (6)						Equity/Other						Media/Entertainment						—						—						—						—						—						—						—
MGTF Radio Company, LLC - L+6.00% (7.00%), 4/1/2024 (2) (6)						Senior Secured First Lien Debt						Media/Entertainment						3,854						43,400						32						(3,551)						6						2,680						42,567
NMFC Senior Loan Program I, LLC (2) (3) (5) (6)						Equity/Other						Diversified Investment Vehicles						496						—						—						—						—						—						—
ORG GC Holdings, LLC - L+6.50% (7.50%) PIK, 11/24/2026 (2) (6)						Senior Secured First Lien Debt						Business Services						57						—						8,343						—						—						—						8,343
ORG GC Holdings, LLC - 18.00% PIK, 11/24/2027 (2) (6)						Senior Secured Second Lien Debt						Business Services						56						—						3,439						—						—						—						3,439
ORG GC Holdings, LLC (2) (3) (6)						Equity/Other						Business Services						—						—						212						—						—						—						212
ORG GC Holdings, LLC (2) (3) (6)						Equity/Other						Business Services						—						—						—						—						—						—						—
Park Ave RE Holdings, LLC - 13.00%, 12/30/2022 (2) (6)						Subordinated Debt						Financials						1,784						37,237						—						(35,700)						—						—						1,537
Park Ave RE Holdings, LLC (2) (3) (6)						Equity/Other						Financials						—						3,300						—						(792)						—						1,953						4,461
Siena Capital Finance, LLC - 12.50%, 11/27/2026 (2) (6)						Subordinated Debt						Financials						5,340						25,500						74,502						(25,000)						—						(2)						75,000
Siena Capital Finance, LLC (2) (6)						Equity/Other						Financials						5,959						35,839						5,950						—						—						23,820						65,609
WPNT, LLC (2) (3) (6)						Equity/Other						Media/Entertainment						—						—						—						—						—						—						—
Total Control Investments																		$	68,286					$	232,605					$	521,026					$	(98,784)					$	(6,239)					$	8,806					$	657,414
Affiliate Investments
Answers Corp. (3) (6)						Equity/Other						Media/Entertainment						$	—					$	727					$	—					$	(718)					$	—					$	136					$	145

84

---

FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Portfolio Company (1)						Type of Asset						Industry						Amount of dividends and interest included in income						Beginning Fair Value at December 31, 2020						Gross additions*						Gross reductions**						Realized Gain/(Loss)						Change in Unrealized Gain (Loss) (7)						Fair Value at December 31, 2021
Capstone Nutrition Development, LLC (3) (5) (6)						Equity/Other						Consumer						$	—					$	5,928					$	—					$	(28,103)					$	23,635					$	(1,460)					$	—
CDS U.S. Intermediate Holdings, Inc. - L+6.00% (7.00%), 11/24/2025 (6)						Senior Secured First Lien Debt						Media/Entertainment						330						1,940						3,944						(374)						3						52						5,565
CDS U.S. Intermediate Holdings, Inc. - L+8.00% (9.00%) 7.00% PIK, 11/24/2027						Senior Secured Second Lien Debt						Media/Entertainment						756						1,104						13,866						(4,977)						278						(9)						10,262
CDS U.S. Intermediate Holdings, Inc. (3) (6)						Equity/Other						Media/Entertainment						—						1,224						—						—						—						4,218						5,442
CDS U.S. Intermediate Holdings, Inc. (3) (6)						Equity/Other						Media/Entertainment						—						437						—						—						—						2,447						2,884
First Eagle Greenway Fund II, LLC						Equity/Other						Diversified Investment Vehicles						170						1,759						—						(1,279)						—						(16)						464
Foresight Energy Operating, LLC - L+8.00% (9.50%), 6/30/2027 (6)						Senior Secured First Lien Debt						Energy						119						1,354						—						(235)						—						(17)						1,102
Foresight Energy Operating, LLC (3) (6)						Equity/Other						Energy						—						2,520						—						—						—						1,445						3,965
Internap Corp. - L+6.50% (7.50%) 5.50% PIK, 5/8/2025 (6)						Senior Secured First Lien Debt						Business Services						466						5,181						338						—						—						(44)						5,475
Internap Corp (3) (6)						Equity/Other						Business Services						—						2,231						—						—						—						(679)						1,552
Jakks Pacific, Inc. - 10.50%, 2.50% PIK, 2/9/2023 (5) (6)						Senior Secured First Lien Debt						Consumer						1,217						17,104						1,552						(18,515)						866						(1,007)						—
Jakks Pacific, Inc. - 6.00%, 2.75% PIK, 8/31/2021 (5) (6)						Subordinated Debt						Consumer						80						—						1,495						(2,827)						1,332						—						—
Jakks Pacific, Inc. (3) (6)						Equity/Other						Consumer						81						402						83						—						—						300						785
Jakks Pacific, Inc. (3)						Equity/Other						Consumer						—						49						2,345						—						—						18						2,412
LendingHome Corp. - 8.00% (5) (6)						Equity/Other						Financials						—						59,823						—						(59,477)						(346)						—						—
MidOcean Credit CLO 2013-2A INC - 0.00%, 1/29/2030 (5) (6)						Collateralized Securities						Diversified Investment Vehicles						—						6,313						—						(10,152)						(5,677)						9,516						—
Mood Media - Common Equity (5) (6)						Equity/Other						Media/Entertainment						—						—						—						645						(645)						—						—
NewStar Arlington Senior Loan Program, LLC 14-1A FR - L+11.00% (11.12%), 4/25/2031 (6)						Collateralized Securities						Diversified Investment Vehicles						555						3,632						19						—						—						924						4,575
NewStar Arlington Senior Loan Program, LLC 14-1A SUB - 23.85%, 4/25/2031 (6)						Collateralized Securities						Diversified Investment Vehicles						3,906						15,631						—						(3,821)						—						5,304						17,114
Newstar Fairfield Fund CLO, Ltd. 2015-1RA F - L+7.50% (7.63%), 1/20/2027 (6)						Collateralized Securities						Diversified Investment Vehicles						2,060						5,459						318						—						—						2,460						8,237
Newstar Fairfield Fund CLO, Ltd. 2015-1RA SUB - 0.00%, 1/20/2027 (6)						Collateralized Securities						Diversified Investment Vehicles						—						—						—						—						—						—						—
PCX Aerostructures, LLC - 6.00%, 8/9/2021 (5) (6)						Subordinated Debt						Industrials						2,829						9,859						645						(7,995)						634						(3,143)						—
PCX Aerostructures, LLC (5) (6)						Equity/Other						Industrials						—						76						—						(2,263)						2,263						(76)						—
PCX Aerostructures, LLC (5) (6)						Equity/Other						Industrials						—						535						—						(609)						609						(535)						—
PCX Aerostructures, LLC (5) (6)						Equity/Other						Industrials						—						—						—						(168)						168						—						—
PennantPark Credit Opportunities Fund II, LP						Equity/Other						Diversified Investment Vehicles						726						9,274						—						(4,197)						—						(124)						4,953
Tap Rock Resources, LLC (6)						Equity/Other						Energy						1,398						11,405						—						(3,484)						—						821						8,742
Tax Defense Network, LLC - 10.00% PIK, 3/31/2022 (6)						Senior Secured First Lien Debt						Consumer						—						3,311						—						—						—						367						3,678

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

Portfolio Company (1)						Type of Asset						Industry						Amount of dividends and interest included in income						Beginning Fair Value at December 31, 2020						Gross additions*						Gross reductions**						Realized Gain/(Loss)						Change in Unrealized Gain (Loss) (7)						Fair Value at December 31, 2021
Tax Defense Network, LLC - L+6.00% (10.00%) PIK, 3/31/2022 (6)						Senior Secured First Lien Debt						Consumer						$	—					$	420					$	—					$	—					$	—					$	44					$	464
Tax Defense Network, LLC - L+6.00% (10.00%) PIK, 3/31/2022 (6)						Senior Secured First Lien Debt						Consumer						—						2,368						—						—						—						248						2,616
Tax Defense Network, LLC (3) (6)						Equity/Other						Consumer						—						—						—						—						—						—						—
Tax Defense Network, LLC (3) (6)						Equity/Other						Consumer						—						—						—						—						—						—						—
Team Waste, LLC (3) (6)						Equity/Other						Industrials						—						2,570						—						—						—						503						3,073
Tennenbaum Waterman Fund, LP						Equity/Other						Diversified Investment Vehicles						1,062						10,087						—						—						—						(323)						9,764
TwentyEighty, Inc. (3) (5) (6)						Equity/Other						Business Services						—						—						—						(35)						35						—						—
Vantage Mobility International, LLC - L+6.00% (7.00%), 3/21/2024 (6)						Senior Secured First Lien Debt						Transportation						8						—						251						—						—						—						251
Vantage Mobility International, LLC - L+6.00% (7.00%), 3/21/2024 (6)						Senior Secured First Lien Debt						Transportation						2						—						244						—						—						—						244
Vantage Mobility International, LLC - L+6.00% (7.00%), 3/21/2024 (6)						Senior Secured Second Lien Debt						Transportation						—						—						17						—						—						—						17
Vantage Mobility International, LLC - L+6.00% (7.00%) PIK, 3/21/2024 (6)						Senior Secured Second Lien Debt						Transportation						—						944						—						—						—						(944)						—
Vantage Mobility International, LLC (3) (6)						Equity/Other						Transportation						—						—						—						—						—						—						—
Vantage Mobility International, LLC (3) (6)						Equity/Other						Transportation						—						—						—						—						—						—						—
Vantage Mobility International, LLC (3) (6)						Equity/Other						Transportation						—						—						—						—						—						—						—
Whitehorse, Ltd. 2014-1A E - L+4.55% (4.68%), 5/1/2026 (6)						Collateralized Securities						Diversified Investment Vehicles						426						5,592						45						—						—						1,534						7,171
Whitehorse, Ltd. 2014-1A Side Letter - 0.00%, 5/1/2026 (6)						Collateralized Securities						Diversified Investment Vehicles						—						—						—						—						—						—						—
Whitehorse, Ltd. 2014-1A SUB - 0.00%, 5/1/2026 (6)						Collateralized Securities						Diversified Investment Vehicles						—						—						—						—						—						—						—
Total Affiliate Investments																		$	16,191					$	189,259					$	25,162					$	(148,584)					$	23,155					$	21,960					$	110,952
Total Control & Affiliate Investments																		$	84,477					$	421,864					$	546,188					$	(247,368)					$	16,916					$	30,766					$	768,366

_____________________________________________________

*     Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities, and the movement of an existing portfolio company into this category from a different category.

**     Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities, and the movement of an existing portfolio company out of this category into a different category.

(1)The principal amount and ownership detail are shown in the consolidated schedules of investments.

(2)This investment was not deemed significant under Regulation S-X as of December 31, 2021.

(3)Investment is non-income producing at December 31, 2021.

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FRANKLIN BSP LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For the period ended June 30, 2022

(Unaudited)

(4)FBLC and CCLF are the members of SLF, a joint venture formed as a Delaware limited liability company that is not consolidated by either member for financial reporting purposes. The members make investments in SLF in the form of LLC equity interests as SLF makes investments, and all portfolio and other material decisions regarding SLF must be submitted to SLF’s board of directors which is comprised of an equal number of members appointed by each of FBLC and CCLF. Because management of SLF is shared equally between us and CCLF, we do not believe we control SLF for purposes of the 1940 Act or otherwise.

(5)Investment no longer held as of December 31, 2021.

(6)The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's Board of Directors as required by the 1940 Act. Such investments are valued using significant unobservable inputs (See Note 3 to the consolidated financial statements).

(7)Gross of net change in deferred taxes in the amount of $(4.1) million.

    Dividends and interest for the year ended December 31, 2021 attributable to Controlled and Affiliated investments no longer held as of December 31, 2021 were $5.7 million.

    Realized loss for the year ended December 31, 2021 attributable to Controlled and Affiliated investments no longer held as of December 31, 2021 was $16.6 million.

    Change in unrealized gain for the year ended December 31, 2021 attributable to Controlled and Affiliated investments no longer held as of December 31, 2021 was $3.0 million.

Note 17 – Subsequent Events

Unregistered Sales of Equity Securities

On July 26, 2022, pursuant to a drawdown notice previously delivered to investors, the Company issued and sold approximately 8.0 million shares of the Company's common stock for an aggregate offering price of approximately $60.0 million.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Franklin BSP Lending Corporation (the "Company," "FBLC," "we," or "our") and the notes thereto and other financial information included elsewhere in this Quarterly Report on Form 10-Q. We are externally managed by our adviser, Franklin BSP Lending Adviser, L.L.C. (the “Adviser”).

Forward Looking Statements

This report, and other statements that we may make, may contain forward-looking statements with respect to future financial or business performance, strategies, or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “potential,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions.

Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and we assume no duty to and do not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to factors previously disclosed in our U.S. Securities and Exchange Commission (“SEC”) reports and those identified elsewhere in this report, including the “Risk Factors” section, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance:

•our future operating results;

•the impact of the COVID-19 pandemic on our business and our portfolio companies, including our and their ability to access capital and liquidity;

•changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including the effect of the current COVID-19 pandemic and recent supply chain disruptions;

•the impact of geopolitical conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing conflict between Russia and Ukraine;

•the impact that the discontinuation of LIBOR and the transition to new reference rates could have on the value of our LIBOR-indexed portfolio investments and the cost of borrowing under our credit facilities;

•the impact of the investments that we expect to make;

•the ability of our portfolio companies to achieve their objectives;

•our contractual arrangements and relationships with third parties;

•our expected financings and investments;

•the adequacy of our cash resources and working capital;

•the timing of cash flows, if any, from the operations of our portfolio companies;

•our repurchase of shares;

•actual and potential conflicts of interest with our Adviser and its affiliates;

•the dependence of our future success on the general economy and its effect on the industries in which we invest;

•the ability to qualify and maintain our qualifications as a regulated investment company (“RIC”) and a business development company (“BDC”);

•the timing, form, and amount of any distributions;

•the impact of fluctuations in interest rates on our business;

•the valuation of any investments in portfolio companies, particularly those having no liquid trading market;

•the impact of changes to generally accepted accounting principles, and the impact to FBLC; and

•the impact of changes to tax legislation and, generally, our tax position.

Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Item 1A. Risk Factors” and elsewhere in this Quarterly Report.    

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Overview

    We are an externally managed, non-diversified closed-end management investment company incorporated in Maryland in May 2010 that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (“the 1940 Act”). In addition, we have elected to be treated for tax purposes as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Our investment activities are managed by the Adviser, a subsidiary of Benefit Street Partners L.L.C. (“BSP”) and supervised by our Board of Directors, a majority of whom are independent of the Adviser and its affiliates. As a BDC, we are required to comply with certain regulatory requirements.

    Our investment objective is to generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments. We invest primarily in senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans, and equity of predominantly private U.S. middle-market companies. We define middle market companies as those with annual revenues of less than $1 billion, although we may invest in larger or smaller companies. We may also purchase interests in loans or corporate bonds through secondary market transactions. We expect that each investment generally will range between approximately 0.5% and 3.0% of our total assets. As of June 30, 2022, 75.5% of our portfolio was invested in senior secured loans.

    Senior secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in priority of payments and are generally secured by liens on the operating assets of a borrower which may include inventory, receivables, plant, property, and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured. We may also invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles (“Collateralized Securities” or “CLO's”). Effective April 1, 2022, we have elected to not invest, directly or indirectly, in coal-related companies, or invest in portfolio companies primarily engaged in directly investing in the exploration for, or the production of, coal at the discretion of the Adviser; provided, however, we shall be considered in compliance with this investment restriction if, from this date forward, we do not invest in any portfolio company that has a Global Industry Classification Standard designation of "coal and consumable fuels."

Financial and Operating Highlights

(Dollars in millions, except per share amounts)
At June 30, 2022:
			Investment Portfolio			$	2,757.0
			Net assets			1,564.7
			Debt (net of deferred financing costs)			1,189.8
			Net asset value per share			7.42
Portfolio Activity for the Six Months Ended June 30, 2022:
			Purchases during the period			194.0
			Sales, repayments, and other exits during the period			216.8
			Number of portfolio companies at end of period			151
Operating results for the Six Months Ended June 30, 2022:
			Net investment income per share			0.28
			Distributions declared per share			0.30
			Net increase in net assets resulting from operations per share			0.23
			Net investment income			57,522
			Net realized and unrealized loss, net of change in deferred taxes			(19,954)
			Net increase in net assets resulting from operations			46,974

Portfolio and Investment Activity

    During the six months ended June 30, 2022, we made $194.0 million of investments in new and existing portfolio companies and had $216.8 million in aggregate amount of sales and repayments, resulting in a net decrease in investments of $22.8 million for the period. The total portfolio of debt investments at fair value consisted of 93.0% bearing variable interest rates and 7.0% bearing fixed interest rates.

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    Our portfolio composition, based on fair value at June 30, 2022 was as follows:

			June 30, 2022
			Percentage of Total Portfolio						Weighted Average Current Yield for Total Portfolio (1)
Senior Secured First Lien Debt			66.9		%				8.3		%
Senior Secured Second Lien Debt			8.6						10.0
Subordinated Debt			4.0						12.0
Debt Subtotal			79.5						8.7
Collateralized Securities (2)			1.2						15.0
Equity/Other (3)			8.2						18.1
FBLC Senior Loan Fund, LLC (3)(4)			11.1						8.0
Total			100.0		%				9.4		%

______________

(1) Includes the effect of the amortization or accretion of loan premiums or discounts.

(2) Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with Accounting Standards Codification ("ASC") Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (see Note 2 - Summary of Significant Accounting Policies).

(3) Weighted average current yield for Equity/Other may be based on actual or annualized income, where applicable.

(4) As of June 30, 2022, FBLC Senior Loan Fund, LLC's holdings consisted of 92.1% senior secured debt. On a look-through basis to FBLC Senior Loan Fund, LLC, our portfolio is comprised of approximately 86.6% senior secured debt as of June 30, 2022.

    During the year ended December 31, 2021, we made $1,932.8 million of investments in new and existing portfolio companies and had $1,898.1 million in aggregate amount of sales and repayments, resulting in net investments of $34.7 million for the period. The total portfolio of debt investments at fair value consisted of 91.5% bearing variable interest rates and 8.5% bearing fixed interest rates.

    Our portfolio composition, based on fair value at December 31, 2021 was as follows:

			December 31, 2021
			Percentage of Total Portfolio						Weighted Average Current Yield for Total Portfolio (1)
Senior Secured First Lien Debt			65.9		%				7.6		%
Senior Secured Second Lien Debt			8.8						9.1
Subordinated Debt			4.2						11.0
Debt Subtotal			78.9						7.9
Collateralized Securities (2)			1.3						15.0
Equity/Other (3)			8.8						17.1
FBLC Senior Loan Fund, LLC (3)(4)			11.0						8.0
Total			100.0		%				8.8		%

______________

(1) Includes the effect of the amortization or accretion of loan premiums or discounts.

(2) Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with Accounting Standards Codification ("ASC") Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (see Note 2 - Summary of Significant Accounting Policies).

(3) Weighted average current yield for Equity/Other may be based on actual or annualized income, where applicable.

(4) As of December 31, 2021, FBLC Senior Loan Fund, LLC holdings consisted of 92.7% senior secured debt. On a look-through basis to FBLC Senior Loan Fund, LLC, our portfolio is comprised of approximately 86.2% senior secured debt as of December 31, 2021.

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Portfolio Asset Quality

    Our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser grades the credit risk of all debt investments on a scale of 1 to 5 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio debt investment relative to the inherent risk at the time the original debt investment was made (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company's business, the collateral coverage of the investment and other relevant factors.

Loan Rating						Summary Description
1						Debt investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since the time of investment are favorable.
2						Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. All investments are initially rated a “2”.
3						Performing debt investment requiring closer monitoring. Trends and risk factors show some deterioration.
4						Underperforming debt investment. Some loss of interest or dividend expected, but still expecting a positive return on investment. Trends and risk factors are negative.
5						Underperforming debt investment with expected loss of interest and some principal.

    The weighted average risk rating of our investments based on fair value was 2.1 and 2.1 as of June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022, we had five portfolio companies on non-accrual with a total amortized cost of $44.7 million and fair value of $10.0 million, which represented 1.6% and 0.4% of the investment portfolio's total amortized cost and fair value, respectively. As of December 31, 2021, we had six portfolio companies on non-accrual with a total amortized cost of $42.5 million and fair value of $12.2 million, which represented 1.5%, and 0.4% of the investment portfolio's total amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in our consolidated financial statements included in this report for additional details regarding our non-accrual policy.

FBLC Senior Loan Fund, LLC

On January 20, 2021, FBLC and Cliffwater Corporate Lending Fund (“CCLF”) formed a joint venture, FBLC Senior Loan Fund, LLC (the “SLF”), that invests primarily in senior secured loans, and to a lesser extent may invest in mezzanine loans, unsecured loans and equity of predominantly private U.S. middle-market companies. SLF was formed as a Delaware limited liability company and is not consolidated by FBLC for financial reporting purposes. FBLC provides capital to SLF in the form of LLC equity interests. At formation, FBLC and CCLF owned 87.5% and 12.5%, respectively, of the LLC equity interests of SLF. For both, quarter and year ended, June 30, 2022 and December 31, 2021, FBLC and CCLF owned 79.8% and 20.2%, respectively, of the LLC equity interests of SLF. Profit and loss are allocated based on each members' ownership percentage of the joint venture's net asset value. SLF has an Administrative and Loan Services Agreement with BSP, an affiliate of the Company, pursuant to which BSP provides certain operational and valuation services for SLF's investments; as well as certain agreements with third-party service providers. FBLC and CCLF each appoint two members to SLF's four-person board of members. All material decisions with respect to SLF, including those involving its investment portfolio, require unanimous approval of a quorum of the board of members. Quorum is defined as (i) the presence of two members of the board of members; provided that at least one individual is present that was elected, designated or appointed by each member; (ii) the presence of three members of the board of members; provided that the individual that was elected, designated or appointed by the member with only one individual present shall be entitled to cast two votes on each matter; and (iii) the presence of four members of the board of members; provided that two individuals are present that were elected, designated or appointed by each member.

As part of the initial contribution to SLF, FBLC contributed $751.8 million of assets including $664.2 million of investments and $42.4 million of cash as well as $446.9 million worth of liabilities including the Citi Credit Facility (as defined in Note 5) debt of $344.4 million in exchange for $304.9 million of equity in SLF. As of June 30, 2022 and December 31, 2021, FBLC’s investment in SLF consisted of equity contributions of $304.9 million.

Below is a summary of SLF’s portfolio as of June 30, 2022 and December 31, 2021. A listing of the individual investments in SLF’s portfolio as of such dates can be found in “Note 3 – Fair Value of Investments” in the notes to the accompanying consolidated financial statements (dollars in thousands):

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						June 30, 2022						December 31, 2021
Total assets						$	1,069,210					$	1,195,960
Total investments (1)						$	971,257					$	1,088,337
Weighted Average Current Yield for Total Portfolio (2)						7.1		%				5.4		%
Number of Portfolio companies in SLF						174						172
Largest portfolio company investment (1)						$	20,558					$	27,965
Total of five largest portfolio company investments (1)						$	93,622					$	113,297

_____________________

(1) At fair value

(2) Includes the effect of the amortization or accretion of loan premiums or discounts.

Below is certain summarized financial information for SLF as of June 30, 2022 and December 31, 2021 and for the periods ended June 30, 2022 and June 30, 2021 (dollars in thousands):

Selected Statement of Assets and Liabilities Information			June 30,						December 31,
			2022						2021
			(Unaudited)
ASSETS
Investments, at fair value (amortized cost of $1,036,503 and $1,085,170, respectively)			$	971,257					$	1,088,337
Cash and other assets			97,953						107,623
Total assets			$	1,069,210					$	1,195,960
LIABILITIES
Revolving credit facilities (net of deferred financing costs of $1,991 and $2,488, respectively)			$	641,559					$	631,562
Secured borrowings			65,016						94,737
Other liabilities			27,473						71,008
Total liabilities			$	734,048					$	797,307
MEMBERS' CAPITAL
Total members' capital			$	335,162					$	398,653
Total liabilities and members' capital			$	1,069,210					$	1,195,960

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Selected Statements of Operations Information									For the three months ended June 30,						For the three months ended June 30,						For the six months ended June 30,						For the period January 20, 2021 through June 30,
									2022						2021						2022						2021
									(Unaudited)						(Unaudited)						(Unaudited)						(Unaudited)
Investment income:
Total investment income									$	15,747					$	10,874					$	30,176					$	19,326
Operating expenses:
Interest and credit facility financing expenses									3,910						2,381						7,278						3,975
Other expenses									708						480						1,342						763
Total expenses									4,618						2,861						8,620						4,738
Net investment income									11,129						8,013						21,556						14,588
Realized and unrealized gain (loss):
Net realized and unrealized gain (loss)									(56,584)						8,581						(69,833)						12,058
Net increase (decrease) in net assets resulting from operations									$	(45,455)					$	16,594					$	(48,277)					$	26,646

RESULTS OF OPERATIONS

    Operating results for the three and six months ended June 30, 2022 and 2021 were as follows (dollars in thousands):

			For the three months ended June 30,												For the six months ended June 30,
			2022						2021						2022						2021
Total investment income			$	63,417					$	58,251					$	127,193					$	114,685
Total expenses			34,169						30,341						66,940						59,457
Income tax expense, including excise tax			752						403						2,731						1,103
Net investment income			$	28,496					$	27,507					$	57,522					$	54,125

Investment Income

    For the three and six months ended June 30, 2022, total investment income was $63.4 million and $127.2 million, respectively, and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.8 billion and a weighted average current yield of 9.4%. Included within total investment income was $2.1 million and $4.1 million, respectively, of fee income for the three and six months ended June 30, 2022. Fee income consists primarily of prepayment and amendment fees. For the three and six months ended June 30, 2021 total investment income was $58.3 million and $114.7 million, respectively, and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.6 billion and a weighted average current yield of 8.7%. Included within total investment income was $3.4 million and $4.4 million, respectively, of fee income for the three and six months ended June 30, 2021. Fee income consists primarily of prepayment and amendment fees.

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Operating Expenses

    The composition of our operating expenses for the three and six months ended June 30, 2022 and 2021 was as follows (dollars in thousands):

			For the three months ended June 30,												For the six months ended June 30,
			2022						2021						2022						2021
Management fees			$	10,494					$	9,462					$	20,997					$	19,036
Incentive fee on income			7,124						6,876						14,380						13,531
Interest and debt fees			13,393						11,032						25,677						20,632
Professional fees			1,126						1,133						1,979						2,412
Other general and administrative			1,602						1,429						3,009						3,030
Administrative services			198						181						393						362
Directors' fees			232						228						505						454
Total operating expenses			$	34,169					$	30,341					$	66,940					$	59,457

For the three and six months ended June 30, 2022, we incurred management fees of $10.5 million and $21.0 million, respectively. For the three and six months ended June 30, 2022, we incurred incentive fees on income of $7.1 million and $14.4 million, respectively. For the three and six months ended June 30, 2021, we incurred management fees of $9.5 million and $19.0 million, respectively. For the three and six months ended June 30, 2021, we incurred incentive fees on income of $6.9 million and $13.5 million, respectively.

For the three and six months ended June 30, 2022, we incurred interest and debt fees of $13.4 million and $25.7 million, respectively. For the three and six months ended June 30, 2021, we incurred interest and debt fees of $11.0 million and $20.6 million, respectively. Interest and debt fees are comprised of interest expense, non-usage fees, trustee fees, amortization of deferred financing costs, and amortization of discount if applicable related to our revolving credit facilities and unsecured notes, each as defined herein in the section entitled "Borrowings". The increase in interest and debt fees for the three and six months ended June 30, 2022 as compared to the same periods in 2021 is primarily the result of the timing of issuance of our 2026 Notes as well as an increase in total principal outstanding on our credit facilities.

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Net Realized Gain (Loss) and Net Change in Unrealized Appreciation (Depreciation) on Investments, Foreign Currency Transactions, and Forward Currency Exchange Contracts

    Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments and foreign currency transactions, net of change in deferred taxes for the six months ended June 30, 2022 and 2021 were as follows (dollars in thousands):

			For the three months ended June 30,												For the six months ended June 30,
			2022						2021						2022						2021
Net realized gain (loss)
Control investments			$	6,840					$	2					$	6,841					$	3
Affiliate investments			392						20,364						504						20,057
Non-affiliate investments			(1,253)						7,636						3,654						7,193
Net realized gain (loss) on foreign currency transactions			308						(853)						501						(1,381)
Net realized loss on extinguishment of debt			—						—						(1,769)						(1,286)
Total net realized gain			6,287						27,149						9,731						24,586
Net change in unrealized appreciation (depreciation) on investments
Control investments			(12,179)						(1,301)						(2,656)						(9,426)
Affiliate investments			(5,564)						(1,470)						(4,520)						19,412
Non-affiliate investments			(5,100)						14,241						(12,900)						44,115
Net change in deferred taxes			(107)						—						122						—
Total net change in unrealized appreciation (depreciation) on investments, net of change in deferred taxes			(22,950)						11,470						(19,954)						54,101
Net change in unrealized appreciation (depreciation) from forward currency exchange contracts			214						595						(325)						888
Net realized and unrealized gain (loss)			$	(16,449)					$	39,214					$	(10,548)					$	79,575

    Net realized and unrealized loss on investments and foreign currency transactions, net of change in deferred taxes, resulted in a net losses of $16.4 million and $10.5 million, respectively, for the three and six months ended June 30, 2022 compared to a net gain of $39.2 million and $79.6 million, respectively, for the same periods in 2021. We look at net realized gain (loss) and change in unrealized appreciation (depreciation) together, as movement in unrealized appreciation or depreciation can be the result of realizations.

    The net realized and unrealized loss for the three months ended June 30, 2022 was primarily driven by unrealized losses on Equity Investments and Collateralized Securities.The net realized and unrealized loss for the six months ended June 30, 2022 was primarily driven by unrealized losses on Equity Investments and Collateralized Securities.

The net realized and unrealized gain for the three months ended June 30, 2021 was primarily driven by realized gains on Equity Investment sales as well as unrealized gains on Senior Secured Investments and Collateralized Securities. The net realized and unrealized gain for the six months ended June 30, 2021 was primarily driven by realized gains on Equity Investment sales as well as unrealized gains on Senior Secured Investments and Collateralized Securities.

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Changes in Net Assets from Operations

    For the three and six months ended June 30, 2022, we recorded a net increase in net assets resulting from operations of $12.0 million and $47.0 million, respectively, versus a net increase in net assets resulting from operations of $66.7 million and $133.7 million, respectively, for the three and six months ended June 30, 2021. The decrease is primarily driven by a decrease in realized gain on our investments and an increase in unrealized loss on our investments. Based on the weighted average shares of common stock outstanding for the six months ended June 30, 2022 and 2021, respectively, our per share net increase in net assets resulting from operations was $0.06 and $0.23, respectively, for the three and six months ended June 30, 2022, versus a net increase in net assets of $0.33 and $0.67, respectively, for the three and six months ended June 30, 2021.

Cash Flows

For the six months ended June 30, 2022, net cash provided by operating activities was $49.9 million. The level of cash flows provided by operating activities is affected by the timing of purchases, redemptions, and sales of portfolio investments. The increase in cash flows provided by operating activities for the six months ended June 30, 2022 was primarily a result of sales and repayments of investments of $216.8 million and a decrease in receivable for unsettled trades of $24.2 million, offset by purchases of investments of $194.1 million.

    Net cash used in financing activities of $76.8 million during the six months ended June 30, 2022 related to payments on debt of $211.5 million, stockholder distributions of $46.2 million and repurchases of common stock of $23.6 million, partially offset by proceeds from issuance of shares of $79.4 million and proceeds from debt of $129.0 million.

    For the six months ended June 30, 2021, net cash used in operating activities was $243.6 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions, and sales of portfolio investments. The decrease in cash flows used in operating activities for the six months ended June 30, 2021 was primarily a result of purchases of investments of $623.1 million as well as payable for unsettled trades of $144.9 million, partially offset by sales and repayments of $483.6 million.

Net cash provided by financing activities of $225.0 million during the six months ended June 30, 2021 primarily related to proceeds from debt of $785.0 million, partially offset by payments on debt of $509.1 million.

Recent Developments

Unregistered Sales of Equity Securities

On July 26, 2022, pursuant to a drawdown notice previously delivered to investors, the Company issued and sold approximately 8.0 million shares of the Company's common stock for an aggregate offering price of approximately $60.0 million.

Liquidity and Capital Resources

    We generate cash flows from fees, interest, and dividends earned from our investments, as well as proceeds from sales of our investments and, previously, from the net proceeds of our Offering. As of June 30, 2022, we had issued 244.8 million shares of our common stock for gross proceeds of $2.5 billion, including the shares purchased by affiliates and shares issued pursuant to the DRIP. As of June 30, 2022, we had $610.0 million of senior unsecured notes outstanding. As of June 30, 2021, we had issued 230.6 million shares of our common stock for gross proceeds of $2.4 billion, including the shares purchased by affiliates and shares issued pursuant to the DRIP. As of June 30, 2021, we had $610.0 million of senior unsecured notes outstanding.

    Our principal demands for funds in both the short-term and long-term are for portfolio investments, for the payment of operating expenses, distributions to our investors, repurchases under our share repurchase program, and for the payment of principal and interest on our outstanding indebtedness. We may also from time to time enter into other agreements with third parties whereby third parties will contribute to specific investment opportunities. Other potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from private offerings, proceeds from the sale of investments, and undistributed funds from operations. However, our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets, and borrowing restrictions that may be imposed by lenders.

    We intend to conduct annual tender offers pursuant to our share repurchase program. Our Board of Directors will consider the following factors, among others, in making its determination regarding whether to cause us to offer to repurchase shares and under what terms:

•the effect of such repurchases on our qualification as a RIC (including the consequences of any necessary asset sales);

•the liquidity of our assets (including fees and costs associated with disposing of assets);

•our investment plans and working capital requirements;

•the relative economies of scale with respect to our size;

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•our history in repurchasing shares or portions thereof; and

•the condition of the securities markets.

    We intend to conduct tender offers on an annual basis. We intend to continue to limit the number of shares to be repurchased in any calendar year to the lesser of (i) 10% of the weighted average number of shares outstanding in the prior calendar year or (ii) the number of shares of common stock the Company is able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during the relevant redemption period. In addition, in the event of a stockholder’s death or disability, any repurchases of shares made in connection with a stockholder’s death or disability may be included within the overall limitation imposed on tender offers during the relevant redemption period, which provides that we may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period.

Distributions

    On May 11, 2022, the Board declared a regular quarterly cash dividend of $0.13 per share and a special dividend of $0.02 per share of the Company's common stock, payable on July 1, 2022 to stockholders of record as of June 30, 2022.

The amount of each such distribution is subject to the discretion of the Board of Directors and applicable legal restrictions related to the payment of distributions. The Company calculates each stockholder’s specific distribution amount for the quarter using record and declaration dates. The distributions are payable by the fifth day following each record date.

    The table below shows the components of the distributions we have declared and/or paid during the six months ended June 30, 2022 and 2021 (dollars in thousands).

			For the six months ended June 30,
			2022						2021
Distributions declared			$	61,263					$	39,657
Distributions paid			$	59,855					$	39,815
Portion of distributions paid in cash			$	46,225					$	30,670
Portion of distributions paid in DRIP shares			$	13,630					$	9,145

    As of June 30, 2022, we had $24.7 million of distributions accrued and unpaid. As of December 31, 2021, we had $23.3 million of distributions accrued and unpaid.

    We may fund our cash distributions to stockholders from any sources of funds available to us, including offering proceeds, borrowings, net investment income from operations, capital gain proceeds from the sale of assets, and non-capital gain proceeds from the sale of assets. We have not established limits on the amount of funds we may use from available sources to make distributions. We may have distributions which could be characterized as a return of capital for tax purposes. During the six months ended June 30, 2022 and 2021, no portion of our distributions was characterized as return of capital for tax purposes. The specific tax characteristics of our distributions made in respect of our anticipated fiscal year ending December 31, 2022 will be reported to stockholders shortly after the end of the calendar year 2022 as well as in our periodic reports with the SEC. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our ordinary income or gain. Moreover, you should understand that any such distributions were not based on our investment performance and can only be sustained if we achieve positive investment performance in future periods and/or our Adviser continues to make such reimbursements. There can be no assurance that we will achieve the performance necessary to sustain our distributions or that we will be able to pay distributions at all.

    The following table sets forth the distributions declared during the six months ended June 30, 2022 and 2021 (dollars in thousands):

			For the six months ended June 30,
			2022						2021
Distributions			$	61,263					$	39,657
Total distributions			$	61,263					$	39,657

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Private Placement of Shares

On April 1, 2022, April 12, 2022 and May 13, 2022, we entered into stock purchase agreements with certain investors (collectively, the “Purchase Agreements”) and associated subscription agreements (collectively, the “Subscription Agreements”), totaling $234.8 million, for the sale of our common stock at the net asset value of each drawdown date. Investors are required to make capital contributions to purchase our common stock each time we deliver a drawdown notice in an aggregate amount not to exceed their respective capital commitments. All purchases will generally be made subject to the terms and conditions set forth in the Purchase Agreements and Subscription Agreements, at a per-share price as determined by our Board, which price will be determined prior to the issuance of our common stock and in accordance with the limitations under Section 23 of the 1940 Act. As of the date of this filing, we have called $79.4 million of capital commitments.

In connection with the Purchase Agreements, the Adviser has sold and will sell additional shares of the Company to such investors at a discounted price or contribute other consideration in connection with each drawdown. The Company is not obligated to reimburse the Adviser for the shares that were sold at a discounted price or the other consideration that was provided by the Adviser.

Taxation as a RIC

    We have elected to be treated as a RIC under Subchapter M of the Code commencing with our tax year ended December 31, 2011 and intend to maintain our qualification as a RIC thereafter. As a RIC, we generally will not be subject to corporate-level U.S. federal income taxes on any income that we distribute as dividends for U.S. federal income tax purposes to our stockholders. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our stockholders, for each tax year, an amount equal to at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gain over realized net long-term capital loss and determined without regard to any deduction for dividends paid, or the annual distribution requirement. Even if we qualify as a RIC, we generally will be subject to corporate-level U.S. federal income tax on our undistributed taxable income and could be subject to state, local, and foreign taxes.

Additionally, in order to avoid the imposition of a U.S. federal excise tax, we are required to distribute, in respect of each calendar year, dividends to our stockholders of an amount at least equal to the sum of 98% of our calendar year net ordinary income (taking into account certain deferrals and elections); 98.2% of our capital gain net income (adjusted for certain ordinary losses) for the one year period ending on October 31 of such calendar year; and any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which we previously did not incur any U.S. federal income tax. If we fail to qualify as a RIC for any reason and become subject to corporate tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and our stockholders. In addition, we could be required to recognize unrealized gains, incur substantial taxes and interest and make substantial distributions in order to re-qualify as a RIC. We cannot assure stockholders that they will receive any distributions.

Related Party Transactions and Agreements

Investment Advisory Agreement

    We entered into an Investment Advisory Agreement as of February 1, 2019, under which the Adviser, subject to the overall supervision of our Board of Directors, manages the day-to-day operations of, and provides investment advisory services to us. The Adviser and its affiliates also provide investment advisory services to other funds that have investment mandates that are similar, in whole and in part, with ours. The Adviser and its affiliates serve as investment adviser or sub-adviser to private funds and registered open-end funds, and serves as an investment adviser to a public real estate investment trust. The Adviser’s policies are designed to manage and mitigate the conflicts of interest associated with the allocation of investment opportunities. In addition, any affiliated fund currently formed or formed in the future and managed by the Adviser or its affiliates may have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. However, in certain instances due to regulatory, tax, investment, or other restrictions, certain investment opportunities may not be appropriate for either us or other funds managed by the Adviser or its affiliates. The Board renewed the Investment Advisory Agreement on January 31, 2022.

    Prior to February 1, 2019, our Adviser provided investment advisory and management services under the Prior Investment Advisory Agreement, effective November 1, 2016, and most recently re-approved by the Board in August 2018. The terms of the Prior Investment Advisory Agreement were materially identical to the Investment Advisory Agreement. The Prior Investment Advisory Agreement automatically terminated upon the indirect change of control of the Adviser on the consummation of the FT Transaction.

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Administration Agreement

    On November 1, 2016, we entered into the Administration Agreement with BSP, pursuant to which BSP provides us with office facilities and administrative services. The Administration Agreement may be terminated by either party without penalty upon not less than 60 days’ written notice to the other. For the three and six months ended June 30, 2022, the Company incurred $0.4 million and $0.8 million respectively, in administrative service fees under the Administration Agreement. For the three and six months ended June 30, 2021, the Company incurred $0.4 million and $0.9 million respectively, in administrative service fees under the Administration Agreement.

Co-Investment Relief

    The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC permitting the BDC to do so. The SEC staff has granted us exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with our investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.

Due To/From Affiliated Funds

Included within Prepaid and Other Assets on the Consolidated Statements of Assets and Liabilities as of June 30, 2022 and December 31, 2021 are $0.0 and $2.6 million, respectively of receivables from Affiliated Funds.

Borrowings

We are only allowed to borrow money such that our asset coverage, which, as defined in the 1940 Act, measures the ratio of total assets less total liabilities not represented by senior securities to total borrowings, equals at least 200% after such borrowing, with certain limited exceptions. We are continually exploring additional forms of alternative debt financing which could include new or expanded credit facilities or the issuance of debt securities. We may use borrowed funds, known as “leverage,” to make investments and to attempt to increase returns to our stockholders by reducing our overall cost of capital. We currently have credit facilities with Wells Fargo, JPM and MassMutual and have sold $610.0 million in aggregate principal of unsecured notes.

Wells Fargo Credit Facility

On August 28, 2020, the Company entered into a $300.0 million revolving credit facility with the Company, as collateral manager, Funding I, as borrower, the lenders party thereto, Wells Fargo, as administrative agent, and U.S. Bank, as collateral agent and collateral custodian (the “Wells Fargo Credit Facility”).

    The Wells Fargo Credit Facility provides for borrowings through August 28, 2023, and any amounts borrowed under the Wells Fargo Credit Facility will mature on August 28, 2025. Prior to the Second Amendment (defined below), the Wells Fargo Credit Facility was priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 2.75% per annum. Interest is payable quarterly in arrears. Funding I will be subject to a non-usage fee to the extent the commitments available under the Wells Fargo Credit Facility have not been borrowed. The non-usage fee per annum is 0.50% for the first 25% of the unused balance and up to 2.0% for the remaining unused balance. Funding I paid a structuring fee and incurred other customary costs and expenses in connection with the Wells Fargo Credit Facility. Pursuant to an amendment entered into on April 6, 2021, the commitment fee for any unused portion of the Wells Fargo Credit Facility was temporarily reduced until September 30, 2021 (the "First Amendment"). Additionally, pursuant to the First Amendment, the maximum spread was reduced from 2.75% to 2.50% as a result of this amendment. The other terms of the Wells Fargo Credit Facility were unchanged. Pursuant to an amendment entered into on May 27, 2022 (the "Second Amendment"), the benchmark rate was transitioned from LIBOR to SOFR. After the Second Amendment, the Wells Fargo Credit Facility is priced at Daily Simple SOFR, with a Daily Simple SOFR floor of zero, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 2.60% per annum.

    Funding I’s obligations under the Wells Fargo Credit Facility are secured by a first priority security interest in substantially all of the assets of Funding I, including its portfolio of investments and the Company’s equity interest in Funding I. The obligations of Funding I under the Wells Fargo Credit Facility are non-recourse to the Company.

    In connection with the Wells Fargo Credit Facility, the Company and Funding I have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The Wells Fargo Credit Facility contains customary default provisions pursuant to which the administrative agent and the lenders under the Wells Fargo

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Credit Facility may terminate the Company in its capacity as collateral manager/portfolio manager under the Wells Fargo Credit Facility. Upon the occurrence of an event of default under the Wells Fargo Credit Facility, the administrative agent or the lenders may declare the outstanding advances and all other obligations under the Wells Fargo Credit Facility immediately due and payable.

JPM Credit Facility

On August 28, 2020, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, 57th Street, entered into a $300.0 million revolving credit facility with JPMorgan Chase Bank, Nation Association, as administrative agent ("JPM"), and U.S. Bank, as collateral agent, collateral administrator and securities intermediary (the "JPM Credit Facility").

The JPM Credit Facility provides for borrowings through August 28, 2023, and any amounts borrowed under the JPM Credit Facility will mature on August 28, 2023 unless the administrative agent exercises its option to extend the maturity date to August 28, 2024. The JPM Credit Facility is priced at three-month LIBOR, with a LIBOR floor of zero, plus a spread of 2.75% per annum. Interest is payable quarterly in arrears. 57th Street will be subject to a non-usage fee to the extent the commitments available under the JPM Credit Facility have not been borrowed. The non-usage fee per annum is 0.50% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance until August 28, 2021, when the non-usage fee per annum is 0.75% for the first 20% of the unused balance and up to 2.75% for the remaining unused balance. 57th Street paid a structuring fee and incurred other customary costs and expenses in connection with the JPM Credit Facility. On January 21, 2021, the Company entered into an amendment (the “JPM Amendment”) to the JPM Credit Facility. The JPM Amendment, among other things, increases the amount that the Company is permitted to borrow under the JPM Credit Agreement from $300.0 million to $400.0 million. On April 12, 2021, the Company, through 57th Street, amended and restated the JPM Credit Facility. The amendment and restatement temporarily reduced the previous minimum funding amount until October 13, 2021. The other material terms of the JPM Credit Facility were unchanged.

57th Street’s obligations under the JPM Credit Facility are secured by a first priority security interest in substantially all of the assets of 57th Street, including its portfolio of investments and the Company’s equity interest in 57th Street. The obligations of 57th Street under the JPM Credit Facility are non-recourse to the Company.

In connection with the JPM Credit Facility, the Company and 57th Street have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The JPM Credit Facility contains customary default provisions pursuant to which the administrative agent and the lenders under the JPM Credit Facility may terminate the Company in its capacity as collateral manager/portfolio manager under the JPM Credit Facility. Upon the occurrence of an event of default under the JPM Credit Facility, the administrative agent or the lenders may declare the outstanding advances and all other obligations under the JPM Credit Facility immediately due and payable.

JPM Revolver Facility

On June 10, 2022, the Company entered into a $495.0 million revolving credit facility with JPMorgan Chase Bank, as administrative agent and as collateral agent, MUFG Union Bank, N.A., Sumitomo Mitsui Banking Corporation, and Wells Fargo Bank, National Association as syndication agents, as well as other Lender parties (the “JPM Revolver Facility”).

The JPM Revolver Facility provides for borrowings through June 10, 2026, and any amounts borrowed under the JPM Revolver Facility will mature on June 10, 2027. The JPM Revolver Facility is priced at three-month Term SOFR, plus a spread calculated based upon the composition of loans in the collateral pool, which will not exceed 1.98% per annum. Interest is payable quarterly in arrears. The Company will be subject to a non-usage fee of 0.38% to the extent the commitments available under the JPM Revolver Facility have not been borrowed. The Company paid a structuring fee and incurred other customary costs and expenses in connection with the JPM Revolver Facility.

In connection with the JPM Revolver Facility, the Company has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The JPM Revolver Facility contains customary events of default for similar financing transactions. Upon the occurrence and during the continuation of an event of default, JPMorgan Chase Bank, N.A. may declare the outstanding advances and all other obligations under the JPM Revolver Facility immediately due and payable.

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Citi Credit Facility

On June 27, 2014, the Company, through a wholly-owned, special purpose financing subsidiary, CB Funding, entered into a credit facility (as amended from time to time, the “Citi Credit Facility”) with Citibank, N.A. ("Citi") as administrative agent and U.S. Bank as collateral agent, account bank, and collateral custodian. From January 1, 2020 to January 20, 2021, the Citi Credit Facility provided for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis, with a reinvestment period ending on May 31, 2021 and maturity date of May 31, 2022. On January 20, 2021, SLF, the Company's joint venture with CCLF entered into an amendment to the Citi Credit Facility (the “Citi Credit Agreement”). The amendment, among other things, (i) replaces the Company with SLF as the collateral manager under the Citi Credit Agreement, (ii) extends the end of the reinvestment period from May 31, 2021 to May 31, 2023 and (iii) extends the final maturity date from May 31, 2022 to May 31, 2024. As a result of this amendment to the Citi Credit Facility, the Company incurred a realized loss on extinguishment of debt of $1.3 million. In connection with the Citi Credit Facility, CB Funding has made certain representations and warranties, is required to comply with various covenants, reporting requirements, and other customary requirements for similar facilities and is subject to certain customary events of default. Upon the occurrence and during the continuation of an event of default, Citi may declare the outstanding advances and all other obligations under the Citi Credit Facility immediately due and payable. During the continuation of an event of default, CB Funding must pay interest at a default rate.

The Citi Credit Facility contains customary default provisions for facilities of this type pursuant to which Citi may terminate the rights, obligations, power, and authority of the Company, in its capacity as servicer of the portfolio assets under the Citi Credit Facility, including, but not limited to, non-performance of Citi Credit Facility obligations, insolvency, defaults of certain financial covenants, and other events with respect to the Company that may be adverse to Citi and the secured parties under the Citi Credit Facility.

The Citi Credit Facility is priced at three-month LIBOR plus a spread of 1.60% per annum through and including the last day of the investment period and 2.00% per annum thereafter. Interest is payable quarterly in arrears. CB Funding is subject to a non-usage fee to the extent the aggregate principal amount available under the Citi Credit Facility has not been borrowed. The non-usage fee per annum is 0.50%. Any amounts borrowed under the Citi Credit Facility along with any accrued and unpaid interest thereunder will mature, and will be due and payable, in three years.

MassMutual Credit Facility

On July 7, 2020, the Company and a wholly-owned, special purpose financing subsidiary of the Company, BDCA Asset Financing, LLC (“BDCA Asset Financing”), entered into a loan and servicing agreement (the “MassMutual Credit Facility”) with Massachusetts Mutual Life Insurance Company (“MassMutual”) as facility servicer and a lender and U.S. Bank National Association as collateral custodian, collateral administrator and administrative agent. The MassMutual Credit Facility provides for borrowings of up to $100.0 million on a committed basis, and, subject to satisfaction of certain conditions, contains an accordion feature whereby the Mass Mutual Credit Facility can be expanded to $150.0 million.

BDCA Asset Financing’s obligations under the MassMutual Credit Facility are secured by a first priority security interest in substantially all of the assets of BDCA Asset Financing, including its portfolio of investments and the Company’s equity interest in BDCA Asset Financing. The obligations of BDCA Asset Financing under the MassMutual Credit Facility are non-recourse to the Company.

The MassMutual Credit Facility provides for borrowings through December 31, 2021 and matures on December 31, 2025. The MassMutual Credit Facility is priced at three-month LIBOR, with a LIBOR floor of 0.75%, plus a spread of 5.0% per annum. Interest is payable quarterly in arrears. BDCA Asset Financing will be subject to a non-usage fee of 0.50% to the extent the aggregate principal amount available under the MassMutual Credit Facility has not been borrowed. BDCA Asset Financing paid a structuring fee and incurred other customary costs and expenses in connection with the MassMutual Credit Facility.

In connection with the MassMutual Credit Facility, the Company and BDCA Asset Financing have made certain representations and warranties and are required to comply with various covenants and other customary requirements. The MassMutual Credit Facility contains customary default provisions pursuant to which MassMutual may terminate the Company in its capacity as portfolio asset servicer of the portfolio assets under the MassMutual Credit Facility. Upon the occurrence of an event of default, MassMutual may declare the outstanding advances and all other obligations under the MassMutual Credit Facility immediately due and payable.

Effective February 18, 2022, the Company terminated the Mass Mutual Credit Facility. As a result of this termination, the Company incurred a realized loss on extinguishment of debt of $1.8 million.

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2022 Notes

    On December 14, 2017, the Company entered into a Purchase Agreement relating to the Company's sale of $150.0 million aggregate principal amount of its 4.75% fixed rate notes due December 30, 2022 (the “2022 Notes”). The 2022 Notes are subject to customary indemnification provisions and representations, warranties, and covenants. The net proceeds from the sale of the 2022 Notes were approximately $147.0 million. The 2022 Notes bear interest at a rate of 4.75% per year payable semi-annually.

2023 Notes

    On May 11, 2018, the Company entered into a Purchase Agreement relating to the Company's sale of $60.0 million aggregate principal amount of its 5.38% fixed rate notes due May 30, 2023 (the “2023 Notes”). The 2023 Notes are subject to customary indemnification provisions and representations, warranties, and covenants. The net proceeds from the sale of the 2023 Notes were approximately $58.7 million. The 2023 Notes bear interest at a rate of 5.375% per year payable semi-annually.

2024 Notes

    On December 3, 2019, the Company entered into a Purchase Agreement relating to the Company's sale of $100.0 million aggregate principal amount of its 4.85% fixed rate notes due December 15, 2024 (the “2024 Notes”). The 2024 Notes are subject to customary indemnification provisions and representations, warranties, and covenants. The net proceeds from the sale of the 2024 Notes were approximately $98.4 million. The 2024 Notes bear interest at a rate of 4.85% per year payable semi-annually.

2026 Notes

On March 24, 2021, the Company entered into a Purchase Agreement relating to the Company's sale of $300.0 million aggregate principal amount of its 3.25% fixed rate notes due March 30, 2026 (the “Restricted 2026 Notes”). The net proceeds from the sale of the Restricted 2026 Notes were approximately $296.0 million. Pursuant to a Registration Statement on Form N-14 (File No. 333-257321), on September 22, 2021, the Company closed an exchange offer in which holders of the Restricted 2026 Notes were offered the opportunity to exchange their Restricted 2026 Notes for new registered notes with substantially identical terms (the "Unrestricted 2026 Notes" and, together with the Restricted 2026 Notes, the 2026 Notes), through which holders representing 99.88% of the outstanding principal of the then Restricted 2026 Notes obtained Unrestricted 2026 Notes. The 2026 Notes are subject to customary indemnification provisions and representations, warranties and covenants. The 2026 Notes bear interest at a rate of 3.25% per year payable semi-annually.

See Note 5 to our consolidated financial statements contained in this Quarterly Report on Form 10-Q for a more detailed discussion of our borrowings.

Contractual Obligations

    The following table shows our payment obligations for repayment of debt and other contractual obligations as of June 30, 2022 (dollars in thousands):

									Payment Due by Period
			Total						Less than 1 year						1 - 3 years						3- 5 years						More than 5 years
Wells Fargo Credit Facility (1)			$	267,000					$	—					$	—					$	267,000					$	—
JPM Credit Facility (2)			321,600						—						321,600						—						—
JPM Revolver Facility (3)			5,000						—						—						5,000						—
2026 Notes (4)			297,075						—						—						297,075						—
2024 Notes (5)			99,413						—						99,413						—						—
2023 Notes (6)			59,941						59,941						—						—						—
2022 Notes (7)			149,918						149,918						—						—						—
Total contractual obligations			$	1,199,947					$	209,859					$	421,013					$	569,075					$	—

______________

(1)As of June 30, 2022, we had $33.0 million of unused borrowing capacity under the Wells Fargo Credit Facility, subject to borrowing base limits.

(2)As of June 30, 2022, we had $78.4 million of unused borrowing capacity under the JPM Credit Facility, subject to borrowing base limits.

(3)As of June 30, 2022, we had $490.0 million of unused borrowing capacity under the JPM Revolver Facility, subject to borrowing base limits.

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(4)As of June 30, 2022, we had no unused borrowing capacity under the 2026 Notes.

(5)As of June 30, 2022, we had no unused borrowing capacity under the 2024 Notes.

(6)As of June 30, 2022, we had no unused borrowing capacity under the 2023 Notes.

(7)As of June 30, 2022, we had no unused borrowing capacity under the 2022 Notes.

Off-Balance Sheet Arrangements

    We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Commitments

    In the ordinary course of business, we may enter into future funding commitments. As of June 30, 2022, the Company had unfunded commitments on delayed draw term loans of $153.7 million, unfunded commitments on revolver term loans of $111.0 million, unfunded equity capital discretionary commitments of $11.1 million, and unfunded commitments on term loans of $0.6 million. As of December 31, 2021, the Company had unfunded commitments on delayed draw term loans of $163.6 million, unfunded commitments on revolver term loans of $102.9 million, unfunded equity capital discretionary commitments of $11.1 million, and unfunded commitments on term loans of $0.8 million. Please refer to Note 7 - Commitments and Contingencies for further detail of these unfunded commitments. We maintain sufficient cash on hand and available borrowing capacity to fund such unfunded commitments.

Significant Accounting Estimates and Critical Accounting Policies

    Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

    While our significant accounting policies are more fully described in Note 2 - Summary of Significant Accounting Policies appearing elsewhere in this report, we believe the following accounting policies require the most significant judgment in the preparation of our consolidated financial statements.

Valuation of Portfolio Investments

    Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis we perform an analysis of each investment to determine fair value as follows:

    Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. We may also obtain quotes with respect to certain of our investments from pricing services or brokers or dealers in order to value assets. When doing so, we determine whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, we use the quote obtained.

    Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

    For an investment in an investment fund that does not have a readily determinable fair value, we measure the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC 946, as of our measurement date.

    For investments in Collateralized Securities, both the assets and liabilities of each Collateralized Securities' capital structure are modeled. The model uses a waterfall engine to store the collateral data, generate collateral cash flows from the assets and distribute the cash flows to the liability structure based on the contractual priority of payments. The waterfall cash

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flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk, among others. In addition, broker quotations and/or comparable trade activity is considered as an input to determining fair value when available.

    As part of our quarterly valuation process the Adviser may be assisted by one or more independent valuation firms engaged by us. The Board of Directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the independent valuation firm(s) (to the extent applicable).

    With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:

•Each portfolio company or investment will be valued by the Adviser, potentially with assistance from one or more independent valuation firms engaged by our Board of Directors;

•The independent valuation firm(s), if involved, will conduct independent appraisals and make an independent assessment of the value of each investment; and

•The Board of Directors determines the fair value of each investment, in good faith, based on the input of the Adviser and independent valuation firm (to the extent applicable). On August 10, 2022, pursuant to Rule 2a-5, the Board has designated the Adviser as the Company's valuation designee (the "Valuation Designee") to perform fair value determinations relating to the value of assets held by the Company. The Adviser also has established a Valuation Committee to assist the Adviser in carrying out its designated responsibilities that the Board has designated to the Adviser as Valuation Designee, subject to oversight of the Board.

    Because there is not a readily available market value for most of the investments in its portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our Board of Directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.

Revenue Recognition

Interest Income

    Investment transactions are accounted for on the trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discount and amortization of premium on investments.

    The Company has a number of investments in Collateralized Securities. Interest income from investments in the “equity” class of these Collateralized Securities (in the Company's case, preferred shares, or subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC 325-40-35, Beneficial Interests in Securitized Financial Assets ("ASC 325-40-35"). The Company monitors the expected cash inflows from its equity investments in Collateralized Securities, including the expected principal repayments. The effective yield is determined and updated quarterly. In accordance with ASC 325-40, investments in CLOs are periodically assessed for other-than-temporary impairment ("OTTI"). When the Company determines that a CLO has OTTI, the amortized cost basis of the CLO is written down as of the date of the determination based on events and information evaluated and that write-down is recognized as a realized loss.

Dividend Income

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies.

Dividend income from SLF is recorded on accrual basis once dividends are declared by SLF's board of directors. Distributions from SLF are evaluated at the time of distribution to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions as dividend income unless there are sufficient accumulated tax-basis earnings and profit in SLF prior to distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

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Fee Income

    Fee income, such as structuring fees, origination, closing, amendment fees, commitment, and other upfront fees are generally non-recurring and are recognized as revenue when earned, either upfront or amortized into income. Upon the payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment, and other upfront fees are recorded as income.

Payment-in-Kind Interest/Dividends

    We may hold debt and equity investments in our portfolio that contain PIK interest and dividend provisions. PIK interest and PIK dividend, which represent contractually deferred interest or dividends that add to the investment balance that is generally due at maturity, are recorded on accrual basis to the extent such amounts are expected to be collected.

Non-accrual Income

    Investments are placed on non-accrual status when principal or interest/dividend payments are past due and/or when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest is generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.

Net Realized Gain or Loss and Net Change in Unrealized Appreciation or Depreciation

    Gain or loss on the sale of investments is calculated using the specific identification method. We measure realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when a gain or loss is realized.

    See Note 2 - Summary of Significant Accounting Policies to the consolidated financial statements for a description of other accounting policies and recently issued accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

    The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to interest rate fluctuations. Many factors including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control contribute to interest rate risk. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars, and treasury lock agreements, subject to the requirements of the 1940 Act, in order to mitigate our interest rate risk with respect to various debt instruments. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates. During the periods covered by this report, we did not engage in interest rate hedging activities. We would not hold or issue these derivative contracts for trading or speculative purposes.

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    As of June 30, 2022, our debt included variable-rate debt, bearing a weighted average interest rate of LIBOR or SOFR plus 2.67% and fixed rate debt, bearing a weighted average interest rate of 4.09% with a total carrying value (net of deferred financing costs) of $1,189.8 million. The following table quantifies the potential changes in interest income net of interest expense should base interest rates increase or decrease by the amounts below assuming that our current consolidated statement of assets and liabilities was to remain constant and no actions were taken to alter our existing interest rate sensitivity. Interest rate floors, if applicable, are not reflected in the sensitivity analysis below.

Change in Base Interest Rates						Estimated Change in Interest Income net of Interest Expense (in thousands)
(-) 229 Basis Points						$	(33,776)
(-) 200 Basis Points						$	(29,561)
(-) 100 Basis Points						$	(14,781)
(-) 50 Basis Points						$	(7,390)
(+) 50 Basis Points						$	7,390
(+) 100 Basis Points						$	14,781
(+) 200 Basis Points						$	29,561

    Because we may borrow money to make investments, our net investment income may be dependent on the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of increasing interest rates, our cost of funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

Capital Markets Risk

    The prices of securities we hold may decline in response to certain events, including those directly involving the companies we invest in; conditions affecting the general economy; overall market changes; legislative reform; local, regional, national or global political, social or economic instability; and interest rate fluctuations. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in value of the publicly-traded securities held by us.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were (a) designed to ensure that the information we are required to disclose in our reports under the Exchange Act is recorded, processed, and reported in an accurate manner and on a timely basis and the information that we are required to disclose in our Exchange Act reports is accumulated and communicated to management to permit timely decisions with respect to required disclosure and (b) operating in an effective manner.

Change in Internal Control Over Financial Reporting

No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    As of June 30, 2022, we were not defendants in any material pending legal proceeding, and no such material proceedings are known to be contemplated. However, from time to time, we may be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under the contracts with our portfolio companies. Third parties may also seek to impose liability on us in connection with the activities of our portfolio companies.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed below and in Part I., “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which could materially affect our business, financial condition, and/or operating results. The risks described below and in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.

Because we borrow money, the potential for gain or loss on amounts invested in us will be magnified and may increase the risk of investing in us.

    As of June 30, 2022, we had approximately $1.2 billion of debt financing. The use of borrowings, also known as leverage, increases the volatility of investments by magnifying the potential for gain or loss on invested equity capital. Because we use leverage to partially finance our investments, through borrowing from banks and other lenders, you will experience increased risks of investing in our common stock. If the value of our assets increases, leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause our net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net income to increase more than it would without the leverage, while any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to make common stock distribution payments. Leverage is generally considered a speculative investment technique.

Illustration. The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing below. The calculation assumes (i) $3.4 billion in total assets, (ii) a weighted average cost of funds of 3.60%, (iii) $1.8 billion in debt outstanding (i.e., assumes that the $610.0 million principal amount of our unsecured notes sold and the full $1,195.0 million available to us under our revolving credit facilities is outstanding), and (iv) $1.6 billion in stockholders’ equity. In order to compute the “Corresponding return to stockholders,” the “Assumed Return on Our Portfolio (net of expenses)” is multiplied by the assumed total assets to obtain an assumed return to us. From this amount, the interest expense is calculated by multiplying the assumed weighted average cost of funds by the assumed debt outstanding, and the product is subtracted from the assumed return to us in order to determine the return available to stockholders. The return available to stockholders is then divided by our stockholders’ equity to determine the “Corresponding return to stockholders.” Actual interest payments may be different.

Assumed Return on Our Portfolio (net of expenses)						(10)%						(5)%						—%						5%						10%
Corresponding return to stockholders (1)						(25.74)%						(14.95)%						(4.15)%						6.64%						17.44%

___________________

(1) In order for us to cover our hypothetical annual interest payments on indebtedness, we would need to achieve annual returns on our June 30, 2022 total assets of at least 1.92%.

As of June 30, 2022, the Wells Fargo Credit Facility provided for borrowings in an aggregate principal amount of up to $300.0 million on a committed basis, due August 28, 2025; the JPM Credit Facility provided for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis, due August 28, 2023; the JPM Revolver Facility provided for borrowings in an aggregate principal amount of up to $495.0 million on a committed basis, due June 10, 2027; the 2022 Notes provided borrowings in an aggregate principal amount of $150.0 million, due December 30, 2022; the 2023 Notes provided borrowings in an aggregate principal amount of $60.0 million, due May 30, 2023; the 2024 Notes provided borrowings in an aggregate principal amount of $100.0 million, due December 15, 2024; and the 2026 Notes provided borrowings in an aggregate principal amount of $300.0 million, due March 30, 2026. See Item 7 in the Annual Report filed on Form 10-K for more information about these financing arrangements.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

On April 14, 2022, pursuant to a drawdown notice previously delivered to investors, the Company issued and sold approximately 5.6 million shares of the Company's common stock, par value $0.001 per share (the "Common Stock") for an aggregate offering price of approximately $41.5 million.

On June 3, 2022, pursuant to a drawdown notice previously delivered to investors, the Company issued and sold approximately 4.9 million shares of the Common Stock for an aggregate offering price of approximately $37.9 million.

Issuer Purchases of Equity Securities

Repurchases of our common stock pursuant to our tender offer are as follows:

Period

Total Number of Shares Purchased

Average Price per Share

Cumulative Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)

April 1, 2022 through April 30, 2022

—

—

—

—

May 1, 2022 through May 31, 2022

—

—

—

—

June 1, 2022 through June 30, 2022

—

—

—

—

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

    Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

    Not applicable.

ITEM 5. OTHER INFORMATION

    None.

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ITEM 6. EXHIBITS

    The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the six months ended June 30, 2022 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit No.			Description
3.1			Third Articles of Amendment and Restatement of the Registrant (previously filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed on August 10, 2017 and herein incorporated by reference).
3.2			Bylaws (previously filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed on August 10, 2017 and herein incorporated by reference).
10.1			Form of Purchase Agreement between the Company and investors (filed as Exhibit 1.1 to the Company's Current Report on Form 8-K filed on April 7, 2022 and herein incorporated by reference).
10.2			Form of Subscription Agreement between the Company and investors (filed as Exhibit 1.2 to the Company's Current Report on Form 8-K filed on April 7, 2022 and herein incorporated by reference).
10.3			Amendment No. 2 to Loan and Servicing Agreement, dated as of May 27, 2022, among BDCA Funding I, LLC, the Company, Wells Fargo Bank, National Association, each of the Lenders and Lender Agents party thereto and U.S. Bank Trust Company, National Association (filed herewith).
10.4			Senior Secured Credit Agreement, dated as of June 10, 2022, among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, Wells Fargo Bank, National Association, Sumitomo Mitsui Banking Corporation, and MUFG Bank, Ltd. as syndication agents, and JPMorgan Chase Bank, N.A., Wells Fargo Bank, National Association, Sumitomo Mitsui Banking Corporation, and MUFG Bank, Ltd. as Joint Bookrunner and Joint Lead Arrangers (filed herewith).
31.1			Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2			Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32			Written statement of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be

signed on its behalf by the undersigned thereunto duly authorized.

Signature

Title

Date

/s/ Richard J. Byrne Richard J. Byrne

Chief Executive Officer, President, and Chairman of the Board of Directors (Principal Executive Officer)

August 12, 2022

/s/ Nina Kang Baryski Nina Kang Baryski

Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

August 12, 2022

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Exhibit 10.3

 

EXECUTION COPY

 

AMENDMENT NO. 2 TO
LOAN AND SERVICING AGREEMENT AND WAIVER

 

THIS AMENDMENT NO. 2 TO LOAN AND SERVICING AGREEMENT AND WAIVER (this “Amendment”) is made as of May 27, 2022, by and among:

 

(1)            FRANKLIN BSP LENDING CORPORATION. (formerly known as Business Development Corporation of America), a Maryland limited liability company, as collateral manager (together with its successors 7and assigns in such capacity, the “Collateral Manager”);

 

(2)           BDCA FUNDING I, LLC, a Delaware limited liability company, as the borrower (together with its successors and assigns in such capacity, the “Borrower”);

 

(3)            EACH OF THE LENDERS FROM TIME TO TIME PARTY HERETO (together with its respective successors and assigns in such capacity, each a “Lender” and collectively, the “Lenders”); and

 

(4)            WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as the administrative agent for the Lenders hereunder (together with its successors and assigns in such capacity, the “Administrative Agent”);

 

(5)            U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION (as successor in interest to U.S. Bank National Association), a national banking association, not in its individual capacity but solely as the collateral agent (together with its successors and assigns in such capacity, the “Collateral Agent”); and

 

(6)            U.S. BANK NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as the collateral custodian (together with its successors and assigns in such capacity, the “Collateral Custodian”).

 

Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Agreement (as defined below).

 

RECITALS

 

WHEREAS, the Borrower, the Collateral Manager, the Administrative Agent, the Lenders, the Collateral Agent and the Collateral Custodian are parties to that certain Loan and Servicing Agreement dated as of August 28, 2020 (such agreement as amended, modified, supplemented, waived or restated from time to time, including by that certain Amendment No. 1 to Loan and Servicing Agreement, dated as of April 6, 2021, the “Agreement”);

 

WHEREAS, Section 13.1 of the Agreement provides that the parties to the Agreement may amend, waive, supplement or otherwise modify any of the provisions of the Agreement under the circumstances and subject to the satisfaction of the conditions set forth therein.

 

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NOW, THEREFORE, based upon the above Recitals, the mutual premises and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

Section 1.         Amendments. The Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the bold and double-underlined text (indicated textually in the same manner as the following example: bold and double-underlined text) as set forth on the pages of the Agreement attached as Exhibit A hereto.

 

Section 2.         Waiver. The Administrative Agent and each of the Lenders hereby waives any violation of (i) the limitation applicable to Discretionary Sales set forth in Section 2.17(a)(vi) of the Agreement; provided that the OLB of all Loans subject to a proposed Discretionary Sale or sold in a Discretionary Sale following the effectiveness of this Amendment shall comply with the limitation set forth in such section as of the date hereof, (ii) the covenant regarding compliance with the opinions of Ropes and Gray LLP set forth in Section 5.3(m) of the Agreement and (iii) the notice requirement in respect to changing the Borrower’s name set forth in Section 5.2(g) of the Agreement and the notice requirement in respect to changing the Collateral Manager’s name set forth in Section 5.4(c) of the Agreement.

 

Except as expressly set forth in this message, each of the Administrative Agent and each Lender reserves all of its rights, privileges, powers and remedies under the Agreement and the other Loan Documents, as well as under applicable law (whether determined at law or in equity). Except as specifically provided herein, this waiver shall not operate as a waiver of any violation of, or any right, privilege, power or remedy of any party under, the Agreement or any other Transaction Document; all such rights, privileges, powers and remedies are expressly reserved. The Administrative Agent’s or any Lender’s exercise or failure to exercise any rights, privileges, powers and remedies under any of the foregoing in a particular instance shall not operate as a waiver of its right to exercise the same or different rights, privileges, powers and/or remedies in any other instance or instances.

 

Section 3.         Agreement in Full Force and Effect as Amended. Except as specifically amended hereby, all provisions of the Agreement shall remain in full force and effect. All references to the Agreement in the Transaction Documents shall be deemed to mean the Agreement as modified hereby. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Agreement other than as expressly set forth herein and shall not constitute a novation of the Agreement.

 

Section 4.         Representations. Each of the Borrower and the Collateral Manager hereby represent and warrant as of the date of this Amendment as follows:

 

(a)            it is duly formed or organized and validly existing and, if applicable in the State of its organization, in good standing, under the laws of the State of its formation or organization;

 

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(b)            the execution, delivery and performance by it of this Amendment and the Agreement as amended hereby are within its powers, have been duly authorized, and do not contravene (A) its limited liability company agreement, charter, by-laws, or other organizational documents, or (B) any Applicable Law;

 

(c)            no consent, license, permit, approval or authorization of, or registration, filing or declaration with any Governmental Authority or official thereof, is required in connection with the execution, delivery, performance, validity or enforceability of this Amendment and the Agreement amended hereby by or against it;

 

(d)            this Amendment has been duly executed and delivered by it;

 

(e)            each of this Amendment and the Agreement as amended hereby constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by general principles of equity;

 

(f)            it is not in default under the Agreement as amended hereby; and

 

(g)           upon giving effect to this Amendment, there is no Termination Event.

 

Section 5.         Condition to Effectiveness. The effectiveness of this Amendment is conditioned upon: (i) payment (to the extent invoiced) of outstanding fees of each Lender and any invoiced outstanding fees and disbursements of the Administrative Agent (if any), (ii) delivery of executed signature pages by all parties hereto to the Administrative Agent and (iii) delivery of an opinion letter of Ropes and Gray LLP relating to the true sale and true contribution of the Loans in form and substance satisfactory to the Administrative Agent.

 

Section 6.         Miscellaneous.

 

(a)            Without in any way limiting any other obligation hereunder or under the Transaction Documents, the Borrower agrees to provide, from time to time, any additional documentation and to execute additional acknowledgements, amendments, instruments or other agreements as may be reasonably requested and required by the Administrative Agent to effectuate the foregoing.

 

(b)           This Amendment may be executed in any number of counterparts (including by facsimile or in portable document format), and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument but all of which together shall constitute one and the same agreement.

 

(c)            The descriptive headings of the various sections of this Amendment are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

 

(d)            This Amendment may not be amended or otherwise modified except as provided in the Agreement.

 

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(e)            The failure or unenforceability of any provision hereof shall not affect the other provisions of this Amendment or the Agreement.

 

(f)            Whenever the context and construction so require, all words used in the singular number herein shall be deemed to have been used in the plural, and vice versa, and the masculine gender shall include the feminine and neuter and the neuter shall include the masculine and feminine.

 

(g)            This Amendment and the Agreement represent the final agreement between the parties only with respect to the subject matter expressly covered hereby and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements between the parties. There are no unwritten oral agreements between the parties.

 

(h)            The provisions of Sections 13.10 and 13.11 of the Agreement are each incorporated by reference herein mutatis mutandis.

 

(i)            This Amendment shall be valid, binding, and enforceable against a party when executed and delivered by an authorized individual on behalf of the party by means of (i) an original manual signature; (ii) a faxed, scanned, or photocopied manual signature, or (iii) any other electronic signature permitted by the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, and/or any other relevant electronic signatures law, including any relevant provisions of the UCC (collectively, “Signature Law”), in each case to the extent applicable. Each faxed, scanned, or photocopied manual signature, or other electronic signature, shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. Each party hereto shall be entitled to conclusively rely upon, and shall have no liability with respect to, any faxed, scanned, or photocopied manual signature, or other electronic signature, of any other party and shall have no duty to investigate, confirm or otherwise verify the validity or authenticity thereof. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute one and the same instrument. For the avoidance of doubt, original manual signatures shall be used for execution or indorsement of writings when required under the UCC or other Signature Law due to the character or intended character of the writings.

 

(j)             THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN THE AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS SET FORTH IN THE AGREEMENT.

 

(k)            By their execution hereof, the parties hereto acknowledge and agree that U.S. Bank Trust Company, National Association is the successor in interest to U.S. Bank National Association as Collateral Agent under the Agreement by an assignment from U.S. Bank National Association of its rights, interests and obligations in its role as Collateral Agent to U.S. Bank Trust Company, National Association. In furtherance of the foregoing, all Transaction Documents, including all exhibits and schedules thereto, are hereby amended by changing all references therein to U.S. Bank National Association solely in its role as Collateral Agent to U.S. Bank Trust Company, National Association.

 

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(l)            Each of the Administrative Agent and the Lenders hereby directs the Collateral Custodian and the Collateral Agent to execute this Amendment. In entering into this Amendment and performing its duties under this Amendment, the Collateral Custodian and the Collateral Agent shall be entitled to all the same rights, protections, immunities and indemnities as set forth in the Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

			BDCA FUNDING I, LLC, as the Borrower
			By:
						Name:			Nina Kang Baryski
						Title:			Chief Financial Officer

 

			FRANKLIN BSP LENDING CORPORATION (formerly known as Business Development Corporation of America), as the Collateral Manager
			By:
						Name:			Nina Kang Baryski
						Title:			Chief Financial Officer

 

[Additional Signatures Follow]

 

Amendment No. 2 to Loan and Servicing Agreement

 

 

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[Signatures Continued From Previous Page]

 

			WELLS FARGO BANK, NATIONAL ASSOCIATION, as the Administrative Agent
			By:
						Name:
						Title:

 

[Additional Signatures Follow]

 

Amendment No. 2 to Loan and Servicing Agreement

 

 

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[Signatures Continued From Previous Page]

 

			WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender
			By:
						Name:
						Title:

 

[Additional Signatures Follow]

 

Amendment No. 2 to Loan and Servicing Agreement

 

 

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[Signatures Continued From Previous Page]

 

			U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as the Collateral Agent
			By:
						Name:
						Title:
			U.S. BANK NATIONAL ASSOCIATION, as the Collateral Custodian
			By:
						Name:
						Title:

 

Amendment No. 2 to Loan and Servicing Agreement

 

 

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EXHIBIT A

 

EXECUTION COPY

 

(Conformed through Amendment No. 1 2 dated April 6 May 27, 2021 2022)

 

UP TO U.S. $300,000,000 LOAN AND SERVICING AGREEMENT

 

by and among

 

BUSINESS-DEVELOPMENT FRANKLIN BSP LENDING CORPORATION OF AMERICA,
as the Collateral Manager

 

BDCA FUNDING I, LLC,
as the Borrower

 

EACH OF THE LENDERS
FROM TIME TO TIME PARTY HERETO,
as the Lenders

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as the Administrative Agent

 

and

 

U.S. BANK NATIONAL ASSOCIATION,
as the Collateral Agent and as the Collateral Custodian

 

Dated as of August 28, 2020

 

 

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TABLE OF CONTENTS

 

Page

 

Section 2.3.			Reduction of the Facility Amount; Mandatory and Optional Repayments			27
Section 2.4.			Determination of Interest			28
Section 2.5.			Evidence of Advances			29
Section 2.6.			Principal Repayments			29
Section 2.7.			Interest Settlement Procedures before the Default Period			29
Section 2.15.			Taxes			31
Section 10.2.			Remedies			34
ARTICLE XIII. MISCELLANEOUS						34
Section 13.1.			Amendments and Waivers			34
Section 13.2.			Notices, Etc.			35
Section 13.3.			Ratable Payments			36

 

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EXHIBITS

 

EXHIBIT A-1			Form of Borrowing Notice
EXHIBIT A-2			Form of Repayment Notice (Reduction of Advances Outstanding/Facility Amount)
EXHIBIT A-3			Form of Borrowing Base Certificate
EXHIBIT A-4			Form of Approval Notice
EXHIBIT B			[Reserved]
EXHIBIT C			Form of Collateral Management Report
EXHIBIT D-1			Form of Officer’s Certificate as to Solvency (BDCA Funding I, LLC)
EXHIBIT D-2			Form of Officer’s Certificate as to Solvency (Franklin BSP Lending Corporation (formerly known as Business Development Corporation of America)
EXHIBIT D-3			[Reserved]
EXHIBIT E-1			Form of Officer’s Closing Certificate (BDCA Funding I, LLC)
EXHIBIT E-2			Form of Officer’s Closing Certificate (Franklin BSP Lending Corporation (formerly known as Business Development Corporation of America))
EXHIBIT E-3			[Reserved]
EXHIBIT F-1			Form of Power of Attorney (BDCA Funding I, LLC)
EXHIBIT F-2			Form of Power of Attorney (Collateral Manager)
EXHIBIT F-3			Form of Power of Attorney (Originator)
EXHIBIT G			Form of Release of Required Loan Documents
EXHIBIT H			Form of Collateral Manager’s Certificate
EXHIBIT I			Form of Transferee Letter
EXHIBIT J			Form of Joinder Supplement
EXHIBIT K			Form of Required Loan Documents Certificate
EXHIBIT L			Form of Loan Checklist

 

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LOAN AND SERVICING AGREEMENT

 

THIS LOAN AND SERVICING AGREEMENT (as amended, modified, waived, supplemented, restated or replaced from time to time, this “Agreement”) is made as of this August 28, 2020, by and among:

 

(1)            BUSINESS DEVELOPMENT FRANKLIN BSP LENDING CORPORATION OF AMERICA (formerly known as Business Development Corporation of America), a Maryland corporation (“BDCA”), as collateral manager (together with its successors and assigns in such capacity, the “Collateral Manager”);

 

(2)            BDCA FUNDING I, LLC, a Delaware limited liability company, as the borrower (together with its successors and assigns in such capacity, the “Borrower”);

 

(3)            EACH OF THE LENDERS FROM TIME TO TIME PARTY HERETO (together with its respective successors and assigns in such capacity, each a “Lender” and collectively, the “Lenders”);

 

(5)            WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“WFBNA”), not in its individual capacity but solely as the administrative agent for the Lenders hereunder (together with its successors and assigns in such capacity, the “Administrative Agent”), and

 

(6)            U.S. BANK NATIONAL ASSOCIATION, national banking association (“USB”), not in its individual capacity but solely as the collateral agent (together with its successors and assigns in such capacity, the “Collateral Agent”), and not in its individual capacity but solely as the collateral custodian (together with its successors and assigns in such capacity, the “Collateral Custodian”).

 

PRELIMINARY STATEMENT

 

WHEREAS, the Borrower desires that each Lender extend financing on the terms and conditions set forth herein; and WHEREAS, each Lender desires to extend financing on the terms and conditions set forth herein.

 

NOW, THEREFORE, based upon the foregoing recitals, the premises and the mutual agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

- [Skipped Pages] -

 

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“Anti-Money Laundering Laws”: Applicable laws or regulations in any jurisdiction in which the Borrower or any member of the Borrowing Group is located or doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.

 

“Applicable Law”: For any Person or property of such Person, all existing and future laws, rules, regulations (including proposed, temporary and final income tax regulations), statutes, treaties, codes, ordinances, permits, certificates, orders, licenses of and interpretations by any Governmental Authority applicable to such Person (including, without limitation, predatory and abusive lending laws, usury laws, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board’s Regulations “B” and “Z”, the Servicemembers Civil Relief Act of 2003 and state adaptations of the National Consumer Act and of the Uniform Consumer Credit Code and all other consumer credit laws and equal credit opportunity and disclosure laws) and applicable judgments, decrees, injunctions, writs, awards or orders of any court, arbitrator or other administrative, judicial, or quasi-judicial tribunal or agency of competent jurisdiction.

 

“Applicable LIBOR Prime Rate”: With respect to any Loan, the prime or base rate applicable to such Loan pursuant to the Underlying Instruments for such Loan.

 

“Applicable Reference Rate”: With respect to any Loan, the definition of “LIBOR Rate” (including any successor to “LIBOR Rate” based on SOFR) or any comparable definition in the Underlying Instruments for such Loan.

 

“Applicable Prime Rate”: With respect to any Loan, the prime or base rate applicable to such Loan pursuant to the Underlying Instruments for such Loan.

 

“Approval Notice”: With respect to any Eligible Loan, the written notice, in substantially the form attached hereto as Exhibit A-4, evidencing the approval by the Administrative Agent, in its sole discretion, of the acquisition by the Borrower of such Eligible Loan.

 

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“Asset Coverage Ratio” means the ratio, determined on a consolidated basis, without duplication, in accordance with GAAP, of (a) the fair value of the total assets of BDCA and its Subsidiaries as required by, and in accordance with, the 1940 Act and any orders of the SEC issued to BDCA to be determined by the Board of Directors of BDCA and reviewed by its auditors, less all liabilities (other than Indebtedness, including Indebtedness hereunder) of BDCA and its Subsidiaries, to (b) the aggregate amount of Indebtedness of BDCA and its Subsidiaries; provided that the calculation of the Asset Coverage Ratio shall not include Subsidiaries that are not required to be included by the 1940 Act as affected by such orders of the SEC issued to BDCA including, if set forth in any such order, any Subsidiary which is a small business investment company which is licensed by the Small Business Administration to operate under the Small Business Investment Act of 1958.

 

“Assigned Documents”: Defined in Section 2.12.

 

“Available Funds”: With respect to any Payment Date, all amounts on deposit in the Collection Account (including, without limitation, any Collections with respect to Loans included in the Collateral and earnings from Permitted Investments in the Collection Account), during the immediately preceding Accrual Period.

 

“Bankruptcy Code”: The United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.), as amended from time to time.

 

“Base Rate”: On any date, a fluctuating per annum interest rate equal to the higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 0.5%; provided that, notwithstanding the foregoing, at any time the LIBOR Rate Benchmark exceeds the higher of the rates specified in clauses (a) and (b), then the Base Rate shall be increased by such excess.

 

“BDCA”: Defined in the Preamble.

 

“Benchmark”: Initially, Daily Simple SOFR; provided that if a Benchmark Transition Event has occurred with respect to any then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 13.1.

 

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“Benchmark Replacement”: The With respect to any Benchmark Transition Event for any then-current Benchmark, the sum of: (a) the alternate benchmark rate (which may include Term SOFR) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate of interest as a replacement to the LIBOR Rate for such Benchmark for Dollar denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Agreement.

 

“Benchmark Replacement Adjustment”: With respect to any replacement of the LIBOR Rate any then-current Benchmark with an Unadjusted Benchmark Replacement for each applicable Accrual Period, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the LIBOR Rate such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the LIBOR Rate such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar denominated syndicated credit facilities at such time.

 

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“Benchmark Replacement Conforming Changes”: With respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Prime Rate,” the definition of “Federal Funds Rate,” the definition of “Accrual Period,” timing and frequency of determining rates and making payments of interest and other administrative matters) that the Administrative Agent, in consultation with the Borrower, decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement).

 

“Benchmark Replacement Date”: The earlier to occur of the following events with respect to the LIBOR Rate any then-current Benchmark:

 

(1)            in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the LIBOR Rate such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide the LIBOR Rate such Benchmark; or

 

(2)            in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date of on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided, that such non-representativeness will be determined by reference to the public most recent statement or publication of information referenced therein in such clause (3) and even if any other tenor of such Benchmark (or such component thereof) continues to be provided on such date.

 

“Benchmark Transition Event”: The occurrence of one or more of the following events with respect to the LIBOR Rate any then-current Benchmark:

 

(1)            a public statement or publication of information by or on behalf of the administrator of the LIBOR Rate such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide the LIBOR Rate such Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the LIBOR Rate such Benchmark (or such component);

 

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(2)            a public statement or publication of information by the regulatory supervisor for the administrator of the LIBOR Rate such Benchmark (or the published component used in the calculation thereof), the U.S. Federal Reserve System Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for the LIBOR Rate such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for the LIBOR Rate such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the LIBOR Rate such Benchmark (or such component), which states that the administrator of the LIBOR Rate such Benchmark (or such component) has ceased or will cease to provide the LIBOR Rate such Benchmark (or such component thereof) permanently or indefinitely,; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the LIBOR Rate such Benchmark (or such component thereof); or

 

(3)            a public statement or publication of information by the regulatory supervisor for the administrator of the LIBOR Rate announcing that the LIBOR Rate is no longer such Benchmark (or the published component used in the calculation thereof) announcing that such Benchmark (or such component thereof) is not, or as of a specified future date will not be, representative.

 

“Benchmark Transition Start Date”: (a) In the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in Election, the date specified by the Administrative Agent or the Required Lenders, as applicable, by notice to the Borrower, the Administrative Agent (in the case of such notice by the Required Lenders) and the Lenders.

 

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“Benchmark Unavailability Period”: If a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the LIBOR Rate and solely to the extent that the LIBOR Rate has not been replaced with a Benchmark Replacement, the The period (if any) (x) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the LIBOR Rate any then-current Benchmark for all purposes hereunder in accordance with Section 13.1 and (y) ending at the time that a Benchmark Replacement has replaced the LIBOR Rate any then-current Benchmark for all purposes hereunder pursuant to Section 13.1(c).

 

“Beneficial Ownership Regulation”: 31 C.F.R. § 1010.320.

 

“Benefit Plan Investor”: A “benefit plan investor” as defined in Department of Labor regulation 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA, which includes an employee benefit plan that is subject to the fiduciary responsibility provisions of Title I of ERISA, a plan that is subject to Section 4975 of the Code, and an entity the underlying assets of which are deemed to include plan assets of any such employee benefit plan or plan.

 

“Borrower”: Defined in the Preamble.

 

“Borrowing Base”: As of any Measurement Date, an amount equal to the least of:

 

			(a)			the aggregate sum of (i) the products of (A) the Advance Rate for each Eligible Loan as of such date and (B) the Adjusted Borrowing Value of such Eligible Loan as of such date, plus (ii) the amount on deposit in the Principal Collections Account as of such date; or

 

			(b)			(i) the aggregate Adjusted Borrowing Value of all Eligible Loans as of such date minus (ii) the Minimum Equity Amount, plus (iii) the amount on deposit in the Principal Collections Account as of such date; or

 

“Collection Date”: The date following either the Reinvestment Period End Date or the Termination Date on which the Aggregate Unpaids have been reduced to zero and indefeasibly paid in full.

 

“Collections”: The sum of all Interest Collections and all Principal Collections received with respect to the Collateral.

 

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“Commitment”: With respect to each Lender, the commitment of such Lender to make Advances in accordance herewith in an amount not to exceed (a) prior to the earlier to occur of the Reinvestment Period End Date or the Termination Date, the dollar amount set forth opposite the Lender’s name on Annex B hereto or the amount set forth as such Lender’s “Commitment” on Schedule I to the Joinder Supplement relating to such Lender, as applicable, and (b) on or after the earlier to occur of the Reinvestment Period End Date or the Termination Date, with respect to each Lender, such Lender’s Pro Rata Share of the aggregate Advances Outstanding.

 

“Commitment Fee”: Defined in Section 2.13(a).

 

“Commitment Fee Rate”: Defined in Section 2.13(a).

 

“Conforming Changes”: With respect to either the use or administration of Daily Simple SOFR or any other then-current Benchmark, the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day,” the definition of “U.S. Governmental Securities Business Day,” the definition of “Accrual Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 13.1 and other technical, administrative or operational matters) that the Administrative Agent decides in consultation with the Borrower may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement).

 

“Continued Errors”: Defined in Section 6.12(d).

 

“Contractual Obligation”: With respect to any Person, any material provision of any securities issued by such Person or any material indenture, mortgage, deed of trust, contract, undertaking, agreement, instrument or other document to which such Person is a party or by which it or any of its property is bound or to which either is subject.

 

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“Daily Simple SOFR”: On any day (a “SOFR Rate Day”), a rate per annum equal to the greater of (a) SOFR for the day (such day, a “Simple SOFR Determination Day”) that is five (5) U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website, and (b) zero. If by 5:00 p.m. on the second (2nd) U.S. Government Securities Business Day immediately following any SOFR Determination Day, SOFR in respect of such SOFR Determination Day has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to the Daily Simple SOFR has not occurred, then SOFR for such SOFR Determination Day will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; provided that any SOFR determined pursuant to this sentence shall be utilized for purposes of calculation of Daily Simple SOFR for no more than three (3) consecutive SOFR Rate Days. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.

 

“Default Period”: The period beginning on the day on which the Termination Date is declared or automatically occurs, and ending on the Collection Date.

 

“Defaulting Lender”: Any Lender that (i) has failed to fund any portion of the Advances required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (ii) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless such amount is the subject of a good faith dispute, (iii) has notified the Borrower, the Administrative Agent or any other Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply or has failed to comply with its funding obligations under this Agreement or generally under other agreements in which it commits or is obligated to extend credit, or (iv) has become or is insolvent or has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

 

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“Designated Loan”: Any Loan designated as such by the Administrative Agent, in its sole discretion, at the time of approval of such Loan.

 

“Determination Date”: The last day of each calendar month.

 

“Discretionary Sale”: Defined in Section 2.17.

 

“Discretionary Sale Date”: The Business Day identified by the Borrower to the Administrative Agent and the Collateral Agent in a Discretionary Sale Notice as the proposed date of a Discretionary Sale.

 

“Discretionary Sale Notice”: Defined in Section 2.17.

 

“Disruption Event”:  The occurrence of any of the following: (a) any Lender shall have notified the Administrative Agent of a determination by such Lender that it would be contrary to law or to the directive of any central bank or other Governmental Authority (whether or not having the force of law) to obtain United States dollars in  any applicable interbank market to fund any Advance, (b) any Lender shall have notified the Administrative Agent of the inability, for any reason, of such Lender to determine the applicable Interest Rate, (c) any Lender shall have notified the Administrative Agent of a determination by such Lender, as applicable, that the rate at which United States dollars are being offered to such Lender in any applicable interbank market does not accurately reflect the cost to such Lender of making, funding or maintaining any Advance, or (d) any Lender shall have notified the Administrative Agent of the inability of such Lender, as applicable, to obtain United States dollars in  any applicable interbank market to make, fund or maintain any Advance.

 

“Dollars”: Means, and the conventional “$” signifies, the lawful currency of the United States.

 

“EBITDA”: With respect to any period and any Loan, the meaning of “EBITDA”, “Adjusted EBITDA” or any comparable definition in the Underlying Instruments for each such Loan, and in any case that “EBITDA”, “Adjusted EBITDA” or such comparable definition is not defined in such Underlying Instruments, an amount, for the principal obligor on such Loan and any of its parents or Subsidiaries, except any Subsidiary excluded from the Underlying Documents, that are obligated pursuant to the Underlying Instruments for such Loan (determined on a consolidated basis without duplication in accordance with GAAP) equal to earnings from continuing operations for such period plus (a) interest expense, (b) income taxes, (c) depreciation and amortization for such period (to the extent deducted in determining earnings from continuing operations for such period), (d) amortization of intangibles (including, but not limited to, goodwill, financing fees and other capitalized costs), other non-cash charges and organization costs, (e) extraordinary losses in accordance with GAAP, (f) one-time, non-recurring non-cash charges consistent with the compliance statements and financial reporting packages provided by the Obligors and (g) any other item the Borrower and the Administrative Agent mutually deem to be appropriate, all computed on an annualized basis and pro forma basis in the case of an acquisition.

 

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“Early Opt-in Election”: The occurrence of:

 

(1)            (i) a determination by the Administrative Agent or (ii) a notification by the Required Lenders to the Administrative Agent (with a copy to the Borrower) that the Required Lenders have determined that Dollar denominated syndicated credit facilities being executed at such time, or that include language similar to that contained in Section 12.1 are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace the LIBOR Rate, and

 

(2)            (i) the election by the Administrative Agent or (ii) the election by the Required Lenders to declare that an Early Opt-in Election has occurred and the provision, as applicable, by the Administrative Agent of written notice of such election to the Borrower and the Lenders or by the Required Lenders of written notice of such election to the Administrative Agent.

 

“Eligible Loan”: On any date, each Loan that satisfies each of the following criteria (unless compliance with any one or more of such representations and warranties is waived, in writing, by the Administrative Agent, in its sole discretion):

 

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purchase by the Borrower as an Eligible Loan but that, as of any subsequent date of determination, no longer is eligible for purchase by the Borrower as an Eligible Loan, for so long as such obligation fails to satisfy such requirements.

 

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“ERISA”: The United States Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

“ERISA Affiliate”: (a) Any corporation that is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Borrower or Collateral Manager, as applicable, (b) a trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the Code) with the Borrower or Collateral Manager, as applicable, or (c) for purposes of Section 302 of ERISA and Section 412 of the Code, a member of the same affiliated service group (within the meaning of Section 414(m) of the Code) as the Borrower, or Collateral Manager, as applicable, any corporation described in clause (a) above or any trade or business described in clause (b) above.

 

“Errors”: Defined in Section 6.12(d).

 

“Eurodollar Disruption Event”: The occurrence of any of the following: (a) any Lender shall have notified the Administrative Agent of a determination by such Lender that it would be contrary to law or to the directive of any central bank or other Governmental Authority (whether or not having the force of law) to obtain United States dollars in the London interbank market to fund any Advance, (b) any Lender shall have notified the Administrative Agent of a determination by such Lender, as applicable, that the rate at which deposits of United States dollars are being offered to such Lender in the London interbank market does not accurately reflect the cost to such Lender of making, funding or maintaining any Advance or (c) any Lender shall have notified the Administrative Agent of the inability of such Lender, as applicable, to obtain United States dollars in the London interbank market to make, fund or maintain any Advance.

 

“Excepted Persons”: Defined in Section 13.13(a).

 

“Exchange Act”: The United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

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“Excluded Amounts”: (a) Any amount received in the Collection Account with respect to any Loan included as part of the Collateral, which amount is attributable to the payment of any Tax, fee or other charge imposed by any Governmental Authority on such Loan or on any Related Property, (b) any amount received in the Collection Account or other Account representing (i) a reimbursement of insurance premiums and (ii) any escrows relating to Taxes, insurance and other amounts in connection with Loans which are held in an escrow account for the benefit of the Obligor and the secured party pursuant to escrow arrangements under the Underlying Instruments and (c) any amount received in the Collection Account with respect to any Loan retransferred or substituted for upon the occurrence of a Warranty Event or that is otherwise replaced by a Substitute Loan, or that is otherwise sold or transferred by the Borrower pursuant to Section 2.16 or Section 2.17, to the extent such amount is attributable to a time after the effective date of such replacement or sale.

 

“Financial Asset”: The meaning specified in Section 8-102(a)(9) of the UCC.

 

“Financial Sponsor”: Any Person, including any Subsidiary of such Person, whose principal business activity is acquiring, holding, and selling investments (including controlling interests) in otherwise unrelated companies that each are distinct legal entities with separate management, books and records and bank accounts, whose operations are not integrated with one another and whose financial condition and creditworthiness are independent of the other companies so owned by such Person.

 

“First Lien Loan”: A Broadly Syndicated Loan or Middle Market Loan.

 

“First Out Attachment Ratio” With respect to any Eligible Loan, as of any date of determination, an amount equal to the Net Senior Leverage Ratio with respect to all or any portion of such Eligible Loan that constitutes first lien senior secured Indebtedness that is not (and cannot by its terms become) subordinate in right of payment to any obligation of the Obligor in any bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceedings (excluding any first lien last-out Indebtedness within the capital structure).

 

“Fixed Rate Loan”: An Eligible Loan other than a Floating Rate Loan.

 

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“Floating Rate Loan”: An Eligible Loan under which the Loan Rate payable by the Obligor thereof is based on the Applicable Prime Rate or the Applicable LIBOR Reference Rate, plus some specified interest percentage in addition thereto, and the Loan provides that such Loan Rate will reset in accordance with customary terms immediately upon any change in the related Applicable Prime Rate or the Applicable LIBOR Reference Rate.

 

“Funding Date”: With respect to any Advance, the date such funds are made available to the Borrower in accordance with Section 2.2.

 

“Funding Request”: A Borrowing Notice in the form of Exhibit A-1 requesting an Advance and including the items required by Section 2.2.

 

“GAAP”: Generally accepted accounting principles as in effect from time to time in the United States.

 

“Governmental Authority”: With respect to any Person, any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any body or entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over such Person.

 

“Grant” or “Granted” means to grant, bargain, sell, convey, assign, transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit, set over and confirm. A Grant of the Collateral, or of any other instrument, shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including, the immediate continuing right to claim for, collect, receive and receipt for principal and interest payments in respect of the Collateral, and all other monies payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all as calculated by the Borrower and the Collateral Manager in good faith using information from and calculations consistent with the relevant compliance statements and financial reporting packages provided by the relevant Obligor as per the requirements of the Underlying Instruments.

 

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“Interest Obligations”: With respect to any period and any Loan, for the Obligor on such Loan and, to the extent included in the corresponding calculation of EBITDA, any parent that is obligated pursuant to the Underlying Instruments for such Loan (determined on a consolidated basis without duplication in accordance with GAAP), the meaning of “Interest Obligations” or any comparable definition in the Underlying Instruments for each such Loan, and in any case that “Interest Obligations” or such comparable definition is not defined in such Underlying Instruments, all cash interest in respect of Indebtedness (including the interest component of any payments in respect of Capital Lease Obligations) accrued during such period (whether or not actually paid during such period).

 

“Interest Rate”: Subject to Section 2.14(d), for any Accrual Period and for each Advance outstanding for each day during such Accrual Period, a rate equal to the LIBOR Rate Benchmark.

 

“Investment”: With respect to any Person, any direct or indirect loan, advance or investment by such Person in any other Person, whether by means of share purchase, capital contribution, loan or otherwise, excluding the making or acquisition of Loans and the acquisition of Equity Securities otherwise permitted by the terms hereof which are related to such Loans.

 

“Joinder Supplement”: An agreement among the Borrower, a Lender and the Administrative Agent in the form of Exhibit J to this Agreement (appropriately completed) delivered in connection with a Person becoming a Lender hereunder after the Closing Date, as contemplated by Section 13.16(a).

 

“Last Out Attachment Ratio”: With respect to any Eligible Loan, as of any date of determination, an amount equal to the Net Senior Leverage Ratio with respect to all or any portion of such Eligible Loan that constitutes first lien senior secured Indebtedness.

 

“Lender”: Defined in the Preamble.

 

“Lender Fee Letter”: Each fee letter agreement that shall be entered into by and among the Borrower, the Collateral Manager, the applicable Lender in connection with the transactions contemplated by this Agreement, as amended, modified, waived, supplemented, restated or replaced from time to time.

 

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“LIBOR Rate”: For any day during the Accrual Period, with respect to any Advance (or portion thereof) the greater of (x) zero and (y)(a) the rate per annum appearing on Reuters Screen LIBOR01 Page (or any successor or substitute page) as the London interbank offered rate for deposits in dollars at approximately 11:00 a.m., London time, for such day, provided, if such day is not a Business Day, the immediately preceding Business Day, for a three-month maturity; and (b) if no rate specified in clause (a) of this definition so appears on Reuters Screen LIBOR01 Page (or any successor or substitute page), the interest rate per annum at which dollar deposits of $5,000,000 and for a three-month maturity are offered by the principal London office of Wells Fargo Bank, National Association in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, for such day.

 

“Lien”: Any mortgage, lien, pledge, charge, right, claim, security interest or encumbrance of any kind of or on any Person’s assets or properties in favor of any other Person (including any UCC financing statement or any similar instrument filed against such Person’s assets or properties). For the avoidance of doubt, notwithstanding any Loan acquired by the Borrower hereunder meeting the requirements of an Eligible Loan, customary restrictions on transfers of a Loan pursuant to the related Underlying Instruments shall not be deemed to be a “Lien.”

 

“Liquidation Expenses”: With respect to any Loan, the aggregate amount of all out-of-pocket expenses reasonably incurred by the Collateral Manager (including amounts paid to any subservicer) in accordance with the Collateral Manager’s customary procedures in connection with the repossession, refurbishing and disposition of any Related Property securing such Loan upon or after the expiration or earlier termination of such Loan, and other out-of-pocket costs related to the liquidation of any such assets, as documented by the Collateral Manager upon the request of the Administrative Agent, in writing providing a breakdown of the Liquidation Expenses for such Loan, along with any supporting documentation therefor.

 

“Loan”: Any commercial loan which the Collateral Manager directs the Borrower to acquire, which loan includes, without limitation, (i) the Required Loan Documents and Loan Checklist, and (ii) all right, title and interest of the Borrower in and to the loan and any Related Property, but excluding, as applicable, the Excluded Amounts.

 

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“Loan Checklist”: An electronic or hard copy, as applicable, of a checklist, in the form of Exhibit L, delivered by or on behalf of the Borrower to the Collateral Custodian, for each Loan, that identifies all applicable Required Loan Documents with respect to such Loan, which shall specify whether such document is an original or a copy and includes the identification number and the name of the Obligor with respect to the related Loan.

 

“Loan Rate”: For each Loan in an Accrual Period, the current cash pay interest rate for such Loan in such period, as specified in the related Underlying Instruments.

 

“Loan Tape”: The loan tape to be delivered in connection with each Collateral Management Report and on each applicable Funding Date, which tape shall include (but not be limited to) the aggregate OLB of all Loans and, with respect to each Loan, the following information:

 

(a)            name and number of the related Obligor;

 

(b)            whether such Obligor is an Affiliate of the Borrower, the Originator or Collateral Manager;

 

(c)            calculation of the Net Senior Leverage Ratio for the Relevant Test Period as calculated on the related Funding Date of such Loan (provided that if any other positions in such Loan existed on its Funding Date then such calculation shall include the Net Senior Leverage Ratio utilized for the position with the earliest of such other Funding Dates ), and for the most recent Relevant Test Period;

 

(d)            calculation of the Interest Coverage Ratio for the Relevant Test Period as calculated on the related Funding Date of such Loan (provided that if any other positions in such Loan existed on its Funding Date then such calculation shall include the Interest Coverage Ratio utilized for the position with the earliest of such other Funding Dates), and for the most recent Relevant Test Period;

 

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(e)            calculation of the Net Leverage Ratio for the Relevant Test Period as calculated on the related Funding Date of such Loan (provided that if any other positions in such Loan existed on its Funding Date then such calculation shall include the Net Leverage Ratio utilized for the position with the earliest of such other Funding Dates), and for the most recent Relevant Test Period;

 

(f)            Exposure Amount (if applicable);

 

(g)            collection status (number of days past due);

 

(h)            loan status (whether in default or on non-accrual status);

 

(i)            Loan rating;

 

(j)            scheduled final maturity date;

 

(k)            date and amount of next Scheduled Payment;

 

(l)            loan rate of interest (and reference rate);

 

(m)            LIBOR reference rate floor (if applicable);

 

(n)            OLB;

 

(o)            par amount;

 

(p)            Assigned Value;

 

(q)            Purchase Price;

 

(r)            Moody’s asset and Obligor rating (if available);

 

(s)            S&P asset and Obligor rating (if available);

 

(t)            Loan type (e.g., Broadly Syndicated Loan, Second Lien Loan or Middle Market Loan);

 

(u)            collateral position;

 

(v)            industry classification;

 

(w)            gross total debt for the most recent Relevant Test Period

 

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Instruments or, if no such period is provided for therein, for Obligors delivering monthly financing statements, each period of the last 12 consecutive reported calendar months, and for Obligors delivering quarterly financing statements, each period of the last four consecutive reported fiscal quarters of the principal Obligor on such Loan; provided that with respect to any Loan for which the relevant test period is not provided for in the Underlying Instruments, if an Obligor is a newly-formed entity as to which 12 consecutive calendar months have not yet elapsed, “Relevant Test Period” shall initially include the period from the date of formation of such Obligor to the end of the twelfth calendar month or fourth fiscal quarter (as the case may be) from the date of formation, and shall subsequently include each period of the last 12 consecutive reported calendar months or four consecutive reported fiscal quarters (as the case may be) of such Obligor.

 

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“Repayment Notice”: Each written notice required to be delivered by the Borrower in respect of (a) any reduction of the Advances Outstanding pursuant to Section 2.3(b), in the form of Exhibit A-2 or (b) any termination in whole or reduction in part of the Facility Amount pursuant to Section 2.3(a), in the form of Exhibit A-2.

 

“Replaced Loan”: Defined in Section 2.16(a)(i).

 

“Reportable Event”: Means any of the events set forth in Section 4043(c) of ERISA, other than an event for which the 30 day notice period has been waived.

 

“Reporting Date”: The date that is two (2) Business Days prior to the 17th of each calendar month (unless in such month a Payment Date occurs in which case two (2) Business Days prior to such Payment Date).

 

“Required Lenders”: At any time, (i) WFBNA (as a Lender hereunder) and its successors and assigns and (ii) the Lenders representing an aggregate of at least 51% of the aggregate Commitments of the Lenders then in effect; provided that if there are two or more unaffiliated Lenders party hereto as of the applicable date of determination, then at least two such Lenders shall be required to constitute the Required Lenders; and provided further that the Commitment of, and the portion of any outstanding Advances, as applicable, held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

 

“Required Loan Documents”: For each Loan, the following documents or instruments, all in each case as specified on the related Loan Checklist:

 

(a)            (i) unless such Loan is a Noteless Loan, the original executed promissory note (or, in the case of a lost note, a copy of the executed underlying promissory note accompanied by an original executed affidavit and indemnity endorsed by the Borrower in blank); (and

 

(b)            (i) unless such Loan is a Noteless Loan, an unbroken chain of endorsements from each prior holder of such promissory note to the Borrower), or (ii) if such promissory note is not issued in the name of the Borrower or is a Noteless Loan, (A) an executed copy copies of each an unbroken chain of assignment and assumption agreements, transfer documents or instruments relating to such Loan evidencing the assignment of such Loan from each prior third party owner thereof to the Borrower, (iii) an executed assignment and assumption agreement, transfer document or instrument relating to such Loan evidencing the assignment of such Loan from any prior third party owner thereof to the Borrower and from to the Borrower in blank;(b) that, to the extent the following can be obtained without undue expense or effort for the related Loan, copies required by the Underlying Instruments, is counter-signed by the applicable underlying administrative agent, (iv) a copy of the loan register held by the administrative agent for such Loan showing that the Borrower is the lender of record with respect to such Loan, or (v) a copy of the executed (i) guaranty, (ii) underlying credit or loan agreement (or similar agreement pursuant to which the related Loan has been issued or created), (iii) acquisition agreement (or similar agreement) and (iv) security agreement or other agreement that secures the obligations represented by such Loan, in each case as set forth on the Loan Checklist; to which the Borrower was an original signatory (which includes the Borrower’s commitment).

 

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(c)            with respect to any Loan originated by the Originator and with respect to which the Originator acts as administrative agent (or in a comparable capacity), either (i) copies of the UCC-1 Financing Statements, if any, and any related continuation statements, each showing the Obligor as debtor and the Collateral Agent as total assignee or showing the Obligor, as debtor and the Originator as secured party and each with evidence of filing thereon, or (ii) copies of any such financing statements certified by the Collateral Manager to be true and complete copies thereof in instances where the original financing statements have been sent to the appropriate public filing office for filing, in each case, as set forth in the Loan Checklist.

 

“Required Reports”: Collectively, the Collateral Management Report required pursuant to Section 6.7(b), the Collateral Manager’s Certificate required pursuant to Section 6.7(c), the financial statements of the Originator required pursuant to Section 6.7(d), the financial statements and valuation reports of each Obligor required pursuant to Section 6.7(e), the annual statements as to compliance required pursuant to Section 6.8, and the annual independent public accountant’s report required pursuant to Section 6.9.

 

“Required Sale Asset”: Any asset owned by the Borrower that would disqualify the Borrower from using the “loan securitization exemption” under the Volcker Rule (as determined by the Administrative Agent in its reasonable discretion).

 

“Responsible Officer”: With respect to any Person, any duly authorized officer of such Person with direct responsibility for the administration of this Agreement and also, with respect to a particular matter, any other duly authorized officer of such Person to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

 

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“Restricted Junior Payment”: (i) Any dividend or other distribution, direct or indirect, on account of any class of limited liability company interests of the Borrower now or hereafter outstanding, except a dividend paid solely in interests of that class of limited liability company interests or in any junior class of limited liability company interests of the Borrower; (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any class of limited liability company interests of the Borrower now or hereafter outstanding, (iii) any payment made to redeem, purchase, repurchase or retire, or to

 

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“Secured Party”: (i) Each Lender, (ii) the Administrative Agent, (iii) the Collateral Agent, (iv) the Collateral Custodian and (v) the Securities Intermediary.

 

“Securities Account”: The meaning specified in Section 8-501 of the UCC.

 

“Securities Account Control Agreement”: The Securities Account Control Agreement, dated as of the Closing Date, among the Borrower, as the debtor, the Collateral Manager, the Administrative Agent and USB, as the Collateral Agent and as the Securities Intermediary, as the same may be amended, modified, waived, supplemented or restated from time to time.

 

“Securities Intermediary”: (i) A Clearing Corporation; or (ii) a Person, including a bank or broker, that in the ordinary course of its business maintains Securities Accounts for others and is acting in that capacity.

 

“Security”: The meaning specified in Section 9-102(a)(15) of the UCC.

 

“Security Certificate”: The meaning specified in Section 8-102(a)(16) of the UCC.

 

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“Security Entitlement”: The meaning specified in Section 8-102(a)(17) of the UCC.

 

“Simple SOFR Determination Day”: The meaning specified in the definition of “Daily Simple SOFR”.

 

“SOFR”: With respect A rate equal to any day means the secured overnight financing rate published for such day as administered by the SOFR Administrator.

 

“SOFR Administrator”: The Federal Reserve Bank of New York, as the administrator of the benchmark, (or a any successor administrator) on the Federal Reserve Bank of New York.

 

“SOFR Administrator’s Website”: The website of the SOFR Administrator, currently at http://www.newyorkfed.orghttp://www.newyorkfed.org, for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

 

“SOFR Rate Day”: The meaning specified in the definition of “Daily Simple SOFR”.

 

“Solvent”: As to any Person at any time, having a state of affairs such that all of the following conditions are met: (a) the fair value of the property of such Person is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code; (b) the present fair saleable value of the property of such Person in an orderly liquidation of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts and other liabilities as they become absolute and matured; (c) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in a business or a transaction, and does not propose to engage in a business or a transaction, for which such Person’s property assets would constitute unreasonably small capital.

 

“Subsidiary”: As to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly, through one or more intermediaries, or both, by such Person.

 

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“Substitute Loan”: Defined in Section 2.16(a).

 

“Substitution Date”: Defined in Section 2.16(a).

 

“Successor Collateral Manager”: Defined in Section 6.12(a).

 

“Taxes”: Any present or future taxes, levies, imposts, duties, charges, withholdings, deductions, assessments or fees of any nature (including interest, penalties, and additions thereto) that are imposed by any Governmental Authority.

 

“Term Loan”: A Loan that is a term loan that has been fully funded and does not contain any unfunded commitment arising from an extension of credit to an Obligor.

 

“Term SOFR”: The forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

 

“Termination Date”: The earliest of (a) the date of the termination in whole of the Facility Amount pursuant to Section 2.3(a), (b) the Facility Maturity Date or (c) the date of the declaration of the Termination Date or the date of the automatic occurrence of the Termination Date pursuant to Section 10.2(a).

 

“Termination Event”: Defined in Section 10.1.

 

“Transaction”: Defined in Section 3.2.

 

“Transaction Documents”: This Agreement, the Purchase and Sale Agreement, the Securities Account Control Agreement, each Lender Fee Letter, any Joinder Supplement, any Transferee Letter, the USB Fee Letter, the Pledge Agreement and any additional document the execution of which is necessary or incidental to carrying out the terms of the foregoing documents.

 

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“Transferee Letter”: Defined in Section 13.16.

 

“UCC”: The Uniform Commercial Code as from time to time in effect in the applicable jurisdiction or jurisdictions.

 

“Unadjusted Benchmark Replacement”: The Benchmark Replacement excluding the Benchmark Replacement Adjustment.

 

“Uncertificated Security”: The meaning specified in Section 8-102(a)(l8) of the UCC.

 

“Underlying Instruments”: The loan agreement, credit agreement or other agreement pursuant to which a Loan or Permitted Investment has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such Loan or Permitted Investment or of which the holders of such Loan or Permitted Investment are the beneficiaries.

 

“Unencumbered Liquidity”: The sum of (a) all cash or cash equivalents held by the Originator (other than any cash or cash equivalents held by the Borrower) plus (b) immediately accessible availability from credit facilities of the Originator and its subsidiaries (other than pursuant to this Agreement) plus (c) other liquid assets mutually agreed to by the Originator and the Administrative Agent.

 

“United States”: The United States of America.

 

“Unmatured Termination Event”: Any event (other than events described in Section 10.1(e) and Section 10.1(f) and in the case of Section 10.1(f), due to the occurrence of an event described in Section 6.11(d)) that, with the giving of notice or the lapse of time, or both, would become a Termination Event.

 

“Unrestricted Cash”: The meaning of “Unrestricted Cash” or any comparable definition in the Underlying Instruments for each Loan, and in any case that “Unrestricted Cash” or such comparable definition is not defined in such Underlying Instruments, all cash available for use for general corporate purposes and not held in any reserve account or legally or contractually restricted for any particular purposes or subject to any lien (other than blanket liens permitted under or granted in accordance with such Underlying Instruments).

 

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“Unused Portion”: Defined in Section 2.13(a).

 

“U.S. Government Securities Business Day”: Any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

 

“USB”: Defined in the Preamble.

 

“USB Fee Letter”: The fee letter, dated as of the date hereof, by and among the Collateral Manager and USB, in its capacity as the Collateral Custodian and in its capacity as the Collateral Agent, as such letter may be amended, modified, supplemented, restated or replaced from time to time.

 

“Value Adjustment Event”: With respect to any Loan, the occurrence of any one or more of the following events after the related Funding Date:

 

(i)            (A) the Interest Coverage Ratio for any Relevant Test Period with respect to such Loan is (I) less than 85% of the Interest Coverage Ratio with respect to such Loan as calculated on the applicable Funding Date and (II) less than 1.50x or (B)(x) with respect to Broadly Syndicated Loans and Middle Market Loans, the Net Senior Leverage Ratio for any Relevant Test Period of the related Obligor with respect to such Loan (I) is more than 0.50x

 

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(h)            reference to any Applicable Law means such Applicable Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any Section or other provision of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such Section or other provision;

 

(i)            reference to the par or principal amount of any Loan shall, unless otherwise expressly set forth herein, be calculated exclusive of accrued and Accreted Interest;

 

(j)            for purposes of this Agreement, an Unmatured Termination Event or a Termination Event shall be deemed to be continuing until it is waived in accordance with Section 13.1;

 

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(k)            unless otherwise expressly stated in this Agreement, if at any time any change in generally accepted accounting principles (including the adoption of IFRS) would affect the computation of any covenant (including the computation of any financial covenant) set forth in this Agreement or any other Transaction Document, Borrower and Administrative shall negotiate in good faith to amend such covenant to preserve the original intent in light of such change; provided, that, until so amended, (i) such covenant shall continue to be computed in accordance with the application of generally accepted accounting principles prior to such change and (ii) Borrower shall provide to Administrative Agent a written reconciliation in form and substance reasonably satisfactory to Administrative Agent, between calculations of such covenant made before and after giving effect to such change in generally accepted accounting principles;

 

(l)            the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any other matter related to the London interbank offered rate Benchmark or any component definition thereof or other rates referred to in the definition of “LIBOR Rate” thereof, or with respect to any alternative or, successor rate thereto, or replacement rate thereof thereto (including any Benchmark Replacement), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate (including any Benchmark Replacement), as it may or may not be adjusted pursuant to this Section 1.4(l k), will be similar to, or produce the same value or economic equivalence of, LIBOR Rate or have the same volume or liquidity as did the London interbank offered rate, such Benchmark or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes;

 

(m)            for purposes of any calculation under this Agreement, each Loan will be deemed to have been purchased as of the related Funding Date and sold as of the related settlement date of such sale; and

 

(n)            any reference to “execute”, “executed”, “sign”, “signed”, “signature” or any other like term hereunder shall include execution by electronic signature (including, without limitation, any .pdf file, .jpeg file, or any other electronic or image file, or any “electronic Loan) and (D) include a representation that all conditions precedent for an Advance described in Section 3.2 hereof have been met. Each Funding Request shall be irrevocable; provided, however, that during any Benchmark Unavailability Period, the Borrower may revoke any Funding Notice promptly upon receiving notice of the commencement of such Benchmark Unavailability Period. If any Funding Request is received by the Administrative Agent after 2:00 p.m. on the Business Day prior to the proposed Funding Date, or on a day that is not a Business Day, such Funding Request shall be deemed to be received by the Administrative Agent and each Lender at 9:00 a.m. on the next Business Day.

 

(c)            On the proposed Funding Date, subject to the limitations set forth in Section 2.1(a) and upon satisfaction of the applicable conditions set forth in Section 3.2, in the case of an Advance, each Lender shall make available to the Borrower in same day funds, at such bank or other location reasonably designated by Borrower in the Funding Request given pursuant to this Section 2.2, an amount equal to such Lender’s Pro Rata Share of the least of (i) the amount requested by the Borrower for such Advance, (ii) the aggregate unused Commitments then in effect and (iii) an amount equal to the Availability on such Funding Date.

 

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(d)            On each Funding Date, the obligation of each Lender to remit its Pro Rata Share of any such Advance shall be several from that of each other Lender and the failure of any Lender to so make such amount available to the Borrower shall not relieve any other Lender of its obligation hereunder.

 

(e)            Subject to Section 2.3 and the other terms, conditions, provisions and limitations set forth herein (including, without limitation, the payment of the Prepayment Penalty, as applicable), the Borrower may borrow, repay or prepay and reborrow Advances without any penalty, fee or premium on and after the Closing Date and prior to the end of the Reinvestment Period.

 

Notwithstanding anything to the contrary herein, on the Closing Date the Borrower may request an Advance for the purpose of repaying Indebtedness outstanding under the Existing Credit Facility. In connection therewith, any obligation of WFBNA in its capacity as a Lender to fund such Advance may be netted against any amounts due to WFBNA in its capacity as a lender under the Existing Credit Facility.

 

Section 2.3.        Reduction of the Facility Amount; Mandatory and Optional Repayments.

 

(a)            The Borrower shall be entitled at its option and upon ten (10) Business Days’ prior written notice in the form of Exhibit A-2 to the Administrative Agent (and the Administrative Agent shall forward such notice to each Lender) to either (i) terminate the Facility Amount in whole upon payment in full of all Advances Outstanding, all accrued and unpaid Interest, all accrued and unpaid costs and expenses of the Administrative Agent, Lenders, the Prepayment Penalty (payable pro rata to each Lender) and all other Aggregate Unpaids (other than unmatured contingent indemnification obligations), or (ii) reduce in part the portion of the Facility Amount that exceeds the sum of the Advances Outstanding, all accrued and unpaid Interest (pro rata with respect to the portion of the Facility Amount so reduced), all accrued and unpaid costs and expenses of the Administrative Agent and Lenders and the Prepayment Penalty (payable pro rata to each Lender); provided that in each case no Prepayment Penalty shall be due and payable so long as such termination or reduction occurs no sooner than the date which is one year following the Closing Date. Any request for a reduction or termination pursuant to this Section 2.3(a) shall be irrevocable; provided that any such request for a reduction or termination may be conditioned on the effectiveness of any other transaction and may be revoked if such condition is not satisfied. The Commitment of each Lender shall be reduced by an amount equal to its Pro Rata Share (prior to giving effect to any reduction of Commitments hereunder) of the aggregate amount of any reduction under this Section 2.3(a).

 

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(b)            The Borrower shall be entitled at its option, at any time, to reduce Advances Outstanding; provided that (i) the Borrower shall give one (1) Business Day’s prior written notice of such reduction in the form of Exhibit A-2 to the Administrative Agent and each Lender, and (ii) any reduction of Advances Outstanding (other than with respect to repayments of Advances Outstanding made by the Borrower to reduce Advances Outstanding such that the Availability is greater than or equal to $0) shall be in a minimum amount of $500,000. In connection with any reduction of Advances Outstanding (x) in part, the Borrower shall deliver to each Lender funds sufficient to repay such Advances Outstanding, together with all accrued and unpaid costs and expenses of the Administrative Agent and Lenders related to such repayment (payable pro rata to each Lender) and (y) in whole, the Borrower shall deliver to each Lender funds sufficient to repay such Advances Outstanding, together with all accrued and unpaid Interest, and all accrued and unpaid costs and expenses of the Administrative Agent and Lenders related to such repayment (payable pro rata to each Lender); provided that no such reduction shall be given effect unless (1) sufficient funds have been remitted to pay all such amounts in full, as determined by the Administrative Agent in its sole discretion and (2) no event has occurred or would result from such prepayment which would constitute an Termination Event or an Unmatured Termination Event. The Administrative Agent shall apply amounts received from the Borrower pursuant to this Section 2.3(b) to the pro rata reduction of the Advances Outstanding and to the payment of all accrued and unpaid Interest on the amount of the Advances Outstanding to be repaid. Any Advance so repaid may, subject to the terms and conditions hereof, be reborrowed during the Reinvestment Period. Any Repayment Notice relating to any repayment pursuant to this Section 2.3(b) shall be irrevocable; provided that any such Repayment Notice may be conditioned on the effectiveness of any other transaction and may be revoked if such condition is not satisfied.

 

Section 2.4.        Determination of Interest.

 

(a)            Each applicable Lender shall calculate the Interest Rate and the Interest (including unpaid Interest related thereto, if any, due and payable on a prior Payment Date) to be paid by the Borrower with respect to each Advance on each Payment Date for the related Accrual Period and shall advise the Collateral Manager thereof on the third Business Day prior to such Payment Date.

 

(b)            In connection with the use or administration of Daily Simple SOFR, the Administrative Agent will have the right (in consultation with the Borrower) to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document. The Administrative Agent will promptly notify the Borrower of the effectiveness of any Conforming Changes in connection with the use or administration of Daily Simple SOFR.

 

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Section 2.5.        Evidence of Advances.

 

Each Advance and all repayments thereof shall be evidenced by the applicable Lender’s loan accounts and records. Subject to the Register maintained pursuant to Section 13.16(b), such loan accounts and records shall be conclusive absent manifest error of the amount of the Advances and repayments thereof. Any failure to record any Advances or repayment thereof or any error in doing so shall not limit or otherwise affect the obligation of the Borrower to pay any amount owing with respect to the Advances.

 

Section 2.6.        Principal Repayments.

 

(a)            Unless sooner prepaid pursuant to the terms hereof and subject to Section 10.2, the Advances Outstanding shall be repaid by the Borrower in full on the Termination Date. Advances Outstanding shall be repaid as and when necessary to cause the Availability to equal or exceed $0, and any amount so repaid may, subject to the terms and conditions hereof, be reborrowed hereunder during the Reinvestment Period.

 

(b)            All repayments of any Advance or any portion thereof shall be made together with payment of all Interest accrued and unpaid on the amount repaid to (but excluding)

 

the date of such repayment.

 

Section 2.7.        Interest Settlement Procedures before the Default Period.

 

On each Payment Date before the Default Period, the Collateral Manager shall direct the Collateral Agent to pay pursuant to the Collateral Management Report (and the Collateral Agent shall make payment from the Interest Collections Account to the extent of Available Funds, in reliance on the information set forth in such Collateral Management Report) to the following Persons, the following amounts in the following order of priority:

 

(1)            pari passu to the Collateral Agent and the Collateral Custodian, in an amount equal to any accrued and unpaid Collateral Agent and Portfolio Administration Fees; provided that indemnity amounts payable to the Collateral Agent and the Collateral Custodian pursuant to this clause (1) (and Section 2.8(a)(1) and Section 2.9(1), if applicable) shall not, collectively, exceed $100,000 per annum;

 

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(2)            to or at the direction of the Collateral Manager (i) an amount equal to any accrued and unpaid Collateral Management Fees to the end of the related Accrual Period and (ii) the amount of accrued and unpaid fees and expenses payable by the Borrower to the Collateral Manager under the Transaction Documents;

 

(3)            pro rata in accordance with the amounts due under this clause, to each Lender, in an amount equal to any accrued and unpaid Interest, Facility Margin and Commitment Fee;

 

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be accompanied by a statement setting forth in reasonable detail the basis for such demand), the Borrower shall pay the Administrative Agent on behalf of such Affected Party such additional amounts as will compensate such Affected Party for such reduction. For the avoidance of doubt, any increase in cost and/or reduction in Interest with respect to any Affected Party caused by regulatory capital allocation adjustments due to FAS 166, 167 and subsequent statements and interpretations shall constitute a circumstance on which such Affected Party may base a claim for reimbursement under this Section 2.14.

 

(c)            In determining any amount provided for in this Section 2.14, the Affected Party may use any reasonable averaging and attribution methods. The Administrative Agent, on behalf of any Affected Party making a claim under this Section 2.14 shall submit to the Borrower a certificate setting forth in reasonable detail the basis for and the computations of such additional or increased costs, which certificate shall be conclusive absent manifest error.

 

(d)            If a Eurodollar Disruption Event as described in clause (a) of the definition of “Eurodollar Disruption Event” with respect to any Lender has occurred and is continuing, the applicable Lender shall in turn so notify the Borrower, whereupon all Advances Outstanding of the affected Lender in respect of which Interest accrues at the LIBOR Rate Benchmark shall immediately be converted into Advances Outstanding in respect of which Interest accrues at the Base Rate.

 

(e)            Failure or delay on the part of any Affected Party to demand compensation pursuant to this Section 2.14 shall not constitute a waiver of such Affected Party’s right to demand or receive such compensation.

 

(f)            Notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules and regulations promulgated thereunder or issued in connection therewith and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to have been introduced after the Closing Date, thereby constituting a change for which a claim for increased costs or additional amounts may be made hereunder with respect to the Affected Parties, regardless of the date enacted, adopted or issued.

 

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(g)            If at any time the Borrower shall be liable for the payment of any additional amounts in accordance with this Section 2.14, then the Borrower shall have the option to terminate this Agreement (in accordance with the provisions of Section 2.14(a) but without the payment of any Prepayment Penalty); provided that, such option to terminate shall in no event relieve the Borrower of paying any amounts owing pursuant to this Section 2.14 in accordance with the terms hereof.

 

Section 2.15.         Taxes.

 

(a)            All payments made by the Borrower, including any allocations or distributions to the Lenders, will be made free and clear of and without deduction or withholding for or on account of any Taxes, except as required by Applicable Law. If any Taxes are required

 

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(iii)            The Collateral Manager shall deliver to the Administrative Agent (with a copy to the Collateral Agent) a completed Borrowing Base Certificate and other evidence to the reasonable satisfaction of the Administrative Agent that the Borrower shall have sufficient funds on the related Discretionary Sale Date to effect the contemplated Discretionary Sale in accordance with this Agreement (unless a Discretionary Sale is to be effected on a Payment Date, in which case there must be sufficient Available Funds to effect the contemplated Discretionary Sale in accordance with the terms of this Agreement);

 

(iv)            After giving effect to the Discretionary Sale and the assignment to the Borrower of the Collateral on any Discretionary Sale Date, (a) the Availability is greater than or equal to zero, (b) the representations and warranties contained in Section 4.1, 4.2 and 4.3 hereof shall continue to be correct in all material respects (other than any such representation or warranty that is qualified by “material,” “materially,” “Material Adverse Effect,” or a similar term or phrase, in which case, such representation or warranty shall be true and correct (as so qualified)), except to the extent relating to an earlier date and (c) neither an Unmatured Termination Event nor a Termination Event shall have resulted;

 

(v)            On the related Discretionary Sale Date, the Administrative Agent, each Lender, the Collateral Custodian and the Collateral Agent, as applicable, shall have received, as applicable, in immediately available funds, an amount equal to the sum of (a) an amount sufficient to reduce the Advances Outstanding such that, after giving effect to the transfer of the Loans that are the subject of such Discretionary Sale, the Availability will be equal to or greater than $0 plus (b) an aggregate amount equal to the sum of all other Aggregate Unpaids due and owing to the Administrative Agent, each applicable Lender, the Collateral Agent, the Collateral Custodian, the Affected Parties and the Indemnified Parties, as applicable, under this Agreement and the other Transaction Documents, to the extent accrued to such date; provided that, the Administrative Agent and each Lender shall have the right to determine whether the amount paid (or proposed to be paid) by the Borrower on the Discretionary Sale Date is sufficient to satisfy the requirements of clauses (a) and (b) and is sufficient to reduce the Advances Outstanding to the extent requested by the Borrower in connection with the Discretionary Sale;

 

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(vi)            The OLB of the Loan(s) which are the subject of a proposed Discretionary Sale to an Affiliate of the Collateral Manager, together with the OLB of the Loan(s) sold in all other Discretionary Sales to an Affiliate of the Collateral Manager (other than, for the avoidance of doubt, any Loans sold via participation pursuant to the Master Participation Agreement) and the Loan(s) substituted pursuant to Section 2.16(a) during the preceding 12 month period (or such lesser number of months as shall have elapsed as of such date), shall not exceed 25% of the Facility Amount; provided that the OLB of any Loan with an Assigned Value equal to zero at the time it is subject to a Discretionary Sale shall not be included for purposes of such calculation; and

 

(vii)            On the related Discretionary Sale Date, the proceeds from such Discretionary Sale have been sent directly into the Collection Account.

 

(b)            In connection with any Discretionary Sale, following receipt by the Secured Parties of the amounts referred to in clause (v) above, there shall be transferred and assigned to or at the direction of the Borrower (for further sale to the purchaser in any

 

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2.20(a); provided that during the period of time that such event remains unremedied, (i) no additional Advance will be made under this Agreement and (ii) any payments required to be made by the Collateral Manager on a Payment Date shall be made under Section 2.9; or

 

(j)            failure on the part of the Borrower to make any payment or deposit (including, without limitation, with respect to bifurcation and remittance of Interest Collections and Principal Collections or any other payment or deposit required to be made by the terms of the Transaction Documents, including, without limitation, to any Secured Party, Affected Party or Indemnified Party) required by the terms of any Transaction Document (other than Section 2.3) within three (3) Business Days of the day such payment or deposit is required to be made; or

 

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(k)            the Borrower shall become required to register as an “investment company” within the meaning of the 1940 Act or the arrangements contemplated by the Transaction Documents shall require registration as an “investment company” within the meaning of the 1940 Act; or

 

(l)            the Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Code with regard to any assets of the Borrower and such lien shall not have been released within ten (10) Business Days, or the Pension Benefit Guaranty Corporation shall file notice of a lien pursuant to Section 4068 of ERISA with regard to any of the assets of the Borrower and such lien shall not have been released within ten (10) Business Days; or

 

(m)            failure to pay, on the Termination Date, the outstanding principal of all outstanding Advances, if any, and all Interest and all fees accrued and unpaid thereon together with all other Aggregate Unpaids, including, but not limited to, any Prepayment Penalty; or

 

(n)            without limiting the generality of Section 10.1(j) above, failure of the Borrower to pay Interest within three (3) Business Days of any Payment Date or within three (3) Business Days of when otherwise due; or

 

(o)            the Borrower ceases to have a valid, perfected ownership interest in all of the Collateral; or

 

(p)            the Borrower makes any assignment or attempted assignment of their respective rights or obligations under this Agreement or any other Transaction Document without first obtaining the specific written consent of the Administrative Agent, which consent may be withheld by the Administrative Agent in the exercise of its sole and absolute discretion; or

 

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(q)            the Originator fails to maintain a minimum of $50,000,000 25,000,000 of Unencumbered Liquidity as of the last day of any fiscal quarter, or

 

(r)            the Borrower fails to be 100% owned by the Originator.

 

Section 10.2.         Remedies.

 

(a)            Upon the occurrence and continuance of a Termination Event, (i) the Administrative Agent may, or (ii) the Administrative Agent, upon the direction of all of the Lenders, shall by notice to the Borrower, declare the Termination Date to have occurred;

 

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ARTICLE XIII.

 

MISCELLANEOUS

 

Section 13.1.         Amendments and Waivers.

 

(a)            (i) No amendment or modification of any provision of this Agreement shall be effective without the written agreement of the Borrower, the Collateral Manager, the Required Lenders, the Administrative Agent and, solely if such amendment or modification would adversely affect the rights and obligations of the Collateral Agent or the Collateral Custodian, the written agreement of the Collateral Agent or the Collateral Custodian, as applicable, and (ii) no termination or waiver of any provision of this Agreement or consent to any departure therefrom by the Borrower or the Collateral Manager shall be effective without the written concurrence of the Administrative Agent and the Required Lenders. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

(b)            Notwithstanding the provisions of Section 13.1(a), the written consent of all of the Lenders shall be required for any amendment, modification or waiver (i) reducing any outstanding Advances, or the Interest thereon, (ii) postponing any date for any payment of any Advance, or the Interest thereon, (iii) modifying the provisions of this Section 13.1 or (iv) extending the Facility Maturity Date or the Reinvestment Period End Date.

 

(c)            Notwithstanding anything to the contrary herein or in any other Transaction Document, upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, the Administrative Agent and the Borrower may amend this Agreement to replace the LIBOR Rate then-applicable Benchmark with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after the Administrative Agent has delivered such proposed amendment to all Lenders, the Collateral Agent and the Borrower so long as the Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders. Any such amendment with respect to an Early Opt-in Election will become effective on the date that Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders accept such amendment. No replacement of the LIBOR Rate any then-applicable Benchmark with a Benchmark Replacement pursuant to this Section 13.1(c) will occur prior to the applicable Benchmark Transition Start Date.

 

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In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement; provided, that the Administrative Agent provides prompt written notice of such amendment to the other parties hereto

 

The Administrative Agent will promptly notify the Borrower, the Collateral Agent and the Lenders of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, .as applicable, and its related Benchmark Replacement Date and Benchmark Transition Start Date, (ii) the implementation of any Benchmark Replacement, and (iii ii) the effectiveness of any Benchmark Replacement Conforming Changes and (iv) the commencement or conclusion in connection with the use, administration, adoption or implementation of any a Benchmark Unavailability Period Replacement. Any determination, decision or election that may be made by the Administrative Agent or Lenders pursuant to this Section 13.1(c), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 12.1 13.1(c).

 

During any Benchmark Unavailability Period (or any other period in which any then-current Benchmark is not available), all Advances shall bear interest at the applicable Facility Margin Rate plus the lower of (i) the Prime Rate and (ii) the Federal Funds Base Rate.

 

Section 13.2.       Notices, Etc.

 

(a)            All notices, reports and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including communication by e-mail and facsimile copy) and mailed, e-mailed, faxed, transmitted or delivered, as to each party hereto, at its address set forth on Annex A to this Agreement or at such other address as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective, upon receipt, or in the case of (a) notice by mail, five days after being deposited in the United States mail, first class postage prepaid, (b) notice by e-mail, when verbal or electronic communication of receipt is obtained, or (c) notice by facsimile copy, when verbal communication of receipt is obtained.

 

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(b)            The Administrative Agent and the Collateral Agent, respectively, shall forward copies of each notice it receives in connection with this Agreement to each Lender at its address set forth on Annex A to this Agreement or at such other address as shall be designated by such party in a written notice to the Administrative Agent and the Collateral Agent.

 

Section 13.3.        Ratable Payments.

 

If any Secured Party, whether by setoff or otherwise, has payment (whether voluntary, involuntary, through the exercise of any right or setoff, or otherwise) made to it with respect to any portion of the Aggregate Unpaids owing to such Secured Party (other than payments received pursuant to Section 11.1) in a greater proportion than that received by any other Secured Party, such Secured Party agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of the Aggregate Unpaids held by the other Secured Parties so that after such purchase each Secured Party will hold its ratable proportion of the Aggregate Unpaids; provided that if all or any portion of such excess amount is thereafter recovered from such Secured Party, such purchase shall be rescinded and such Secured Party shall repay to the purchasing Secured Party the purchase price to the extent of such recovery together with an amount equal to such

 

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

 

THE BORROWER:			BDCA FUNDING I, LLC, as the Borrower By:
			By:
						Name:
						Title:

 

[Signatures Continued on the Following Page]

 

BDCA Funding I, LLC
Loan and Servicing Agreement

 

 

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THE COLLATERAL MANAGER:			BUSINESS DEVELOPMENT FRANKLIN BSP LENDING CORPORATION OF AMERICA (formerly known as Business Development Corporation of America), as the Collateral Manager
			By:
						Name:
						Title:

 

[Signatures Continued on the Following Page]

 

BDCA Funding I, LLC
Loan and Servicing Agreement

 

 

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THE ADMINISTRATIVE AGENT:			WELLS FARGO BANK, NATIONAL ASSOCIATION, as the Administrative Agent
			By:
						Name:
						Title:

 

[Signatures Continued on the Following Page]

 

BDCA Funding I, LLC
Loan and Servicing Agreement

 

 

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THE COLLATERAL AGENT:			U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as the Collateral Agent By:
			By:
						Name:
						Title:

 

THE COLLATERAL CUSTODIAN:			U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as the Collateral Custodian By:
			By:
						Name:
						Title:

 

BDCA Funding I, LLC
Loan and Servicing Agreement

 

 

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Annex A

 

BUSINESS DEVELOPMENT FRANKLIN BSP LENDING CORPORATION OF AMERICA
c/o Benefit Street Partners L.L.C.
9 West 57th Street, Suite 4920
New York, NY 10019
Attention: Michael Frick
Telephone: (212) 588-6770
Email: m.frick@benefitstreetpartners.com

 

with a copy (which shall not constitute notice) to:

 

Ropes & Gray LLP
800 Boylston Street
Prudential Tower\
Attention: Patricia Lynch
Email: Patricia.Lynch@ropesgray.com

 

BDCA FUNDING I, LLC
c/o Benefit Street Partners L.L.C.
9 West 57th Street, Suite 4920
New York, NY 10019
Attention: Michael Frick
Telephone: (212) 588-6770
Email: m.frick@benefitstreetpartners.com

 

with a copy (which shall not constitute notice) to:

 

Ropes & Gray LLP
800 Boylston Street
Prudential Tower
Attention: Patricia Lynch
Email: Patricia.Lynch@ropesgray.com

 

WELLS FARGO BANK, NATIONAL ASSOCIATION
as Administrative Agent
Duke Energy Center
550 South Tryon Street
MAC D1086-051
Charlotte, NC 28202
Attention: Corporate Debt Finance
Confirmation: (704) 410-2496
All electronic dissemination of Notices should be sent to scp.mmloans@wellsfargo.com

 

WELLS FARGO BANK, NATIONAL ASSOCIATION
as Lender

 

 

 

 

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Exhibit 10.4

 

Execution Version

 

SENIOR SECURED CREDIT AGREEMENT

 

dated as of

 

June 10, 2022

 

between

 

FRANKLIN BSP LENDING CORPORATION

 

The LENDERS Party Hereto

 

and

 

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

 

MUFG BANK, LTD.

SUMITOMO MITSUI BANKING CORPORATION,

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Syndication Agents

 

$495,000,000

 

 

 

JPMORGAN CHASE BANK, N.A.

MUFG BANK, LTD.

SUMITOMO MITSUI BANKING CORPORATION,

WELLS FARGO SECURITIES, LLC

as Joint Bookrunners and Joint Lead Arrangers

 

 

 

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TABLE OF CONTENTS

 

Page

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01.			Defined Terms			1
SECTION 1.02.			Classification of Loans and Borrowings			35
SECTION 1.03.			Terms Generally			35
SECTION 1.04.			Accounting Terms; GAAP			36
SECTION 1.05.			Benchmark Notification			36
SECTION 1.06.			Divisions			37

 

ARTICLE II

 

THE CREDITS

 

SECTION 2.01.			The Commitments			37
SECTION 2.02.			Loans and Borrowings			37
SECTION 2.03.			Requests for Borrowings			38
SECTION 2.04.			Letters of Credit			39
SECTION 2.05.			Funding of Borrowings			44
SECTION 2.06.			Interest Elections			44
SECTION 2.07.			Termination, Reduction or Increase of the Commitments			46
SECTION 2.08.			Repayment of Loans; Evidence of Debt			48
SECTION 2.09.			Prepayment of Loans			50
SECTION 2.10.			Fees			52
SECTION 2.11.			Interest			54
SECTION 2.12.			Alternate Rate of Interest			55
SECTION 2.13.			Increased Costs			57
SECTION 2.14.			Break Funding Payments			58
SECTION 2.15.			Taxes			59
SECTION 2.16.			Payments Generally; Pro Rata Treatment; Sharing of Set-offs			62
SECTION 2.17.			Defaulting Lenders			64
SECTION 2.18.			Mitigation Obligations; Replacement of Lenders			66

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.01.			Organization; Powers			67
SECTION 3.02.			Authorization; Enforceability			67
SECTION 3.03.			Governmental Approvals; No Conflicts			68
SECTION 3.04.			Financial Condition; No Material Adverse Change			68

 

 

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SECTION 3.05.			Litigation			68
SECTION 3.06.			Compliance with Laws and Agreements			68
SECTION 3.07.			Sanctions and Anti-Corruption Laws			69
SECTION 3.08.			Taxes			69
SECTION 3.09.			ERISA			69
SECTION 3.10.			Disclosure			69
SECTION 3.11.			Investment Company Act; Margin Regulations			69
SECTION 3.12.			Material Agreements and Liens			70
SECTION 3.13.			Subsidiaries and Investments			70
SECTION 3.14.			Properties			71
SECTION 3.15.			Affiliate Agreements			71
SECTION 3.16.			Security Documents			71
SECTION 3.17.			Affected Financial Institutions			72

 

ARTICLE IV

 

CONDITIONS

 

SECTION 4.01.			Effective Date			72
SECTION 4.02.			Each Credit Event			74

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

SECTION 5.01.			Financial Statements and Other Information			75
SECTION 5.02.			Notices of Material Events			77
SECTION 5.03.			Existence; Conduct of Business			78
SECTION 5.04.			Payment of Obligations			78
SECTION 5.05.			Maintenance of Properties; Insurance			78
SECTION 5.06.			Books and Records; Inspection Rights			78
SECTION 5.07.			Compliance with Laws; Anti-Corruption; Sanctions			78
SECTION 5.08.			Certain Obligations Respecting Subsidiaries; Further Assurances			79
SECTION 5.09.			Use of Proceeds			80
SECTION 5.10.			Status of RIC and BDC			81
SECTION 5.11.			Investment and Valuation Policies			81
SECTION 5.12.			Portfolio Valuation and Diversification, Etc.			81
SECTION 5.13.			Calculation of Borrowing Base			85

 

(ii)

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ARTICLE VI

 

NEGATIVE COVENANTS

 

SECTION 6.01.			Indebtedness			95
SECTION 6.02.			Liens			96
SECTION 6.03.			Fundamental Changes and Dispositions of Assets			97
SECTION 6.04.			Investments			99
SECTION 6.05.			Restricted Payments			100
SECTION 6.06.			Certain Restrictions on Subsidiaries			102
SECTION 6.07.			Certain Financial Covenants			102
SECTION 6.08.			Transactions with Affiliates			102
SECTION 6.09.			Lines of Business			103
SECTION 6.10.			No Further Negative Pledge			103
SECTION 6.11.			Modifications of Certain Documents			103
SECTION 6.12.			Payments of Other Indebtedness			104

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

ARTICLE VIII

 

THE ADMINISTRATIVE AGENT

 

ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.01.			Notices; Electronic Communications			113
SECTION 9.02.			Waivers; Amendments			115
SECTION 9.03.			Expenses; Indemnity; Damage Waiver			118
SECTION 9.04.			Successors and Assigns			120
SECTION 9.05.			Survival			124
SECTION 9.06.			Counterparts; Integration; Effectiveness; Electronic Execution			124
SECTION 9.07.			Severability			125
SECTION 9.08.			Right of Setoff			125
SECTION 9.09.			Governing Law; Jurisdiction; Etc.			126
SECTION 9.10.			WAIVER OF JURY TRIAL			127
SECTION 9.11.			Headings			127
SECTION 9.12.			Treatment of Certain Information; Confidentiality			127
SECTION 9.13.			USA PATRIOT Act			128
SECTION 9.14.			Acknowledgment and Consent to Bail-In of Affected Financial Institutions			128
SECTION 9.15.			No Fiduciary Duty			129
SECTION 9.16.			Acknowledgement Regarding Any Supported QFCs			130
SECTION 9.17.			Interest Rate Limitation.			130

 

(iii)

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SCHEDULE I			–			Commitments
SCHEDULE II			–			Material Agreements and Liens
SCHEDULE III			–			Permitted Indebtedness outstanding on the Effective Date
SCHEDULE IV			–			Subsidiaries and Investments
SCHEDULE V			–			Transactions with Affiliates
SCHEDULE VI			–			GICS Industry Classification Group List
SCHEDULE VII			–			Approved Dealers and Approved Pricing Services
SCHEDULE VIII			–			Letter of Credit Commitments

 

EXHIBIT A			-			Form of Assignment and Assumption
EXHIBIT B			-			Form of Guarantee and Security Agreement
EXHIBIT C			-			Form of Opinion of Maryland Counsel to the Borrower
EXHIBIT D			-			Form of Opinion of Counsel to JPMCB
EXHIBIT E			-			Form of Borrowing Base Certificate
EXHIBIT F			-			Form of Borrowing Request
EXHIBIT G			-			Form of Interest Election Request

 

(iv)

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SENIOR SECURED CREDIT AGREEMENT dated as of June 10, 2022 (this “Agreement”), among FRANKLIN BSP LENDING CORPORATION, a Maryland corporation (the “Borrower”), the LENDERS party hereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent and as Collateral Agent.

 

The Borrower has requested that the Lenders provide the credit facilities described herein. The Lenders are prepared to extend such credit upon the terms and conditions hereof, and, accordingly, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01.         Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans constituting such Borrowing, are denominated in Dollars and bearing interest at a rate determined by reference to the Alternate Base Rate.

 

“Additional Debt Amount” means, as of any date, the greater of (a) $50,000,000 and (b) an amount equal to 5% of Shareholders’ Equity.

 

“Administrative Agent” means JPMCB, in its capacity as administrative agent for the Lenders hereunder.

 

“Administrative Agent’s Account” means, an account designated by the Administrative Agent in a notice to the Borrower and the Lenders.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Advance Rate” has the meaning assigned to such term in Section 5.13.

 

“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

 

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. Anything herein to the contrary notwithstanding, the term “Affiliate” shall not include (a) any Person that constitutes an Investment held by any Obligor in the ordinary course of business or (b) any Person that is an Affiliate solely due to its ownership by Franklin Resources Inc.

 

“Affiliate Agreements” means each of the agreements listed on Schedule V.

 

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“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) the Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%; provided that for the purpose of this definition, the Term SOFR Rate for any day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Term SOFR Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.12 (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 2.12(b)), then the Alternate Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as determined pursuant to the foregoing would be less than 1%, such rate shall be deemed to be 1% for purposes of this Agreement.

 

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to money laundering, bribery or corruption.

 

“Applicable Margin” means, for any day, (a) (i) if the Gross Borrowing Base (as of the most recently delivered Borrowing Base Certificate) is equal to or greater than 1.85 times the Combined Debt Amount, (A) with respect to any ABR Loan, 0.85% and (B) in the case of any Term Benchmark Loan, 1.85%, and (ii) if the Gross Borrowing Base (as of the most recently delivered Borrowing Base Certificate) is less than 1.85 times the Combined Debt Amount, (A) with respect to any ABR Loan, 0.975%, and (B) in the case of any Term Benchmark Loan, 1.975%, and (b) with respect to the commitment fees payable under Section 2.10(a) hereunder, 0.375%. Any change in the Applicable Margin due to a change in the ratio of the Gross Borrowing Base to the Combined Debt Amount as set forth in any Borrowing Base Certificate shall be effective from and including the day immediately succeeding the date of delivery of such Borrowing Base Certificate; provided that if any Borrowing Base Certificate has not been delivered in accordance with Section 5.01(d), then from and including the day immediately succeeding the date on which such Borrowing Base Certificate was required to be delivered, the Applicable Margin shall be the Applicable Margin set forth in clause (a)(ii) above to and including the date on which the required Borrowing Base Certificate is delivered.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments of such Lender. If the Commitments have terminated or expired, the Applicable Percentages previously based on such Commitments shall be determined based upon the existing Credit Exposure.

 

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“Approved Dealer” means (a) in the case of any Portfolio Investment that is not a U.S. Government Security, a bank or a broker-dealer registered under the Securities Exchange Act of 1934 of nationally recognized standing or an Affiliate thereof, (b) in the case of a U.S. Government Security, any primary dealer in U.S. Government Securities, and (c) in the case of any foreign Portfolio Investment, any foreign broker-dealer of internationally recognized standing or an Affiliate thereof, in the case of each of clauses (a), (b) and (c) above, as set forth on Schedule VII or any other bank or broker-dealer acceptable to the Administrative Agent in its reasonable determination.

 

“Approved Pricing Service” means a pricing or quotation service as set forth in Schedule VII or any other pricing or quotation service designated in writing by the Borrower to the Administrative Agent.

 

“Approved Third Party Appraiser” means each of (a) Houlihan Lokey Howard & Zukin Inc., (b) Lincoln International LLC (formerly known as Lincoln Partners LLC), (c) Duff & Phelps Corporation, (d) Valuation Research Corporation, (e) Cherry Bekaert LLP and (f) any other third party appraiser selected by the Borrower in its reasonable discretion.

 

“Asset Coverage Ratio” means the ratio, determined on a consolidated basis, without duplication, in accordance with GAAP, of (a) the value of total assets of the Borrower and its Subsidiaries, less all liabilities (other than outstanding Indebtedness, including outstanding Indebtedness hereunder) of the Borrower and its Subsidiaries, to (b) the aggregate amount of Indebtedness of the Borrower and its Subsidiaries. For the purposes of calculating the Asset Coverage Ratio, Indebtedness of an SBIC Subsidiary outstanding as of the date of such calculation shall be excluded from the calculation of Asset Coverage Ratio to the extent and in the manner that such Indebtedness may be excluded from the asset coverage requirements of sections 18(a) and 61(d) of the Investment Company Act pursuant to an effective exemptive order issued by the Securities and Exchange Commission.

 

“Assignment and Assumption” means an Assignment and Assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

 

“Assuming Lender” has the meaning assigned to such term in Section 2.07(e).

 

“Availability Period” means, with respect to any Commitments, the period from and including the Effective Date to but excluding the earlier of the Commitment Termination Date and the date of termination of such Commitments.

 

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“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark (or component thereof, as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (e) of Section 2.12.

 

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

 

“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

 

“Basel III” means the agreements on capital requirements, leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision on 16 December 2010, each as amended, supplemented or restated.

 

“Benchmark” means, initially, with respect to any Term Benchmark Loan, the Term SOFR Rate; provided that if a Benchmark Transition Event, and the related Benchmark Replacement Date have occurred with respect to the Daily Simple SOFR or Term SOFR Rate, as applicable, or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) of Section 2.12.

 

“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:

 

(1)            Daily Simple SOFR; or

 

Senior Secured Credit Agreement

 

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(2)            the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time in the United States and (b) the related Benchmark Replacement Adjustment.

 

If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.

 

“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for syndicated credit facilities.

 

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent, in consultation with the Borrower, decides may be appropriate to reflect the adoption and implementation of such Benchmark and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark exists, in such other manner of administration as the Administrative Agent, in consultation with the Borrower, decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

 

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“Benchmark Replacement Date” means, with respect to any Benchmark, the earliest to occur of the following events with respect to such then-current Benchmark:

 

(1)            in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

 

(2)            in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.

 

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark:

 

(1)            a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

 

(2)            a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board, the NYFRB, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

 

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(3)            a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative.

 

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.12 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.12.

 

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

 

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

 

“Borrower” means Franklin BSP Lending Corporation, a Maryland corporation.

 

“Borrowing” means (a) all ABR Loans made, converted or continued on the same date and (b) all Term Benchmark Loans that have the same Interest Period.

 

“Borrowing Base” has the meaning assigned to such term in Section 5.13.

 

“Borrowing Base Certificate” means a certificate of a Financial Officer of the Borrower, substantially in the form of Exhibit E and appropriately completed.

 

“Borrowing Base Deficiency” means, at any date on which the same is determined, the amount, if any, by which (a) the aggregate Covered Debt Amount as of such date exceeds (b) the Borrowing Base as of such date.

 

“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03 substantially in the form of Exhibit F.

 

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“Business Day” means any day (other than a Saturday or a Sunday) on which banks are open for business in New York City.

 

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Cash” means any immediately available funds in Dollars or in any currency other than Dollars which is a freely convertible currency.

 

“Cash Equivalents” means investments (other than Cash) that are one or more of the following obligations:

 

(a)            U.S. Government Securities, in each case maturing within one year from the date of acquisition thereof;

 

(b)            investments in commercial paper or other short-term corporate obligations maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, a credit rating of at least A-1 from S&P and at least P-1 from Moody’s;

 

(c)            investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof (i) issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof, provided that such certificates of deposit, banker’s acceptances and time deposits are held in a securities account (as defined in the Uniform Commercial Code) through which the Collateral Agent can perfect a security interest therein and (ii) having, at such date of acquisition, a credit rating of at least A-1 from S&P and at least P-1 from Moody’s;

 

(d)            fully collateralized repurchase agreements with a term of not more than 30 days from the date of acquisition thereof for U.S. Government Securities and entered into with (i) a financial institution satisfying the criteria described in clause (c) of this definition or (ii) an Approved Dealer having (or being a member of a consolidated group having) at such date of acquisition, a credit rating of at least A-1 from S&P and at least P-1 from Moody’s;

 

(e)            a Reinvestment Agreement issued by any bank (if treated as a deposit by such bank), or a Reinvestment Agreement issued by any insurance company or other corporation or entity, in each case, at the date of such acquisition having a credit rating of at least A-1 from S&P and at least P-1 from Moody’s; provided that such Reinvestment Agreement may be unwound at the option of the Borrower at any time without penalty;

 

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(f)            money market funds that have, at all times, credit ratings of “Aaa” and “MR1+” by Moody’s and “AAAm” or “AAAm-G” by S&P, respectively; and

 

(g)            any of the following offered by U.S. Bank National Association (or any successor custodian or other entity acting in a similar capacity with respect to the Borrower) (I) money market deposit accounts, (II) eurodollar time deposits, (III) commercial eurodollar sweep services or (IV) open commercial paper services, in each case having, at such date of acquisition, a credit rating of at least A-1 from S&P and at least P-1 from Moody’s and maturing not later than 270 days from the date of acquisition thereof,

 

provided, that (i) in no event shall Cash Equivalents include any obligation that provides for the payment of interest alone (for example, interest-only securities or “IOs”); (ii) if any of Moody’s or S&P changes its rating system, then any ratings included in this definition shall be deemed to be an equivalent rating in a successor rating category of Moody’s or S&P, as the case may be; (iii) Cash Equivalents (other than U.S. Government Securities or repurchase agreements) shall not include any such investment of more than 10% of total assets of the Obligors in any single issuer; and (iv) in no event shall Cash Equivalents include any obligation that is not denominated in Dollars.

 

“Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the Effective Date), of shares representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower or (b) the acquisition of direct or indirect Control of the Borrower by any Person or group other than Benefit Street Partners L.L.C. or any Affiliate of Benefit Street Partners L.L.C.

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the Effective Date, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Effective Date or (c) compliance by any Lender or any Issuing Bank (or, for purposes of Section 2.13(b), by any lending office of such Lender or by such Lender’s or such Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Effective Date; provided that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith or in implementation thereof and (ii) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”.

 

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“Charges” has the meaning assigned to such term in Section 9.17.

 

“CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” has the meaning assigned to such term in the Guarantee and Security Agreement.

 

“Collateral Agent” means JPMCB in its capacity as Collateral Agent under the Guarantee and Security Agreement, and includes any successor Collateral Agent thereunder.

 

“Collateral Pool” means, at any time, each Portfolio Investment that has been Delivered (as defined in the Guarantee and Security Agreement) to the Collateral Agent and is subject to the Lien of the Guaranty and Security Agreement, and then only for so long as such Portfolio Investment continues to be Delivered as contemplated therein and in which the Collateral Agent has a first-priority perfected Lien as security for the Secured Obligations; provided that in the case of any Portfolio Investment in which the Collateral Agent has a first-priority perfected security interest (subject to any Lien permitted by Section 6.02 hereof) pursuant to a valid Uniform Commercial Code filing (and for which no other method of perfection with a higher priority is possible), such Portfolio Investment may be included in the Borrowing Base so long as all remaining actions to complete “Delivery” are satisfied in full within 5 Business Days of such inclusion.

 

“Combined Debt Amount” means, as of any date, the sum of (i) the greater of (x) the aggregate amount of Commitments of all Lenders as of such date and (y) the aggregate amount of Credit Exposures of all Lenders as of such date plus (ii) the aggregate amount of outstanding Designated Indebtedness and, without duplication, unused Designated Indebtedness Commitments (as each such term is defined in the Guarantee and Security Agreement).

 

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Loans denominated in Dollars hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Credit Exposure permitted hereunder, as such commitment may be (a) reduced or increased from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule I, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The aggregate amount of the Lenders’ Commitments as of the Effective Date is $495,000,000.

 

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“Commitment Increase” has the meaning assigned to such term in Section 2.07(e).

 

“Commitment Increase Date” has the meaning assigned to such term in Section 2.07(e).

 

“Commitment Termination Date” means June 10, 2026.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

“Contemplated Bond Indebtedness” means Indebtedness incurred pursuant to Section 6.01(j).

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

 

“Controlled Foreign Corporation” means any Subsidiary which is (i) a “controlled foreign corporation” (within the meaning of Section 957 of the Code), (ii) a subsidiary substantially all the assets of which consist of equity (or equity and indebtedness) in Subsidiaries described in clause (i) of this definition, or (iii) an entity treated as disregarded for U.S. federal income tax purposes that owns more than 65% of the voting stock of a Subsidiary described in clause (i) or (ii) of this definition.

 

“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

 

“Covered Debt Amount” means, on any date, (a) all of the Credit Exposures of all Lenders on such date plus (b) the aggregate amount of outstanding Permitted Indebtedness on such date plus (c) the aggregate amount of any outstanding Indebtedness incurred pursuant to Sections 6.01(g), 6.01(i), 6.01(j) and 6.01(l) as of such date minus (d) the LC Exposures fully cash collateralized as of such date pursuant to Section 2.04(k) and the last paragraph of Section 2.08(a); provided that the aggregate principal amount of all Longer Term Unsecured Indebtedness, Specified Existing Bond Indebtedness, Contemplated Bond Indebtedness, and 50% of all Shorter Term Unsecured Indebtedness shall be excluded from the calculation of the Covered Debt Amount, in each case, to the extent then outstanding, until the date that is 9 months prior to the scheduled maturity date of such Longer Term Unsecured Indebtedness, Specified Existing Bond Indebtedness, Contemplated Bond Indebtedness, or Shorter Term Unsecured Indebtedness as applicable, provided, that to the extent, but only to the extent, any portion of Longer Term Unsecured Indebtedness, Specified Existing Bond Indebtedness, Contemplated Bond Indebtedness or Shorter Term Unsecured Indebtedness referred to above is subject to a contractually scheduled amortization payment, other principal payment or redemption earlier than 6 months after the Maturity Date (in the case of Longer Term Unsecured Indebtedness), or earlier than the original final maturity date of such Indebtedness (in the case of Specified Existing Bond Indebtedness, Contemplated Bond Indebtedness or Shorter Term Unsecured Indebtedness), all of such portion of such Indebtedness, to the extent then outstanding, shall be included in the calculation of the Covered Debt Amount beginning upon the date that is the later of (i) 9 months prior to such scheduled amortization payment, other principal payment or redemption and (ii) the date the Borrower becomes aware that such Indebtedness is required to be paid or redeemed. For the avoidance of doubt, for purposes of calculating the Covered Debt Amount, any convertible securities will be included at the then outstanding principal balance thereof.

 

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“Covered Entity” means any of the following:

 

(i)            a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

 

(ii)            a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

 

(iii)            a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

 

“Covered Party” has the meaning assigned to it in Section 9.16.

 

“Credit Party” means the Administrative Agent, each Issuing Bank, or any other Lender.

 

“Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Loans and LC Exposure at such time.

 

“Custodian” means U.S. Bank National Association, or any other financial institution mutually agreeable to the Collateral Agent and the Borrower, acting as the custodian on behalf of the Obligors with respect to documentation for Portfolio Investments and any accounts of the Obligors, or any agent or sub-custodian acting on behalf of the Custodian, or any successor in such capacity acting pursuant to a custodian agreement.

 

“Custodian Agreement” means that certain Custody Agreement, dated as of August 13, 2012, by and between the Borrower and the Custodian, as amended, restated, supplemented or otherwise modified from time to time.

 

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“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), a rate per annum equal to SOFR for the day (such day, a “SOFR Determination Date”) that is five (5) U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.

 

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Defaulting Lender” means any Lender, as determined by the Administrative Agent, that has (a) failed to fund any portion of its Loans or participations in Letters of Credit within three Business Days of the date required to be funded by it hereunder, unless, in the case of any Loans, such Lender notifies the Administrative Agent and the Borrower that such Lender’s failure is based on such Lender’s reasonable determination that the conditions precedent to funding such Loan under this Agreement have not been met, such conditions have not otherwise been waived in accordance with the terms of this Agreement and such Lender has advised the Administrative Agent in writing (with reasonable detail of those conditions that have not been satisfied) prior to the time at which such funding was to have been made, (b) notified the Borrower, the Administrative Agent, any Issuing Bank or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or generally under other agreements in which it commits to extend credit (unless such writing or public statement states that such position is based on such Lender’s commercially reasonable determination that a condition precedent to funding or extension of credit (which condition precedent, together with the applicable default, if any, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) failed, within three Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, (e) (i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or custodian, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or (f) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.

 

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“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

 

“Designated Subsidiary” means:

 

1.            An SBIC Subsidiary;

 

2.            (a)         a direct or indirect Subsidiary of the Borrower designated by the Borrower as a “Designated Subsidiary” which meets the following criteria:

 

(i)            to which any Obligor sells, conveys or otherwise transfers (whether directly or indirectly) Portfolio Investments, which engages in no material activities other than in connection with the purchase or financing of such assets;

 

(ii)            no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (A) is Guaranteed by any Obligor (other than Guarantees in respect of Standard Securitization Undertakings), (B) is recourse to or obligates any Obligor in any way other than pursuant to Standard Securitization Undertakings or (C) subjects any property of any Obligor (other than property that has been contributed or sold, purported to be sold or otherwise transferred to such Subsidiary or the Equity Interests of such Subsidiary), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings or any Guarantee thereof,

 

(iii)            with which no Obligor has any material contract, agreement, arrangement or understanding other than on terms no less favorable to such Obligor than those that might be obtained at the time from Persons that are not Affiliates of any Obligor, other than fees payable in the ordinary course of business in connection with servicing receivables or financial assets, and

 

(iv)            to which no Obligor has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results, other than pursuant to Standard Securitization Undertakings; or

 

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(b)            a direct or indirect Subsidiary of the Borrower designated by the Borrower as a “Designated Subsidiary” and which satisfies each of the foregoing criteria set forth in clauses (2)(a)(ii), (iii) and (iv); or

 

3.            any Subsidiary listed on Schedule IV hereto.

 

Any such designation under this clause (2) by the Borrower shall be effected pursuant to a certificate of a Financial Officer delivered to the Administrative Agent, which certificate shall include a statement to the effect that, to the best of such officer’s knowledge, such designation complied with the foregoing conditions set forth in clauses (2)(a) or (2)(b). For the avoidance of doubt, in the case of clause (2)(a), the Borrower shall be in compliance with Section 6.03(d) after giving effect to any such designation. Each Subsidiary of a Designated Subsidiary shall be deemed to be a Designated Subsidiary and shall comply with the foregoing requirements of this definition. The parties hereby agree that the Subsidiaries identified as Designated Subsidiaries on Schedule IV hereto shall each constitute a Designated Subsidiary so long as they comply with the foregoing requirements of this definition.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

 

“Dollars” or “$” refers to lawful money of the United States of America.

 

“Domestic Subsidiary” means any Subsidiary other than a Controlled Foreign Corporation.

 

“EBITDA” means the consolidated net income of the applicable Person (excluding extraordinary, unusual or non-recurring gains and extraordinary losses (to the extent excluded in the definition of “EBITDA” (or similar defined term used for the purposes contemplated herein) in the relevant agreement relating to the applicable Portfolio Investment)) for the relevant period plus, without duplication, the following to the extent deducted in calculating such consolidated net income in the relevant agreement relating to the applicable Portfolio Investment for such period: (i) consolidated interest charges for such period, (ii) the provision for federal, state, local and foreign income taxes payable for such period, (iii) depreciation and amortization expense for such period, and (iv) such other adjustments included in the definition of “EBITDA” (or similar defined term used for the purposes contemplated herein) in the relevant agreement relating to the applicable Portfolio Investment, provided that such adjustments are market terms for substantially similar debt of other similarly situated borrowers at the time such relevant agreements are entered into as reasonably determined in good faith by the Borrower.

 

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

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“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

 

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standard (within the meaning of Sections 412 and 430 of the Code or Sections 302 and 303 of ERISA) applicable to such Plan; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan under Section 4041 of ERISA or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to a withdrawal from a Plan subject to Section 4063 of ERISA during a plan year in which it was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA, or a complete withdrawal or partial withdrawal (within the meanings of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice from any Multiemployer Plan concerning the imposition of Withdrawal Liability on the Borrower or any ERISA Affiliate or a determination that a Multiemployer Plan is insolvent (within the meaning of Section 4245 of ERISA) or in reorganization (within the meaning of Section 4241 of ERISA).

 

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“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

 

“Event of Default” has the meaning assigned to such term in Article VII.

 

“Excluded Assets” means the entities identified as Excluded Assets in Schedule IV hereto, any CDO Securities and finance lease obligations, and each Designated Subsidiary, and any similar assets or entities in which any Obligor holds an interest on or after the Effective Date, and, in each case, their respective Subsidiaries.

 

“Excluded Asset Lien” has the meaning set forth in Section 6.02(e).

 

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor (determined after giving effect to Section 3.10 of the Guarantee and Security Agreement and any other keepwell, support or other agreement for the benefit of such Guarantor) or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of an Obligor hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or that are Other Connection Taxes, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which an Obligor is located, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law described in clause (a) or (b) of the definition of Change in Law) to comply with Section 2.15(e) or (g), except to the extent, other than in a case of failure to comply with Section 2.15(e), that such Foreign Lender’s (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from an Obligor with respect to such withholding tax pursuant to Section 2.15(a), (d) any United States federal withholding Taxes imposed under FATCA and (e) United States federal backup withholding tax.

 

Senior Secured Credit Agreement

 

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“Extraordinary Receipts” means any cash received by or paid to any Obligor on account of any foreign, federal, state or local tax refunds, pension plan reversions, judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, condemnation awards (and payments in lieu thereof), indemnity payments received not in the ordinary course of business, purchase price adjustment received not in the ordinary course of business in connection with any purchase agreement and proceeds of insurance (excluding, however, for the avoidance of doubt, proceeds of any issuance of Equity Interests and issuances of Indebtedness by any Obligor); provided that Extraordinary Receipts shall not include any (x) amounts that the Borrower receives from the Administrative Agent or any Lender pursuant to Section 2.15(e), or (y) cash receipts to the extent received from proceeds of insurance, condemnation awards (or payments in lieu thereof), indemnity payments or payments in respect of judgments or settlements of claims, litigation or proceedings to the extent that such proceeds, awards or payments are received by any Person in respect of any unaffiliated third party claim against or loss by such Person and promptly applied to pay (or to reimburse such Person for its prior payment of) such claim or loss and the costs and expenses of such Person with respect thereto.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.

 

“Federal Funds Effective Rate” means, for any day, the rate calculated by the New York Fed based on such day’s federal funds transactions by depository institutions (as determined in such manner as the New York Fed shall set forth on its public website from time to time) and published on the next succeeding Business Day by the New York Fed as the federal funds effective rate, provided, that, if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

 

“Financial Officer” means the chief executive officer, president, chief financial officer, principal accounting officer, chief accounting officer, treasurer, assistant treasurer, controller or assistant controller of the Borrower.

 

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“Floor” means the benchmark rate floor, if any, provided in this Agreement, which initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to Term SOFR Rate and Daily Simple SOFR shall be 0% per annum.

 

“Foreign Lender” means any Lender or any Issuing Bank that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

“GAAP” means generally accepted accounting principles in the United States of America.

 

“GICS” means, as of any date, the most recently published Global Industry Classification Standard.

 

“GICS Industry Group Classification” means any industry group classification within GICS, as updated and amended from time to time.

 

“Governmental Authority” means the government of the United States of America, or of any other nation, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Gross Borrowing Base” has the meaning assigned to such term in Section 5.13(g).

 

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

 

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“Guarantee and Security Agreement” means that certain Guarantee and Security Agreement dated as of June 10, 2022 between the Borrower, the Subsidiary Guarantors, the Administrative Agent, each holder (or a representative or trustee therefor) from time to time of any Other Secured Indebtedness, and the Collateral Agent.

 

“Guarantee Assumption Agreement” means a Guarantee Assumption Agreement substantially in the form of Exhibit B to the Guarantee and Security Agreement between the Administrative Agent and an entity that, pursuant to Section 5.08, is required to become a Subsidiary Guarantor under the Guarantee and Security Agreement (with such changes as the Administrative Agent shall request, consistent with the requirements of Section 5.08).

 

“Hedging Agreement” means any interest rate protection agreement, foreign currency exchange protection agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

 

“IBA” has the meaning assigned to such term in Section 1.05.

 

“Increasing Lender” has the meaning assigned to such term in Section 2.07(e).

 

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of business), (e) all Indebtedness of others secured by any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed (provided that, to the extent that the recourse of such Indebtedness is limited to the assets secured by such Lien, the amount of such Indebtedness shall be the lower of the outstanding amount of such Indebtedness and the fair market value of the property subject to such Lien), (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. For the avoidance of doubt, Indebtedness shall not include (a) any revolving commitments or letters of credit for which any Obligor is acting as a lender or issuing lender, as applicable, as part of or in connection with a Portfolio Investment or (b) any non-recourse liabilities for participations sold by any Person in any Bank Loan.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

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“Independent Valuation Provider” means an independent third-party valuation firm, including, Murray, Devine & Co., Houlihan Lokey, Duff & Phelps, Lincoln Advisors, Valuation Research Corporation, Alvarez & Marsal and any other independent nationally recognized third-party valuation firm selected by the Administrative Agent and reasonably acceptable to the Borrower.

 

“Industry Classification Group” means (a) any of the GICS Industry Group Classifications set forth in Schedule VI hereto, together with any such group classifications that may be subsequently added to GICS and provided by the Borrower to the Administrative Agent and (b) up to three additional industry group classifications established by the Borrower pursuant to Section 5.12. For the avoidance of doubt, CDO Securities shall be treated as belonging to the “Diversified Financials” Industry Classification Group.

 

“Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.06 substantially in the form of Exhibit G.

 

“Interest Payment Date” means (a) the Maturity Date, (b) with respect to any ABR Loan, each Quarterly Date and (c) with respect to any Term Benchmark Loan, the last day of each Interest Period therefor and, in the case of any Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at three-month intervals after the first day of such Interest Period.

 

“Interest Period” means with respect to any Term Benchmark Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, three or six months thereafter (in each case, subject to the availability for the Benchmark applicable to the relevant Loan), as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period and (iii) no tenor that has been removed from this definition pursuant to Section 2.12(e) shall be available for specification in such Borrowing Request or Interest Election Request. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

“Investment” means, for any Person: (a) Equity Interests, bonds, notes, debentures or other securities of any other Person or any agreement to acquire any Equity Interests, bonds, notes, debentures or other securities of any other Person (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale); (b) deposits, advances, loans or other extensions of credit made to any other Person (including purchases of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such Person); or (c) Hedging Agreements.

 

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“Investment Policies” has the meaning assigned to such term in Section 3.11(c).

 

“Investment Company Act” means the Investment Company Act of 1940, as amended from time to time.

 

“Issuing Banks” means JPMCB, MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation and Wells Fargo Securities, LLC in their capacity as the issuers of Letters of Credit hereunder, and their respective successors in such capacity as provided in Section 2.04(j).

 

“Joint Lead Arrangers” means JPMCB, MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation and Wells Fargo Securities, LLC.

 

“JPMCB” means JPMorgan Chase Bank, N.A.

 

“LC Disbursement” means a payment made by any Issuing Bank pursuant to a Letter of Credit.

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time (including any Letter of Credit for which a draft has been presented but not yet honored by any Issuing Bank) plus (b) the aggregate amount of all LC Disbursements in respect of such Letters of Credit that have not yet been reimbursed by or on behalf of the Borrower at such time.

 

“Lenders” means, (i) the Persons listed on Schedule I as having Commitments, (ii) any Assuming Lender that shall have become a party hereto pursuant to Section 2.07(e) and (iii) any other Person that shall have become a party hereto pursuant to an Assignment and Assumption that provides for it to assume a Commitment or to acquire Credit Exposure, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption or otherwise in accordance with the terms hereof.

 

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

 

“Letter of Credit Collateral Account” has the meaning assigned to such term in Section 2.04(k).

 

“Letter of Credit Documents” means, with respect to any Letter of Credit, collectively, any application therefor and any other agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk with respect to such Letter of Credit or (b) any collateral security for any of such obligations, each as the same may be modified and supplemented and in effect from time to time.

 

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“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities (other than on market terms at fair value so long as in the case of any Portfolio Investment, the Value used in determining the Borrowing Base is not greater than the call price), except in favor of the issuer thereof (and in the case of Portfolio Investments that are securities, excluding customary drag along, tag along, right of first refusal and other similar rights in favor of the equity holders of the same issuer).

 

“Loan Documents” means, collectively, this Agreement, the Letter of Credit Documents and the Security Documents.

 

“Loans” means the revolving loans made by the Lenders to the Borrower pursuant to Section 2.01(a) or (b).

 

“Longer Term Unsecured Indebtedness” means any Indebtedness of an Obligor (which may be Guaranteed by one or more other Obligors) that (a) has no amortization prior to, and a final maturity date not earlier than, six months after the Maturity Date, (b) has terms substantially comparable to market terms for substantially similar debt of other similarly situated borrowers as determined by the Borrower in good faith and (c) is not secured by any assets of any Obligor.

 

“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X of the Board of Governors of the Federal Reserve System.

 

“Material Adverse Effect” means a material adverse effect on (a) the business, Portfolio Investments and other assets, liabilities and financial condition of the Borrower and its Subsidiaries taken as a whole (excluding in any case a decline in the net asset value of the Borrower or a change in general market conditions or values of the Investments of the Borrower and its Subsidiaries), or (b) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent and the Lenders thereunder.

 

“Material Indebtedness” means (a) Indebtedness (other than the Loans, Letters of Credit and Hedging Agreements), of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $50,000,000 and (b) obligations in respect of one or more Hedging Agreements under which the maximum aggregate amount (giving effect to any netting agreements) that the Borrower and the Subsidiaries would be required to pay if such Hedging Agreement(s) were terminated at such time would exceed $50,000,000.

 

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“Maturity Date” means the earliest to occur of (a) June 10, 2027 and (b) the date on which all Commitments have been terminated and the aggregate amount of Loans outstanding has been repaid in full and all other obligations of the Borrower hereunder have been indefeasibly paid in full (other than any indemnities and similar contingent obligations that are not then due and that survive the termination of this Agreement).

 

“Maximum Rate” has the meaning assigned to such term in Section 9.17.

 

“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA in respect of which the Borrower or any ERISA Affiliate makes any contributions.

 

“Net Cash Proceeds” means:

 

(a)            with respect to any Disposition by the Borrower or any of its Subsidiaries (other than a Designated Subsidiary), or any Extraordinary Receipt received or paid to the account of the Borrower or any of its Subsidiaries (other than Designated Subsidiaries) (in each case, which requires a payment of the Loans under Section 2.09(c)), an amount equal to (a) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) minus (b) the sum of (i) the principal amount of any Indebtedness that is secured by the applicable asset and that is required to be repaid in connection with such transaction (other than Indebtedness under the Loan Documents), (ii) the reasonable out-of-pocket fees, costs and expenses incurred by the Borrower or such Subsidiary in connection with such transaction, (iii) the taxes paid or reasonably estimated to be actually payable within two years of the date of the relevant transaction in connection with such transaction; provided that, if the amount of any estimated taxes pursuant to this clause (iii) exceeds the amount of taxes actually required to be paid in cash in respect of such Disposition, the aggregate amount of such excess shall constitute Net Cash Proceeds (as of the date the Borrower determines such excess exists); and provided further that if the amount of any estimated taxes pursuant to this clause (iii) is less than the amount of taxes actually required to be paid in cash in respect of such Disposition, the shortfall shall be netted against subsequent Net Cash Proceeds received by the Borrower or any of its Subsidiaries and (iv) any reasonable costs, fees, commissions, premiums and expenses incurred by the Borrower or any of its Subsidiaries in connection with such Disposition; and

 

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(b)            with respect to the sale or issuance of any Equity Interest by the Borrower or any of its Subsidiaries (other than a Designated Subsidiary) (including, for the avoidance of doubt, cash received by the Borrower or any of its Subsidiaries for the sale by the Borrower or such Subsidiary of any Equity Interest of a Designated Subsidiary but specifically excluding any sale of any Equity Interest by a Designated Subsidiary or cash received by a Designated Subsidiary in connection with the sale of any Equity Interest and any sales or issuances of Equity Interests to the Borrower or any Subsidiary Guarantor), or the incurrence or issuance of any Indebtedness by the Borrower or any of its Subsidiaries (other than Designated Subsidiaries) (in each case, which requires a payment of the Loans under Section 2.10(d)), an amount equal to (i) the sum of the cash and Cash Equivalents received in connection with such transaction minus (ii) the sum of (1) reasonable out-of-pocket fees, costs and expenses, incurred by the Borrower or such Subsidiary in connection therewith plus (2) any reasonable costs, fees, commissions, premiums, expenses, or underwriting discounts or commissions incurred by the Borrower or any of its Subsidiaries in connection therewith.

 

“New York Fed” means the Federal Reserve Bank of New York.

 

“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if neither of such rates is published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined shall be less than 0%, such rate shall be deemed to be 0% for purposes of this Agreement.

 

“NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.

 

“Obligor” means, collectively, the Borrower and the Subsidiary Guarantors.

 

“Other Connection Taxes” means, with respect to any recipient of any payment to be made by or on account of any obligation of an Obligor hereunder, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

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“Other Permitted Indebtedness” means (a) accrued expenses and current trade accounts payable incurred in the ordinary course of any Obligor’s business which are not overdue for a period of more than 90 days or which are being contested in good faith by appropriate proceedings, (b) Indebtedness (other than Indebtedness for borrowed money) arising in connection with transactions in the ordinary course of any Obligor’s business in connection with its purchasing of securities, derivatives transactions, reverse repurchase agreements or dollar rolls to the extent such transactions are permitted under the Investment Company Act and the Investment Policies, provided that such Indebtedness does not arise in connection with the purchase of Portfolio Investments other than Cash Equivalents and U.S. Government Securities and (c) Indebtedness in respect of judgments or awards so long as such judgments or awards do not constitute an Event of Default under clause (l) of Article VII.

 

“Other Secured Indebtedness” means, as at any date, Indebtedness (other than Indebtedness hereunder) of an Obligor (which may be Guaranteed by one or more other Obligors) that (i) (a) has no amortization (other than amortization in an amount not greater than 1% of the aggregate initial principal amount of such Indebtedness per annum, provided that amortization in excess of 1% per annum shall be permitted so long as the amount of such amortization in excess of 1% is permitted to be incurred pursuant to Section 6.01(g) hereof, and, in the case of any term loan, other than for any customary mandatory prepayment required by the terms thereof, it being understood that if any mandatory prepayment is required under such Other Secured Indebtedness constituting a term loan that is not required pursuant to Section 2.09(b) hereof, the Borrower shall offer to repay Loans (and/or provide cover for LC Exposure as specified in Section 2.04(k)) in an amount at least equal to the aggregate Credit Exposure’s ratable share, determined based on the outstanding principal amount of the aggregate Credit Exposure as compared to the Other Secured Indebtedness being paid, provided the Borrower shall only be required to make an offer to repay the Loans (and/or provide cover for LC Exposure) to the extent of any amounts that the Borrower would not be permitted to borrow as a new Loan hereunder at such time) prior to, and has a final maturity date not earlier than, six months after the Maturity Date, (b) has terms substantially comparable to market terms for substantially similar debt of other similarly situated borrowers as determined by the Borrower in good faith and (c) is not secured by any assets of any Obligor other than pursuant to the Security Documents and the holders of which have agreed, in a manner satisfactory to the Administrative Agent and the Collateral Agent, to be bound by the provisions of the Security Documents, or (ii) is permitted pursuant to Section 6.01(g) hereof and that has been designated by the Borrower as “Designated Indebtedness” in accordance with the requirements of Section 6.01 of the Guaranty and Security Agreement.

 

“Other Taxes” means any and all present or future stamp, court or documentary, intangible, recording, filing, or similar Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.18).

 

“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar transactions by U.S.-managed banking offices of depository institutions (as such composite rate shall be determined by the New York Fed as set forth on its public website from time to time) and published on the next succeeding Business Day by the New York Fed as an overnight bank funding rate (from and after such date as the New York Fed shall commence to publish such composite rate).

 

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“Payment” has the meaning assigned to such term in Article VIII.

 

“Payment Notice” has the meaning assigned to such term in Article VIII.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

 

“Permitted Indebtedness” means, collectively, Specified Existing Bond Indebtedness, Other Secured Indebtedness and Longer Term Unsecured Indebtedness.

 

“Permitted Liens” means: (a) Liens imposed by any Governmental Authority for taxes, assessments or charges not yet due or that are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Borrower in accordance with GAAP; (b) Liens of clearing agencies, broker-dealers and similar Liens incurred in the ordinary course of business, provided that such Liens (i) attach only to the securities (or proceeds) being purchased or sold and (ii) secure only obligations incurred in connection with such purchase or sale, and not any obligation in connection with margin financing; (c) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmens’, storage and repairmen’s Liens and other similar Liens arising in the ordinary course of business and securing obligations (other than Indebtedness for borrowed money); (d) Liens incurred or pledges or deposits made to secure obligations incurred in the ordinary course of business under workers’ compensation laws, unemployment insurance or other similar social security legislation (other than in respect of employee benefit plans subject to ERISA) or to secure public or statutory obligations; (e) Liens securing the performance of, or payment in respect of, bids, insurance premiums, deductibles or co-insured amounts, tenders, government or utility contracts (other than for the repayment of borrowed money), surety, stay, customs and appeal bonds and other obligations of a similar nature incurred in the ordinary course of business, provided that all Liens on any Collateral that is permitted pursuant to this clause (e) shall have a priority that is junior to the Liens of the Security Documents; (f) Liens arising out of judgments or awards so long as such judgments or awards do not constitute an Event of Default under clause (l) of Article VII; (g) customary rights of setoff and liens upon (i) deposits of cash in favor of banks or other depository institutions in which such cash is maintained in the ordinary course of business, (ii) cash and financial assets held in securities accounts in favor of banks and other financial institutions with which such accounts are maintained in the ordinary course of business and (iii) assets held by a custodian in favor of such custodian in the ordinary course of business securing payment of fees, indemnities and other similar obligations; (h) Liens arising solely from precautionary filings of financing statements under the Uniform Commercial Code of the applicable jurisdictions in respect of operating leases entered into by the Borrower or any of its Subsidiaries in the ordinary course of business; (i) deposits of money that are not Collateral securing leases to which the obligor is a party as the lessee made in the ordinary course of business, (j) easements, rights of way, zoning restrictions and similar encumbrances on real property and minor irregularities in the title thereto that do not (i) secure obligations for the payment of money or (ii) materially impair the value of such property or its use by any Obligor or any of its Subsidiaries in the normal conduct of such Person’s business; (k) Liens in favor of any escrow agent solely on and in respect of any cash earnest money deposits made by any Obligor in connection with any letter of intent or purchase agreement (to the extent that the acquisition or disposition with respect thereto is otherwise permitted hereunder); and (l) precautionary Liens, and filings of financing statements under the Uniform Commercial Code, covering assets sold or contributed to any Person not prohibited hereunder.

 

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“Permitted SBIC Guarantee” means a guarantee by one or more Obligors of Indebtedness of an SBIC Subsidiary on the SBA’s then applicable form.

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

“Plan” means any “employee pension benefit plan” (as defined in Section 3(2) of ERISA), other than a Multiemployer Plan subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Portfolio Investment” means any Investment held by the Obligors in their asset portfolio (and solely for purposes of determining the Borrowing Base, and of Sections 6.02(d) and 6.04(d) and clause (p) of Article VII, Cash, excluding Cash pledged as cash collateral for Letters of Credit). Without limiting the generality of the foregoing, it is understood and agreed that (A) any Portfolio Investments that have been contributed or sold, purported to be contributed or sold or otherwise transferred to any Excluded Asset, or held by any Controlled Foreign Corporation that is not a Subsidiary Guarantor, shall not be treated as Portfolio Investments, and (B) any Investment in which any Obligor has sold a participation therein shall not be treated as a Portfolio Investment to the extent of such participation. Notwithstanding the foregoing, nothing herein shall limit the provisions of Section 5.12(b)(i), which provides that, for purposes of this Agreement, all determinations of whether an investment is to be included as a Portfolio Investment shall be determined on a settlement-date basis (meaning that any investment that has been purchased will not be treated as a Portfolio Investment until such purchase has settled, and any Portfolio Investment which has been sold will not be excluded as a Portfolio Investment until such sale has settled), provided that no such investment shall be included as a Portfolio Investment to the extent it has not been paid for in full.

 

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“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or in any similar release by the Federal Reserve Board (as determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.

 

“Proceeding” has the meaning assigned to it in Section 9.03(b).

 

“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

 

“QFC Credit Support” has the meaning assigned to it in Section 9.16.

 

“Quarterly Dates” means the last Business Day of March, June, September and December in each year.

 

“Quoted Investments” has the meaning set forth in Section 5.12(b)(ii)(A).

 

“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR Rate, 5:00 a.m. (Chicago time) on the day that is two Business Days preceding the date of such setting or (2) for any other Benchmark, the time determined by the Administrative Agent in its reasonable discretion.

 

“Register” has the meaning set forth in Section 9.04.

 

“Regulations T, U and X” means, respectively, Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

 

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, partners, trustees, administrators, employees, agents and advisors of such Person and such Person’s Affiliates.

 

“Relevant Asset Coverage Ratio” means, as of any date, the Asset Coverage Ratio as of the most recent Quarterly Date.

 

“Relevant Governmental Body” means the Federal Reserve Board and/or the NYFRB, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.

 

“Reinvestment Agreement” means a guaranteed reinvestment agreement from a bank, insurance company or other corporation or entity having a credit rating of at least A-1 from S&P and at least P-1 from Moody’s; provided that such agreement provides that it is terminable by the purchaser, without penalty, if the rating assigned to such agreement by either S&P or Moody’s is at any time lower than such ratings.

 

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“Required Lenders” means, at any time, Lenders having Credit Exposures and unused Commitments representing more than 50% of the sum of the total Credit Exposures and unused Commitments at such time; provided that the Credit Exposure and unused Commitments of any Defaulting Lender shall be disregarded in the determination of Required Lenders.

 

“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

 

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any shares of any class of capital stock of the Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of the Borrower or any option, warrant or other right to acquire any such shares of capital stock of the Borrower.

 

“Return of Capital” means any return of capital received by any Obligor in respect of the outstanding principal of any Portfolio Investment (whether at stated maturity, by acceleration or otherwise but not including any prepayment of a revolver that does not permanently reduce the related commitments) and any net cash proceeds received by any Obligor from the sale of any property or assets pledged as collateral in respect of any Portfolio Investment to the extent such Obligor is permitted to retain all such proceeds (under law or contract) minus all taxes paid or reasonably estimated to be payable by such Obligor or any of its Subsidiaries as a result of such return of capital or receipt of proceeds (after taking into account any available tax credits or deductions) minus any costs, fees, commissions, premiums and expenses incurred by such Obligor directly incidental to such return of capital or receipt of proceeds, including reasonable legal fees and expenses.

 

“RIC” means a Person qualifying for treatment as a “regulated investment company” under the Code.

 

“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

 

“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (as of the Effective Date, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Crimea, Cuba, Iran, North Korea and Syria).

 

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“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State or by the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons. For purposes of this definition, “Person” shall include a vessel.

 

“SBA” means the United States Small Business Administration or any Governmental Authority succeeding to any or all of the functions thereof.

 

“SBIC Subsidiary” means any direct or indirect wholly-owned Subsidiary (including such Subsidiary’s general partner or managing entity to the extent that the only material asset of such general partner or managing entity is its equity interest in the SBIC Subsidiary) of the Borrower licensed as a small business investment company under the Small Business Investment Act of 1958, as amended (or that has applied for such a license and is actively pursuing the granting thereof by appropriate proceedings promptly instituted and diligently conducted), and which is designated by the Borrower (pursuant to a certificate of a Financial Officer delivered to the Administrative Agent) as an SBIC Subsidiary.

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc., a New York corporation, or any successor thereto.

 

“Secured Obligations” has the meaning set forth in the Guarantee and Security Agreement. The Secured Obligations shall in no event include Excluded Swap Obligations.

 

“Security Documents” means, collectively, the Guarantee and Security Agreement and all other assignments, pledge agreements, security agreements, intercreditor agreements, control agreements and other instruments executed and delivered at any time by any of the Obligors pursuant to the Guarantee and Security Agreement or otherwise providing any collateral security for any of the Secured Obligations.

 

“Shareholders’ Equity” means, at any date, the amount determined on a consolidated basis, without duplication, in accordance with GAAP, of shareholders’ equity for the Borrower and its Subsidiaries at such date.

 

“Shorter Term Unsecured Indebtedness” means (a) all unsecured indebtedness issued after the Effective Date that has a maturity date earlier than 6 months after the Maturity Date and an initial term of at least three (3) years at issuance, except to the extent such unsecured indebtedness constitutes Contemplated Bond Indebtedness.

 

“Significant Subsidiary” means, at any time of determination, any (a) Obligor or (b) any other Subsidiary that, on a consolidated basis with its Subsidiaries, has aggregate assets or aggregate revenues greater than 10% of the aggregate assets or aggregate revenues of the Borrower and its Subsidiaries, taken as a whole, at such time.

 

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“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website.

 

“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).

 

“SOFR Administrator’s Website” means the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

 

“Special Equity Interest” means any Equity Interest that is subject to a Lien in favor of creditors of the issuer of such Equity Interest, provided that (a) such Lien was created to secure Indebtedness owing by such issuer to such creditors, (b) such Indebtedness was (i) in existence at the time the Obligors acquired such Equity Interest, (ii) incurred or assumed by such issuer substantially contemporaneously with such acquisition or created pursuant to a financing transaction contemplated by the definition of “Designated Subsidiary” or (iii) already subject to a Lien granted to such creditors and (c) unless such Equity Interest is not intended to be included in the Collateral, the documentation creating or governing such Lien does not prohibit the inclusion of such Equity Interest in the Collateral.

 

“Specified Existing Bond Indebtedness” means Indebtedness of the Borrower evidenced by the Specified Existing Bonds and outstanding as of the Effective Date.

 

“Specified Existing Bonds” means (i) the Borrower’s 5.375% notes due May 2023 in an aggregate principal amount of $60,000,000, (ii) the Borrower’s 4.85% notes due December 2024 in an aggregate principal amount of $100,000,000 and (iii) the Borrower’s 3.250% notes due March 2026 in an aggregate principal amount of $300,000,000.

 

“Standard Securitization Undertakings” means, collectively, (a) customary arms-length servicing obligations (together with any related performance guarantees), (b) obligations (together with any related performance guarantees) to refund the purchase price or grant purchase price credits for dilutive events or misrepresentations (in each case unrelated to the collectability of the assets sold or the creditworthiness of the associated account debtors), (c) representations, warranties, covenants and indemnities (together with any related performance guarantees) of a type that are reasonably customary in accounts receivable securitizations or securitizations of financial assets and (d) obligations under any customary bad boy guarantee.

 

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“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Anything herein to the contrary notwithstanding, the term “Subsidiary” shall not include any Person that constitutes an Investment held by any Obligor in the ordinary course of business and that is not, under GAAP, consolidated on the financial statements of the Borrower and its Subsidiaries. Unless otherwise specified, “Subsidiary” means a Subsidiary of the Borrower.

 

“Subsidiary Guarantor” means any Subsidiary of the Borrower that is a Guarantor under the Guarantee and Security Agreement. It is understood and agreed that Excluded Assets shall not be required to be Subsidiary Guarantors.

 

“Supported QFC” has the meaning assigned to it in Section 9.16.

 

“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any Hedging Agreement that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

“Syndication Agents” means MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation and Wells Fargo Bank, National Association.

 

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Term SOFR Rate.

 

“Term SOFR Determination Day” has the meaning assigned to it under the definition of Term SOFR Reference Rate.

 

“Term SOFR Rate” means, with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator; provided that if the Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.

 

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“Term SOFR Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum determined by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the Term SOFR Reference Rate for the applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding Business Day is not more than three (3) Business Days prior to such Term SOFR Determination Day.

 

“Transactions” means the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans constituting such Borrowing, is determined by reference to the Term SOFR Rate or the Alternate Base Rate.

 

“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

 

“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

 

“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

 

“Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of New York.

 

“Unquoted Investments” has the meaning set forth in Section 5.12(b)(ii)(B).

 

“U.S. Government Securities” means securities that are direct obligations of, and obligations the timely payment of principal and interest on which is fully guaranteed by, the United States or any agency or instrumentality of the United States the obligations of which are backed by the full faith and credit of the United States and in the form of conventional bills, bonds, and notes.

 

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“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

 

“U.S. Special Resolution Regime” has the meaning assigned to it in Section 9.16.

 

“Valuation Policy” has the meaning assigned to such term in Section 5.12(b)(ii)(B).

 

“Value” has the meaning assigned to such term in Section 5.13.

 

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a “complete withdrawal” or “partial withdrawal” from such Multiemployer Plan, as such terms are defined in Sections 4203 and 4205 of ERISA.

 

“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

 

SECTION 1.02.         Classification of Loans and Borrowings. For purposes of this Agreement, Loans, Letters of Credit and LC Exposure may be classified and referred to by Type (e.g., an “ABR Loan”, or “Term Benchmark Loan”). Borrowings also may be classified and referred to by Type (e.g., an “ABR Borrowing”).

 

SECTION 1.03.         Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, amended and restated, supplemented, renewed or otherwise modified (subject to any restrictions on such amendments, supplements, renewals or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

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SECTION 1.04.         Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. The Borrower covenants and agrees with the Lenders that whether or not the Borrower may at any time adopt Financial Accounting Standard No. 159 (or successor standard solely as it relates to fair valuing liabilities) or accounts for liabilities acquired in an acquisition on a fair value basis pursuant to Financial Accounting Standard No. 141(R) (or successor standard solely as it relates to fair valuing liabilities), all determinations of compliance with the terms and conditions of this Agreement shall be made on the basis that the Borrower has not adopted Financial Accounting Standard No. 159 (or such successor standard solely as it relates to fair valuing liabilities) or, in the case of liabilities acquired in an acquisition, Financial Accounting Standard No. 141(R) (or such successor standard solely as it relates to fair valuing liabilities); provided that, if the Borrower shall at any time adopt Financial Accounting Standard No. 159, or if Financial Accounting Standard No. 141(R) shall apply with respect to any acquired assets or liabilities, for purposes of calculating compliance with Section 6.07(a) and Section 6.07(b) after such adoption, or for any period ending after such adoption, Specified Debt shall be valued as it is valued under Financial Accounting Standard No. 159 or Financial Accounting Standard No. 141(R), as applicable.

 

SECTION 1.05.         Benchmark Notification. The interest rate on a Loan may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section 2.12(b) provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions unrelated to this Agreement that affect the calculation of any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error in the calculation of any such rate (or component thereof) by any such information source or service.

 

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SECTION 1.06.         Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.

 

ARTICLE II

 

THE CREDITS

 

SECTION 2.01.         The Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Loans in Dollars to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (a) such Lender’s Credit Exposure exceeding such Lender’s Commitment, (b) the aggregate Credit Exposure of all of the Lenders exceeding the aggregate Commitments, or (c) the total Covered Debt Amount exceeding the Borrowing Base then in effect.

 

Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans.

 

SECTION 2.02.         Loans and Borrowings.

 

(a)            Obligations of Lenders. Each Loan shall be made as part of a Borrowing consisting of Loans of the same Type made by the applicable Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

 

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(b)            Type of Loans. Subject to Section 2.12, (i) each Borrowing shall be constituted entirely of ABR Loans or of Term Benchmark Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Term Benchmark Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(c)            Minimum Amounts. Each Borrowing (whether Term Benchmark or ABR) shall be in multiples of $1,000,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.04(f). Borrowings of more than one Type may be outstanding at the same time.

 

(d)            Limitations on Interest Periods. Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request (or to elect to convert to or continue as a Term Benchmark Borrowing) any Borrowing if the Interest Period requested therefor would end after the Maturity Date.

 

SECTION 2.03.         Requests for Borrowings.

 

(a)            Notice by the Borrower. To request a Borrowing, the Borrower shall deliver a Borrowing Request to the Administrative Agent (i) in the case of a Term Benchmark Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (ii) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the proposed Borrowing. Each such Borrowing Request shall be irrevocable.

 

(b)            Content of Borrowing Requests. Each Borrowing Request shall specify the following information in compliance with Section 2.02:

 

(i)            the aggregate amount of the requested Borrowing;

 

(ii)            the date of such Borrowing, which shall be a Business Day;

 

(iii)            whether such Borrowing is to be an ABR Borrowing or a Term Benchmark Borrowing;

 

(iv)            in the case of a Term Benchmark Borrowing, the Interest Period therefor, which shall be a period contemplated by the definition of “Interest Period” and permitted under Section 2.02(d); and

 

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(v)            the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05.

 

(c)            Notice by the Administrative Agent to the Lenders. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each applicable Lender of the details thereof and of the amounts of such Lender’s Loan to be made as part of the requested Borrowing.

 

(d)            Failure to Elect. If no election as to the Type of a Borrowing is specified, then the requested Borrowing shall be a Term Benchmark Borrowing having an Interest Period of one month. If a Term Benchmark Borrowing is requested but no Interest Period is specified, the requested Borrowing shall be a Term Benchmark Borrowing denominated in Dollars having an Interest Period of one month’s duration.

 

SECTION 2.04.         Letters of Credit.

 

(a)            General. Subject to the terms and conditions set forth herein, in addition to the Loans provided for in Section 2.01, the Borrower may request any Issuing Bank to issue, at any time and from time to time during the Availability Period, Letters of Credit denominated in Dollars for its own account or the account of its designee (provided the Obligors shall remain primarily liable to the Lenders hereunder for payment and reimbursement of all amounts payable in respect of such Letter of Credit hereunder) in such form as is acceptable to such Issuing Bank in its reasonable determination and for the benefit of such named beneficiary or beneficiaries as are specified by the Borrower. Letters of Credit issued hereunder shall constitute utilization of the Commitments up to the aggregate amount then available to be drawn thereunder.

 

(b)            Notice of Issuance, Amendment, Renewal or Extension. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by such Issuing Bank) to any Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (d) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. The Administrative Agent will promptly notify the Lenders following the issuance of any Letter of Credit. If requested by the applicable Issuing Bank, the Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, any Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

 

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(c)            Limitations on Amounts. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the aggregate LC Exposure of the Issuing Banks (determined for these purposes without giving effect to the participations therein of the Lenders pursuant to paragraph (e) of this Section) shall not exceed $40,000,000, (ii) the aggregate LC Exposure of the applicable Issuing Bank requested to issue such Letter of Credit (determined for these purposes without giving effect to the participations therein of the Lenders pursuant to paragraph (e) of this Section) shall not exceed the amount set forth opposite the name of such Issuing Bank in Schedule VIII hereto, (iii) the total Credit Exposures shall not exceed the aggregate Commitments, and (iv) the total Covered Debt Amount shall not exceed the Borrowing Base then in effect.

 

(d)            Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the date twelve months after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, twelve months after the then-current expiration date of such Letter of Credit, so long as such renewal or extension occurs within three months of such then-current expiration date); provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods; provided further, that in no event shall a Letter of Credit which expires after the Commitment Termination Date be renewed and no Letter of Credit shall have an expiry date after the Maturity Date.

 

(e)            Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) by an Issuing Bank, and without any further action on the part of the Issuing Banks or the Lenders, such Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. Each Lender acknowledges and severally agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments.

 

In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally severally agrees to pay to the Administrative Agent, for account of each Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by each such Issuing Bank, in each case, in respect of Letters of Credit promptly upon the request of each such Issuing Bank at any time from the time of such LC Disbursement until such LC Disbursement is reimbursed by the Borrower or at any time after any reimbursement payment is required to be refunded to the Borrower for any reason. Such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each such payment shall be made in the same manner as provided in Section 2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to such Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to the next following paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that the Lenders have made payments pursuant to this paragraph to reimburse an Issuing Bank, then to such Lenders and such Issuing Banks as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

 

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(f)            Reimbursement. If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such Issuing Bank in respect of such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 p.m., New York City time, on (i) the Business Day that the Borrower receives notice of such LC Disbursement, if such notice is received prior to 10:00 a.m., New York City time, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time, provided that, if such LC Disbursement is not less than $1,000,000, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing.

 

If the Borrower fails to make such payment when due, the Administrative Agent shall notify each affected Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof.

 

(g)            Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (f) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply strictly with the terms of such Letter of Credit, and (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrower’s obligations hereunder.

 

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Neither the Administrative Agent, the Lenders nor the Issuing Banks, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit by the Issuing Banks or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Banks; provided that the foregoing shall not be construed to excuse any Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by any Issuing Bank’s gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that:

 

(i)            the Issuing Banks may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit;

 

(ii)            the Issuing Banks shall have the right, in their sole discretion, to decline to accept such documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit; and

 

(iii)            this sentence shall establish the standard of care to be exercised by the Issuing Banks when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing).

 

(h)            Disbursement Procedures. Each Issuing Bank shall, within a reasonable time following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Each Issuing Bank shall promptly after such examination notify the Administrative Agent and the Borrower in writing of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the applicable Issuing Bank and the applicable Lenders with respect to any such LC Disbursement.

 

(i)            Interim Interest. If any Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans; provided that, if the Borrower fails to reimburse such LC Disbursement within two Business Days following the date when due pursuant to paragraph (f) of this Section, then the provisions of Section 2.11(c) shall apply. Interest accrued pursuant to this paragraph shall be for account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (f) of this Section to reimburse an Issuing Bank shall be for account of such Lender to the extent of such payment.

 

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(j)            Replacement of an Issuing Bank. Any Issuing Bank may be replaced at any time by written agreement between the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. In addition, if any Issuing Bank, in its capacity as a Lender, assigns all of its Loans and Commitments in accordance with the terms of this Agreement, such Issuing Bank may, with the prior written consent of the Borrower (such consent not to be unreasonably withheld or delayed; provided that no consent of the Borrower shall be required if an Event of Default has occurred and is continuing), resign as an Issuing Bank hereunder upon not less than three Business Days prior written notice to the Administrative Agent and the Borrower. The Administrative Agent shall notify the Lenders of any such replacement or resignation of an Issuing Bank. At the time any such replacement or resignation shall become effective, the Borrower shall pay all unpaid fees accrued for account of the replaced or retiring Issuing Bank pursuant to Section 2.10(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” and/or “Issuing Banks” shall be deemed to refer to such successor or successors (and the other current Issuing Banks, if applicable) or to any previous Issuing Bank, or to such successor or successors (and all other current Issuing Banks) and all previous Issuing Banks, as the context shall require. After the replacement or resignation of an Issuing Bank hereunder, the replaced or retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement or resignation, but shall not be required to issue additional Letters of Credit.

 

(k)            Cash Collateralization. If the Borrower shall be required to provide cover for LC Exposure pursuant to Section 2.08(a), Section 2.09(b), Section 2.09(c) or the last paragraph of Article VII, the Borrower shall immediately deposit into a segregated collateral account or accounts (herein, collectively, the “Letter of Credit Collateral Account”) in the name and under the dominion and control of the Administrative Agent, Cash in an amount equal to the amount required under Section 2.08(a), Section 2.09(b), Section 2.09(c) or the last paragraph of Article VII, as applicable. Such deposit shall be held by the Administrative Agent as collateral in the first instance for the LC Exposure under this Agreement and thereafter for the payment of the Secured Obligations, and for these purposes the Borrower hereby grants a security interest to the Administrative Agent for the benefit of the Lenders in the Letter of Credit Collateral Account and in any financial assets (as defined in the Uniform Commercial Code) or other property held therein.

 

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SECTION 2.05.         Funding of Borrowings.

 

(a)            Funding by Lenders. Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 2:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated by the Borrower in the applicable Borrowing Request; provided that ABR Borrowings made to finance the reimbursement of an LC Disbursement as provided in Section 2.04(f) shall be remitted by the Administrative Agent to the applicable Issuing Bank.

 

(b)            Presumption by the Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing. Nothing in this paragraph shall relieve any Lender of its obligation to fulfill its commitments hereunder, and shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

SECTION 2.06.         Interest Elections.

 

(a)            Elections by the Borrower for Borrowings. Subject to Section 2.03(d), the Loans constituting each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Term Benchmark Borrowing, shall have the Interest Period specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a Borrowing of a different Type or to continue such Borrowing as a Borrowing of the same Type and, in the case of a Term Benchmark Borrowing, may elect the Interest Period therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans constituting such Borrowing, and the Loans constituting each such portion shall be considered a separate Borrowing.

 

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(b)            Notice of Elections. To make an election pursuant to this Section, the Borrower shall deliver an Interest Election Request signed by the Borrower to the Administrative Agent by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such Interest Election Request shall be irrevocable.

 

(c)            Content of Interest Election Requests. Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

 

(i)            the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) of this paragraph shall be specified for each resulting Borrowing);

 

(ii)            the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)            whether the resulting Borrowing is to be an ABR Borrowing or a Term Benchmark Borrowing; and

 

(iv)            if the resulting Borrowing is a Term Benchmark Borrowing, the Interest Period therefor after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period” and permitted under Section 2.02(d).

 

(d)            Notice by the Administrative Agent to the Lenders. Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each applicable Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e)            Failure to Elect; Events of Default. If the Borrower fails to deliver a timely and complete Interest Election Request with respect to a Term Benchmark Borrowing prior to the end of the Interest Period therefor, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to a Term Benchmark Borrowing having an Interest Period of one month. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing no outstanding Term Benchmark Borrowing may have an Interest Period of more than one month’s duration.

 

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SECTION 2.07.         Termination, Reduction or Increase of the Commitments.

 

(a)            Scheduled Termination. Unless previously terminated, the Commitments shall terminate on the Commitment Termination Date.

 

(b)            Voluntary Termination or Reduction. The Borrower may at any time without premium or penalty terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is $25,000,000 (or, if less, the entire remaining amount of the Commitments) or a larger multiple of $5,000,000 in excess thereof (or the entire amount of the Commitments) and (ii) the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.09, the total Credit Exposures would exceed the total Commitments.

 

(c)            Notice of Voluntary Termination or Reduction. The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other events, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

 

(d)            Effect of Termination or Reduction. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

 

(e)            Increase of the Commitments.

 

(i)            Requests for Increase by Borrower. The Borrower shall have the right, at any time after the Effective Date but prior to the Commitment Termination Date, to propose that the Commitments hereunder be increased (each such proposed increase being a “Commitment Increase”) by providing notice to the Administrative Agent, specifying each existing Lender (each an “Increasing Lender”) and/or each additional lender (each an “Assuming Lender”) that shall have agreed to an additional Commitment and the date on which such increase is to be effective (the “Commitment Increase Date”), which shall be a Business Day at least three Business Days (or such lesser period as the Administrative Agent may reasonably agree) after delivery of such notice and 30 days prior to the Commitment Termination Date; provided that:

 

(A)            each Commitment Increase shall be in a minimum amount of at least $25,000,000 or a larger multiple of $5,000,000 in excess thereof (or such lesser amount as the Administrative Agent may reasonably agree);

 

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(B)            the aggregate amount of all Commitment Increases shall not exceed $247,500,000;

 

(C)            each Assuming Lender shall be consented to by the Administrative Agent and the Issuing Banks;

 

(D)            no Default shall have occurred and be continuing on such Commitment Increase Date or shall result from the proposed Commitment Increase;

 

(E)            the representations and warranties contained in this Agreement shall be true and correct in all material respects (or, in the case of the representations and warranties in Sections 3.01 (first sentence with respect to the Obligors), 3.02, 3.04, 3.11 and 3.15 of this Agreement, and in Sections 2.01, 2.02 and 2.04 through 2.09 of the Guarantee and Security Agreement, true and correct in all respects) on and as of the Commitment Increase Date as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and

 

(F)            No Lender shall be obligated to provide any increased Commitment.

 

(ii)            Effectiveness of Commitment Increase by Borrower. The Assuming Lender, if any, shall become a Lender hereunder as of such Commitment Increase Date and the Commitment of any Increasing Lender and such Assuming Lender shall be increased as of such Commitment Increase Date; provided that:

 

(x)            the Administrative Agent shall have received on or prior to 1:00 p.m., New York City time, on such Commitment Increase Date a certificate of a duly authorized officer of the Borrower stating that each of the applicable conditions to such Commitment Increase set forth in the foregoing paragraph (i) has been satisfied; and

 

(y)            each Assuming Lender or Increasing Lender shall have delivered to the Administrative Agent, on or prior to 11:00 a.m., New York City time, on such Commitment Increase Date, an agreement, in form and substance satisfactory to the Borrower and the Administrative Agent, pursuant to which such Lender shall, effective as of such Commitment Increase Date, undertake a Commitment or an increase of Commitment, duly executed by such Assuming Lender or Increasing Lender, as applicable, and the Borrower and acknowledged by the Administrative Agent.

 

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(iii)            Recordation into Register. Upon its receipt of an agreement referred to in clause (ii)(y) above executed by an Assuming Lender or an Increasing Lender, together with the certificate referred to in clause (ii)(x) above, the Administrative Agent shall, if such agreement has been completed, (x) accept such agreement, (y) record the information contained therein in the Register and (z) give prompt notice thereof to the Borrower.

 

(iv)            Adjustments of Borrowings upon Effectiveness of Increase. On the Commitment Increase Date, the Borrower shall be deemed to (A) prepay the outstanding Loans (if any) in full and (B) simultaneously borrow new Loans hereunder in an amount equal to such prepayment (in the case of Term Benchmark Loans, with Term Benchmark Rates equal to the outstanding Term Benchmark Rate and with Interest Period(s) ending on the date(s) of any then outstanding Interest Period(s)), as applicable (as modified hereby); provided that with respect to subclauses (A) and (B), (x) the prepayment to, and borrowing from, any existing Lender shall be effected by book entry to the extent that any portion of the amount prepaid to such Lender will be subsequently borrowed from such Lender and (y) the existing Lenders, the Increasing Lenders and the Assuming Lenders shall make and receive payments among themselves, in a manner acceptable to the Administrative Agent, so that, after giving effect thereto, the Loans are held ratably by the Lenders in accordance with the respective Commitments of such Lenders (after giving effect to such Commitment Increase). Concurrently therewith, the Lenders shall be deemed to have adjusted their participation interests in any outstanding Letters of Credit so that such interests are held ratably in accordance with their Commitments as so increased. The Borrower shall pay to the Lenders the amounts, if any, payable under Section 2.14 (and in accordance with the requirements thereof) as a result of any such prepayment.

 

SECTION 2.08.         Repayment of Loans; Evidence of Debt.

 

(a)            Repayment. The Borrower hereby unconditionally promises to pay to the Administrative Agent for account of the applicable Lenders the outstanding principal amount of the Loans on the Maturity Date.

 

In addition, on the Maturity Date, to the extent any Letter of Credit is outstanding (notwithstanding the requirements of Section 2.04(d)), the Borrower shall deposit into the Letter of Credit Collateral Account Cash in an amount equal to 102% of the undrawn face amount of all Letters of Credit outstanding on the close of business on the Maturity Date, such deposit to be held by the Administrative Agent as collateral security for the LC Exposure under this Agreement in respect of the undrawn portion of such Letters of Credit.

 

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(b)            Manner of Payment. Subject to Section 2.09(c), prior to any repayment or prepayment of any Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be paid and shall notify the Administrative Agent in writing of such selection not later than 11:00 a.m., New York City time, three Business Days before the scheduled date of such repayment; provided that, unless otherwise directed by the Borrower, each repayment of Borrowings shall be applied to repay any outstanding ABR Borrowings before any outstanding Term Benchmark Borrowings. If the Borrower fails to make a timely selection of the Borrowing or Borrowings to be repaid or prepaid, such payment shall be applied, first, to pay any outstanding ABR Borrowings, and, second, to any outstanding Term Benchmark Borrowings in the order of the remaining duration of their respective Interest Periods (the Borrowing with the shortest remaining Interest Period to be repaid first). Each payment of a Borrowing shall be applied ratably to the Loans included in such Borrowing.

 

(c)            Maintenance of Records by Lenders. Each Lender shall maintain in accordance with its usual practice records evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(d)            Maintenance of Records by the Administrative Agent. The Administrative Agent shall maintain the Register in accordance with Section 9.04(c) in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and each Interest Period therefor, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for account of the Lenders and each Lender’s share thereof.

 

(e)            Effect of Entries. The entries made in the records maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie evidence, absent obvious error, of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such records or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement. In the event of any conflict between the records maintained by any Lender and the Administrative Agent in such matters, the records of the Administrative Agent shall control in the absence of manifest error.

 

(f)            Promissory Notes. Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

 

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SECTION 2.09.         Prepayment of Loans.

 

(a)            Optional Prepayments. The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty except for payments under Section 2.14, subject to the requirements of this Section.

 

(b)            Mandatory Prepayments due to Borrowing Base Deficiency. In the event that at any time any Borrowing Base Deficiency shall exist, then, within 5 Business Days, the Borrower shall prepay the Loans (and/or provide cover for LC Exposure as contemplated by Section 2.04(k)), and may (i) if the aggregate Credit Exposure (to the extent not cash collateralized as contemplated by Section 2.04(k)) is greater than zero, in addition to prepaying the Loans (and/or providing cover for LC Exposure) pursuant to the immediately succeeding proviso, reduce the Permitted Indebtedness, Contemplated Bond Indebtedness, Shorter Term Unsecured Indebtedness, and/or Indebtedness incurred pursuant to Section 6.01(g) (in each case, to the extent included in the Covered Debt Amount), or (ii) if the aggregate Credit Exposure (to the extent not cash collateralized as contemplated by Section 2.04(k)) is not greater than zero, reduce the Permitted Indebtedness, Contemplated Bond Indebtedness, Shorter Term Unsecured Indebtedness, or Indebtedness incurred pursuant to Section 6.01(g) (in each case, to the extent included in the Covered Debt Amount), in each case in such amounts as shall be necessary so that such Borrowing Base Deficiency is immediately cured; provided that (A) in the case of clause (i) above, the aggregate amount of such prepayment of Loans (and cover for LC Exposure) shall be at least equal to the aggregate Credit Exposure’s ratable share of the aggregate reduction of Permitted Indebtedness, Contemplated Bond Indebtedness, Shorter Term Unsecured Indebtedness, and/or Indebtedness incurred pursuant to Section 6.01(g) and (B) if, within five Business Days after delivery of a Borrowing Base Certificate demonstrating such Borrowing Base Deficiency (and/or at such other times as the Borrower has knowledge of such Borrowing Base Deficiency), the Borrower shall present the Administrative Agent with a reasonably feasible plan to enable such Borrowing Base Deficiency to be cured within 30 Business Days (which 30-Business Day period shall include the five Business Days permitted for delivery of such plan), then such prepayment and/or reduction shall not be required to be effected within such 5-Business Day period but may be effected in accordance with such plan (with such modifications as the Borrower may reasonably determine), so long as such Borrowing Base Deficiency is cured within such 30-Business Day period; provided, further, that, solely to the extent such Borrowing Base Deficiency is due to a failure to satisfy the requirements of Section 5.13(g) as a consequence of a change in either (y) the ratio of the Gross Borrowing Base to the Senior Debt Amount or (z) the Relevant Asset Coverage Ratio from one Quarterly Period to the next, such 30-Business Day period shall be extended to a 45-Business Day period solely with respect to compliance with Section 5.13(g).

 

(c)            Mandatory Prepayments Following the Commitment Termination Date. During the period commencing on the date immediately following the Commitment Termination Date and ending on the Maturity Date:

 

(i)            Asset Disposition. If the Borrower or any of its Subsidiaries (other than a Designated Subsidiary) Disposes of any property which results in the receipt by such Person of Net Cash Proceeds in excess of $2,000,000 in the aggregate since the Commitment Termination Date, the Borrower shall prepay an aggregate principal amount of Loans equal to 100% of such excess Net Cash Proceeds no later than the fifth Business Day following the receipt of such excess Net Cash Proceeds (such prepayments to be applied as set forth in Section 2.08(b)).

 

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(ii)            Equity Issuance. Upon the sale or issuance by the Borrower or any of its Subsidiaries (other than a Designated Subsidiary) of any of its Equity Interests (other than any sales or issuances of Equity Interests to the Borrower or any Subsidiary Guarantor), the Borrower shall prepay an aggregate principal amount of Loans equal to 75% of all Net Cash Proceeds received therefrom no later than the fifth Business Day following the receipt of such Net Cash Proceeds (such prepayments to be applied as set forth in Section 2.08(b)).

 

(iii)            Indebtedness. Upon the incurrence or issuance by the Borrower or any of its Subsidiaries (other than a Designated Subsidiary) of any Indebtedness, the Borrower shall prepay an aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds received therefrom no later than the fifth Business Day following the receipt of such Net Cash Proceeds (such prepayments to be applied as set forth in Section 2.08(b)).

 

(iv)            Extraordinary Receipt. Upon any Extraordinary Receipt (which, when taken with all other Extraordinary Receipts received after the Commitment Termination Date, exceeds $5,000,000 in the aggregate) received by or paid to or for the account of the Borrower or any of its Subsidiaries (other than a Designated Subsidiary), and not otherwise included in clauses (i), (ii) or (iii) of this Section 2.09(d), the Borrower shall prepay an aggregate principal amount of Loans equal to 100% of such excess Net Cash Proceeds received therefrom no later than the fifth Business Day following the receipt of such excess Net Cash Proceeds (such prepayments to be applied as set forth in Section 2.08(b)).

 

(v)            Return of Capital. If any Obligor shall receive any Return of Capital, the Borrower shall prepay an aggregate principal amount of Loans equal to 100% of such Return of Capital (excluding amounts, if any, payable by the Borrower pursuant to Section 2.14) no later than the fifth Business Day following the receipt of such Return of Capital (such prepayments to be applied as set forth in Section 2.08(b)).

 

Notwithstanding the foregoing, Net Cash Proceeds and Returns of Capital required to be applied to the prepayment of the outstanding Loans pursuant to this Section 2.09(c) shall (A) be applied in accordance with the Guarantee and Security Agreement, (B) exclude the amount (which shall be no less than the amount estimated in good faith by the Borrower under Section 6.05(b) herein) necessary for the Borrower to make all required distributions to maintain the status of a RIC under the Code and a “business development company” under the Investment Company Act for so long as the Borrower retains such status (including distributions permitted under Section 6.05(b)) and (C) exclude amounts described above in clauses (i) through (v) with respect to a Foreign Subsidiary if the application of such amounts to the repayment of the Loans would create a liability for the Borrower or such Foreign Subsidiary under Section 956 of the Code; provided, that the Administrative Agent may direct the application of such deposits as set forth in Section 2.08(b) at any time and if the Administrative Agent does so, no amounts will be payable by the Borrower pursuant to Section 2.14.

 

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(d)            Payments Following the Commitment Termination Date. Notwithstanding any provision to the contrary in Section 2.08 or this Section 2.09, following the Commitment Termination Date:

 

(i)            in connection with any optional prepayment, the Borrower shall be required to cash collateralize any Letters of Credit to the extent any outstanding Letters of Credit are not then cash collateralized as contemplated by Section 2.04(k); and

 

(ii)            any prepayment of Loans required to be made pursuant to clause (c) above shall be applied pro rata to (A) prepay Loans and (B) cash collateralize outstanding Letters of Credit.

 

(e)            Notices, Etc. The Borrower shall notify the Administrative Agent in writing of any prepayment hereunder (i) in the case of prepayment of a Term Benchmark Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.07, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.07. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the affected Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment or scheduled payment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.11 and shall be made in the manner specified in Section 2.08(b).

 

SECTION 2.10.         Fees.

 

(a)            Commitment Fee. The Borrower agrees to pay to the Administrative Agent for account of each Lender a commitment fee, which shall accrue at the Applicable Margin on the daily unused amount of the Commitment of such Lender during the period from and including the Effective Date to but excluding the earlier of the date such Commitment terminates and the Commitment Termination Date. Accrued commitment fees with respect to each Lender shall be payable within 15 Business Days after each Quarterly Date and on the earlier of the date such Lender’s Commitment terminates and the Commitment Termination Date, commencing on the first such date to occur after the Effective Date. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing commitment fees, (i) the daily unused amount of the applicable Commitment shall be determined as of the end of each day and (ii) the Commitment of a Lender shall be deemed to be used to the extent of the outstanding Loans and LC Exposure of such Lender.

 

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(b)            Letter of Credit Fees. The Borrower agrees to pay (i) to the Administrative Agent for account of each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at a rate per annum equal to the Applicable Margin applicable to interest on Term Benchmark Loans (minus ten basis points (0.10%)) multiplied by the daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to each Issuing Bank a fronting fee, which shall accrue at the rate of 0.25% per annum multiplied by the daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) applicable to Letters of Credit issued by such Issuing Bank during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, as well as fees agreed to by the Borrower and each Issuing Bank with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including each Quarterly Date shall be payable on the fifteenth Business Day following such Quarterly Date, commencing on the first such date to occur after the Effective Date; provided that, all such fees with respect to the Letters of Credit shall be payable on the date on which the Commitments terminate (the “termination date”), the Borrower shall pay any such fees that have accrued and that are unpaid on the termination date and, in the event there shall be outstanding any Letters of Credit that have expiration dates after the termination date, the Borrower shall prepay on the termination date the full amount of the participation and fronting fees that will accrue on such Letters of Credit subsequent to the termination date through but not including the date such outstanding Letters of Credit are scheduled to expire (and in connection therewith, the Lenders agree not later than the date two Business Days after the date upon which the last such Letter of Credit shall expire or be terminated to rebate to the Borrower the excess, if any, of the aggregate participation and fronting fees that have been prepaid by the Borrower over the amount of such fees that ultimately accrue through the date of such expiration or termination). Any other fees payable to the Issuing Banks pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

 

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(c)            Administrative Agent Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times as set forth in the Administrative Agent Fee Letter dated March 30, 2022 between the Borrower and the Administrative Agent.

 

(d)            Payment of Fees. All fees payable hereunder shall be paid on the dates due, in Dollars and immediately available funds, to the Administrative Agent (or to the Issuing Banks, in the case of fees payable to them) for distribution, in the case of facility fees and participation fees, to the Lenders entitled thereto. Fees paid shall not be refundable under any circumstances absent obvious error.

 

SECTION 2.11.         Interest.

 

(a)            ABR Loans. The Loans constituting each ABR Borrowing shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin.

 

(b)            Term Benchmark Loans. The Loans constituting each Term Benchmark Borrowing shall bear interest at a rate per annum equal to the applicable Benchmark for the Interest Period in effect for such Borrowing plus the Applicable Margin.

 

(c)            Default Interest. Notwithstanding the foregoing clauses (a) and (b), if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration, by mandatory prepayment or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided above or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

 

(d)            Payment of Interest. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon the Maturity Date; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the Maturity Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Term Benchmark Borrowing prior to the end of the Interest Period therefor, accrued interest on such Borrowing shall be payable on the effective date of such conversion.

 

(e)            Computation. All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Term SOFR Rate, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

 

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SECTION 2.12.         Alternate Rate of Interest.

 

(a)            Alternate Rate of Interest. Subject to clauses (b), (c), (d), (e) and (f) of this Section 2.12, if:

 

(i)            the Administrative Agent determines (which determination shall be conclusive absent manifest error) prior to the commencement of any Interest Period for a Term Benchmark Borrowing that adequate and reasonable means do not exist for ascertaining the Term SOFR Rate (including because the Term SOFR Reference Rate is not available or published on a current basis) for such Interest Period; or

 

(ii)            the Administrative Agent is advised by the Required Lenders prior to the commencement of any Interest Period for a Term Benchmark Borrowing that the Term SOFR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period,

 

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telecopy or electronic mail as promptly as practicable thereafter and, until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist and (y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.06 or a new Borrowing Request in accordance with the terms of Section 2.03, any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Term Benchmark Borrowing and any Borrowing Request that requests a Term Benchmark Borrowing shall instead be deemed to be an Interest Election Request or a Borrowing Request for an ABR Borrowing. Furthermore, if any Term Benchmark Loan is outstanding on the date of the Borrower’s receipt of such notice from the Administrative Agent, then until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist and (y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.06 or a new Borrowing Request in accordance with the terms of Section 2.03, any Term Benchmark Loan shall, on the last day of the Interest Period applicable to such Term Benchmark Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, an ABR Loan.

 

(b)            Notwithstanding anything to the contrary herein or in any other Loan Document (and any Hedging Agreement shall be deemed not to be a Loan Document for purposes of this Section 2.12), if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.

 

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(c)            Notwithstanding anything to the contrary herein or in any other Loan Document, the Administrative Agent, in consultation with the Borrower, will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.

 

(d)            The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (f) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.12, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.12.

 

(e)            Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (1) if the then-current Benchmark is a term rate (including the Term SOFR Rate) and either (a) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (b) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (2) if a tenor that was removed pursuant to clause (i) above either (a) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (b) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

 

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(f)            Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Term Benchmark Borrowing of, conversion to or continuation of Term Benchmark Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to an ABR Borrowing. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate.

 

SECTION 2.13.         Increased Costs.

 

(a)            Increased Costs Generally. If any Change in Law shall:

 

(i)            impose, modify or deem applicable any reserve, compulsory loan, insurance charge, special deposit or similar requirement against assets of, deposits with or for account of, or credit extended by, any Lender or any Issuing Bank; or

 

(ii)            impose on any Lender or any Issuing Bank any other condition, cost or expense, affecting this Agreement or Term Benchmark Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost (other than costs which are Indemnified Taxes or Excluded Taxes) to such Lenders of making, continuing, converting into or maintaining any Term Benchmark Loan (or of maintaining its obligation to make any such Loan) or to increase the cost (other than costs which are Indemnified Taxes or Excluded Taxes) to such Lender or such Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or such Issuing Bank, as the case may be, in Dollars, such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

 

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(b)            Capital Requirements. If any Lender or any Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy), by an amount deemed to be material by such Lender or such Issuing Bank, then from time to time the Borrower will pay to such Lender or such Issuing Bank, as the case may be, in Dollars, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered.

 

(c)            Certificates from Lenders. A certificate of a Lender or an Issuing Bank setting forth the amount or amounts, in Dollars, necessary to compensate such Lender or such Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be promptly delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or such Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

 

(d)            Delay in Requests. Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than six months prior to the date that such Lender or such Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof.

 

SECTION 2.14.         Break Funding Payments. In the event of (i) the payment of any principal of any Term Benchmark Loan prior to the last day of the Interest Period applicable thereto (including as a result of an Event of Default or an optional or mandatory prepayment of Loans), (ii) the conversion of any Term Benchmark Loan other than on the last day of the Interest Period applicable thereto, (iii) the failure to borrow, convert, continue or prepay any Term Benchmark Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.09(e) and is revoked in accordance therewith) or (iv) the assignment of any Term Benchmark Loan prior to the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.18(b), then, in any such event, the Borrower shall compensate each affected Lender for the loss, cost and expense (other than lost profits) attributable to such event. Payment under this Section shall be made upon request of a Lender delivered to the Borrower not later than 10 Business Days following the payment, conversion or failure to borrower, convert, continue or prepay that gives rise to a claim under this Section, accompanied by a certificate of such Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section, which certificate shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

 

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SECTION 2.15.         Taxes.

 

(a)            Payments Free of Taxes. Any and all payments by or on account of any obligation of an Obligor hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable law ; provided that if any applicable law requires an Obligor to deduct or withhold any Taxes from such payments, then (i) the sum payable by the Obligor shall be increased as necessary so that after making all required deductions or withholding (including deductions and withholdings applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) the Obligor shall make such deductions or withholdings and (iii) the Obligor shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

(b)            Payment of Other Taxes by the Borrower. In addition, the Obligors shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

(c)            Indemnification by the Borrower. The Obligors shall indemnify the Administrative Agent, each Lender and each Issuing Bank, within 30 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by the Administrative Agent, such Lender or such Issuing Bank, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Obligors by a Lender or an Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusive absent manifest error.

 

(d)            Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by an Obligor to a Governmental Authority, the Obligor shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

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(e)            Status of Lenders. Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which an Obligor is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding.

 

In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

 

Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in paragraphs (e)(i), (e)(ii), and (g) of this Section) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

Without limiting the generality of the foregoing, if the Borrower is resident for tax purposes in the United States,

 

(i)            each Lender and each Issuing Bank that is not a Foreign Lender shall deliver to the Borrower (with a copy to the Administrative Agent), prior to the date on which such Issuing Bank or Lender becomes a party to this Agreement, upon expiration or invalidity of any forms previously delivered and at times reasonably requested by the Borrower, duly completed copies of Internal Revenue Service Form W-9 or any successor form, provided it is legally able to do so at the time.

 

(ii)            any Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

 

(A)            duly completed copies of Internal Revenue Service Form W-8BEN or Form W-8BEN-E or any successor form claiming eligibility for benefits of an income tax treaty to which the United States is a party,

 

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(B)            duly completed copies of Internal Revenue Service Form W-8ECI or any successor form certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States,

 

(C)            in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (A) a certificate to the effect that such Foreign Lender is not (1) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (3) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (B) duly completed copies of Internal Revenue Service Form W-8BEN (or any successor form) certifying that the Foreign Lender is not a United States Person, or

 

(D)            any other form including Internal Revenue Service Form W-8IMY as applicable prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.

 

In addition, upon reasonable request of the Borrower or the Administrative Agent, each Foreign Lender shall deliver such forms promptly upon the expiration or invalidity of any form previously delivered by such Foreign Lender, provided it is legally able to do so at the time. Each Foreign Lender shall promptly notify the Borrower and the Administrative Agent at any time such Foreign Lender becomes aware that it no longer satisfies the legal requirements to provide any previously delivered form or certificate to the Borrower (or any other form of certification adopted by the U.S. or other taxing authorities for such purpose).

 

(f)            [Reserved].

 

(g)            FATCA. If a payment made to a Lender under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by Law and at such time or times as the Borrower or the Administrative Agent reasonably requests such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (g), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

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(h)            Treatment of Certain Refunds. If the Administrative Agent, any Lender or any Issuing Bank determines, in its sole discretion exercised in good faith, that it has received a refund or credit (in lieu of such refund) of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses of the Administrative Agent, any Lender or any Issuing Bank, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent, any Lender or any Issuing Bank, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, any Lender or any Issuing Bank in the event the Administrative Agent, any Lender or any Issuing Bank is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (h), in no event will the Administrative Agent, any Lender or any Issuing Bank be required to pay any amount to the Borrower pursuant to this paragraph (h) the payment of which would place the Administrative Agent or such Lender in a less favorable net after-Tax position than the Administrative Agent, such Lender or such Issuing Bank would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This subsection shall not be construed to require the Administrative Agent, any Lender or any Issuing Bank to make available its tax returns or its books or records (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

 

(i) Each party’s obligations under this Section shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

SECTION 2.16.         Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(a)            Payments by the Borrower. The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or under Section 2.13, 2.14 or 2.15, or otherwise) or under any other Loan Document (except to the extent otherwise provided therein) prior to 2:00 p.m., New York City time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at the Administrative Agent’s Account, except as otherwise expressly provided in the relevant Loan Document and except payments to be made directly to an Issuing Bank as expressly provided herein and payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03, which shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All amounts owing under this Agreement (including commitment fees, payments required under Section 2.13, and payments required under Section 2.14) or under any other Loan Document (except to the extent otherwise provided therein) are payable in Dollars.

 

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(b)            Application of Insufficient Payments. If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, to pay interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, to pay principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

 

(c)            Pro Rata Treatment. Except to the extent otherwise provided herein: (i) each Borrowing shall be made from the Lenders, and each termination or reduction of the amount of the Commitments under Section 2.07 shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (ii) each Borrowing shall be allocated pro rata among the Lenders according to the amounts of their respective Commitments (in the case of the making of Loans) or their respective Loans that are to be included in such Borrowing (in the case of conversions and continuations of Loans); (iii) each payment of commitment fees under Section 2.10 shall be made for account of the Lenders pro rata according to the average daily unused amounts of their respective Commitments; (iv) each payment or prepayment of principal of Loans by the Borrower shall be made for account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them; and (v) each payment of interest on Loans by the Borrower shall be made for account of the Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to such Lenders.

 

(d)            Sharing of Payments by Lenders. If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon then due than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

 

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(e)            Presumptions of Payment. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for account of the Lenders or the Issuing Banks hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Banks, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or each of the Issuing Banks, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or such Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Federal Funds Effective Rate.

 

(f)            Certain Deductions by the Administrative Agent. If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(e), 2.05(b) or 2.16(e), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

 

SECTION 2.17.         Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a)            commitment fees pursuant to Section 2.10(a) shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender;

 

(b)            the Commitment and Credit Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02), provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender, including as set forth in Section 9.02(b)(i), (ii), (iii), (iv) or (v), shall require the consent of such Defaulting Lender;

 

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(c)            if any LC Exposure exists at the time a Lender becomes a Defaulting Lender then:

 

(i)            all or any part of such LC Exposure shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent (x) in the case of a Defaulting Lender, the sum of all non-Defaulting Lenders’ Credit Exposures plus such Defaulting Lender’s LC Exposure does not exceed the total of all non-Defaulting Lenders’ Commitments and (y) no non-Defaulting Lender’s Credit Exposure will exceed such Lender’s Commitment;

 

(ii)            if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, within three Business Days following notice by the Administrative Agent cash collateralize such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.04(k) for so long as such LC Exposure is outstanding;

 

(iii)            if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.10(b) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;

 

(iv)            if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Section 2.10(a) and Section 2.10(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and

 

(v)            if any Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to this Section 2.17(c), then, without prejudice to any rights or remedies of any Issuing Bank or any Lender hereunder, all facility fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Commitment that was utilized by such LC Exposure) and letter of credit fees payable under Section 2.10(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the applicable Issuing Bank until such LC Exposure is cash collateralized and/or reallocated; and

 

(d)            so long as any Lender is a Defaulting Lender, an Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.17(c), and participating interests in any such newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.17(c)(i) (and Defaulting Lenders shall not participate therein).

 

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In the event that the Administrative Agent, the Borrower and the Issuing Banks (with respect to the Issuing Banks, only to the extent that such Issuing Bank acts in such capacity under the Commitments held by a Defaulting Lender) each agree that such Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Borrower shall no longer be required to cash collateralize any portion of such Lender’s LC Exposure cash collateralized pursuant to Section 2.17(c)(ii) above and the LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.

 

Subject to Section 9.14 no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation.

 

SECTION 2.18.         Mitigation Obligations; Replacement of Lenders.

 

(a)            Designation of a Different Lending Office. If any Lender requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for account of any Lender pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any cost or expense not required to be reimbursed by the Borrower and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable and documented out-of-pocket costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)            Replacement of Lenders. If any Lender requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for account of any Lender pursuant to Section 2.15, or if any Lender becomes a Defaulting Lender or is a non-consenting Lender (as provided in Section 9.02(d)), then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Commitment is being assigned, the Issuing Banks), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.13 or payments required to be made pursuant to Section 2.15, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

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(c)            Defaulting Lender. If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(e), 2.05 or 9.03(c), then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit of the Administrative Agent or the Issuing Banks to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under such Sections, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Lenders that:

 

SECTION 3.01.         Organization; Powers. Each of the Borrower and its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required of the Borrower or such Subsidiary, as applicable.

 

SECTION 3.02.         Authorization; Enforceability. The Transactions are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate and, if required, by all necessary shareholder action. This Agreement has been duly executed and delivered by the Borrower and constitutes, and each of the other Loan Documents when executed and delivered will constitute, a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

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SECTION 3.03.         Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except for (i) such as have been or will be obtained or made and are in full force and effect and (ii) filings and recordings in respect of the Liens created pursuant to the Security Documents, (b) will not violate any applicable law or regulation in any material respect or the charter, by-laws or other organizational documents of the Borrower or any other Obligors or any order of any Governmental Authority, (c) will not violate or result in a default in any material respect under any indenture, agreement or other instrument binding upon the Borrower or any of its Subsidiaries or assets, or give rise to a right thereunder to require any payment to be made by any such Person, and (d) except for the Liens created pursuant to the Security Documents, will not result in the creation or imposition of any Lien on any asset of the Borrower or any other Obligors.

 

SECTION 3.04.         Financial Condition; No Material Adverse Change.

 

(a)            Financial Statements. The Borrower has heretofore delivered the audited consolidated balance sheet and statements of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries as of and for the fiscal year ended December 31, 2021, reported on by Ernst & Young LLP, independent public accountants. Such financial statements present fairly, in all material respects, the consolidated financial position and results of operations and cash flows of the Borrower and its Subsidiaries as of such dates and for such periods in accordance with GAAP applied on a consistent basis. None of the Borrower or any of its Subsidiaries had as of December 31, 2021 any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments not reflected in the financial statements referred to above.

 

(b)            No Material Adverse Change. Since December 31, 2021, there has not been any event, development or circumstance that has had or would reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.05.         Litigation. There are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority now pending against or, to the knowledge of the Borrower, threatened in writing against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve this Agreement or the Transactions (except, in each case, as disclosed to the Lenders and the Administrative Agent prior to the Effective Date), other than any litigation between the Borrower and any Defaulting Lender.

 

SECTION 3.06.         Compliance with Laws and Agreements. Each of the Borrower and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. None of the Obligors is subject to any contract or other arrangement, the performance of which by them would reasonably be expected to result in a Material Adverse Effect.

 

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SECTION 3.07.         Sanctions and Anti-Corruption Laws. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and investment advisors with Anti-Corruption Laws and applicable Sanctions in all material respects, and the Borrower, its Subsidiaries and to the knowledge of the Borrower, their respective employees, officers, directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of the Borrower or any Subsidiary nor, to the knowledge of the Borrower, any director, officer, manager or agent of the Borrower or any Subsidiary is the subject of any Sanctions or is a Sanctioned Person.

 

SECTION 3.08.         Taxes. Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all material Tax returns and reports required to have been filed and has paid or caused to be paid all material Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Person has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.09.         ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, would reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.10.         Disclosure. None of the reports, financial statements, certificates or other written factual information furnished by or on behalf of the Borrower to the Lenders in connection with the negotiation of this Agreement and the other Loan Documents or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) (other than projections, forward-looking information, information of a general economic or general industry nature and all third-party financial statements or reports) when taken as a whole contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

 

SECTION 3.11.         Investment Company Act; Margin Regulations.

 

(a)            Status as Business Development Company. The Borrower is an “investment company” that has elected to be regulated as a “business development company” within the meaning of the Investment Company Act and qualifies as a RIC.

  

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(b)            Compliance with Investment Company Act. The business and other activities of the Borrower and its Subsidiaries, including the making of the Loans hereunder, the application of the proceeds and repayment thereof by the Borrower and the consummation of the Transactions contemplated by the Loan Documents do not result in a violation or breach in any material respect of the provisions of the Investment Company Act or any rules, regulations or orders issued by the Securities and Exchange Commission thereunder, in each case, that are applicable to the Borrower and its Subsidiaries.

 

(c)            Investment Policies. The Borrower is in compliance with all written investment policies, restrictions and limitations for the Borrower delivered to the Lenders prior to the Effective Date (the “Investment Policies”), except to the extent that the failure to so comply could not reasonably be expected to result in a Material Adverse Effect.

 

(d)            Use of Credit. Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any extension of credit hereunder will be used to buy or carry any Margin Stock.

 

SECTION 3.12.         Material Agreements and Liens.

 

(a)            Material Agreements. Part A of Schedule II is a complete and correct list of each credit agreement, loan agreement, indenture, note purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or guarantee by, the Borrower or any Obligor outstanding on the Effective Date, and the aggregate principal or face amount outstanding or that may become outstanding under each such arrangement in each case as of the Effective Date is correctly described in Part A of Schedule II.

 

(b)            Liens. Part B of Schedule II is a complete and correct list of each Lien securing Indebtedness of any Person outstanding on the Effective Date covering any property of the Borrower or any Obligors, and the aggregate Indebtedness secured (or that may be secured) by each such Lien and the property covered by each such Lien is correctly described in Part B of Schedule II.

 

SECTION 3.13.         Subsidiaries and Investments.

 

(a)            Subsidiaries. Set forth in Part A of Schedule IV is a complete and correct list of all of the Subsidiaries of the Borrower on the Effective Date together with, for each such Subsidiary, (i) the jurisdiction of organization of such Subsidiary, (ii) each Person holding ownership interests in such Subsidiary, (iii) the nature of the ownership interests held by each such Person and the percentage of ownership of such Subsidiary represented by such ownership interests and (iv) whether such Subsidiary is a Designated Subsidiary or an Excluded Asset. Except as disclosed in Part A of Schedule IV, (x) the Borrower owns, free and clear of Liens (other than any lien permitted by Section 6.02 hereof), and has (and will have) the unencumbered right to vote, all outstanding ownership interests in each Person shown to be held by it in Part A of Schedule IV, (y) all of the issued and outstanding capital stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (z) there are no outstanding Equity Interests with respect to such Person. Each Subsidiary identified on Part A of Schedule IV as a “Designated Subsidiary” qualifies as such under the definition of “Designated Subsidiary” set forth in Section 1.01.

  

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(b)            Investments. Set forth in Part B of Schedule IV is a complete and correct list of all Investments (other than Investments of the types referred to in clauses (b), (c) and (d) of Section 6.04) held by any of the Obligors in any Person on the Effective Date and, for each such Investment, (x) the identity of the Person or Persons holding such Investment and (y) the nature of such Investment. Except as disclosed in Part B of Schedule IV, as of the Effective Date, each of the Borrower and its Subsidiaries owns, free and clear of all Liens (other than Permitted Liens or Liens created pursuant to the Security Documents), all such Investments.

 

SECTION 3.14.         Properties.

 

(a)            Title Generally. Each of the Borrower and the other Obligors has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

 

(b)            Intellectual Property. Each of the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.15.         Affiliate Agreements. As of the Effective Date, the Borrower has heretofore delivered (to the extent not otherwise publicly filed with the Securities and Exchange Commission) to each of the Lenders true and complete copies of each of the Affiliate Agreements (including any amendments, supplements or waivers executed and delivered thereunder and any schedules and exhibits thereto). As of the date of hereof, each of the Affiliate Agreements is in full force and effect.

 

SECTION 3.16.         Security Documents. The provisions of the Security Documents are effective to create in favor of the Collateral Agent for the benefit of the Secured Parties a legal, valid and enforceable first priority Lien (subject to Liens permitted by Section 6.02) on all right, title and interest of the respective Obligors in the Collateral described therein to secure the Secured Obligations, except for any failure that would not constitute an Event of Default under Section 7.01(p). Except for (a) filing of UCC financing statements and filings as may be required under applicable law or otherwise contemplated hereby and by the Security Documents and (b) the taking of possession or control by the Collateral Agent of the Collateral with respect to which a security interest may be perfected by possession or control, no filing or other action will be necessary to perfect such Liens to the extent required thereunder, except for any filing or action, the absence of which would not constitute an Event of Default under Section 7.01(p).

 

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SECTION 3.17.         Affected Financial Institutions. No Obligor is an Affected Financial Institution.

 

ARTICLE IV

 

CONDITIONS

 

SECTION 4.01.         Effective Date. This Agreement shall become effective on the date on which the Administrative Agent shall have received each of the following documents, each of which shall be satisfactory to the Administrative Agent (and to the extent specified below, to each Lender) in form and substance (or such condition shall have been waived in accordance with Section 9.02):

 

(a)            Executed Counterparts. From each of the parties hereto, either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy or electronic transmission of a signed signature page to this Agreement) that such party has signed a counterpart of this Agreement.

 

(b)            Fees and Expenses. Evidence of the payment by the Borrower of all fees payable to the Lenders on the Effective Date that the Borrower has agreed to pay in connection with this Agreement. The Borrower shall have paid all reasonable and documented out-of-pocket expenses (including the reasonable and documented legal fees of Milbank LLP) for which invoices have been presented at least three Business Days prior to the Effective Date that the Borrower has agreed to pay in connection with this Agreement.

 

(c)            Opinion of Counsel to the Obligors. A favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Ropes & Gray LLP, New York counsel for the Obligors, in form and substance reasonably satisfactory to the Administrative Agent, and of Venable LLP, Maryland counsel for the Borrower, in substantially the form of Exhibit C, and in each case covering such other matters relating to the Obligors, this Agreement or the Transactions as the Required Lenders shall reasonably request.

 

(d)            Opinion of Special New York Counsel to JPMCB. An opinion, dated the Effective Date, of Milbank LLP, special New York counsel to JPMCB in substantially the form of Exhibit D (and JPMCB hereby instructs such counsel to deliver such opinion to the Lenders).

 

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(e)            Corporate Documents. Such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Obligors, the authorization of the Transactions and any other legal matters relating to the Obligors, this Agreement or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel.

 

(f)            Officer’s Certificate. A certificate, dated the Effective Date and signed by the President, a Vice President, the Chief Executive Officer or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in the lettered clauses of the first sentence of Section 4.02.

 

(g)            Liens. (i) Results of a recent lien search in each relevant jurisdiction with respect to the Borrower, which search shall reveal no liens on any of the assets of the Obligors except for liens permitted under Section 6.02 or under the respective Security Documents and liens to be discharged on or prior to the Effective Date pursuant to documentation satisfactory to the Collateral Agent and (ii) copies of all UCC financing statements and similar documents required to be filed in order to create in favor of the Collateral Agent, for the benefit of the Lenders, a first priority perfected security interest in the Collateral (to the extent that such a security interest may be perfected by a filing under the Uniform Commercial Code).

 

(h)            Guarantee and Security Agreement. The Guarantee and Security Agreement, duly executed and delivered by each of the parties thereto.

 

(i)            Borrowing Base Certificate. A Borrowing Base Certificate, dated as of a date not more than five days prior to the Effective Date, updated to reflect any changes to the calculation of the Borrowing Base or the Covered Debt Amount as of the Effective Date.

 

(j)            Valuation Policy. A copy of the Valuation Policy.

 

(k)            Financial Statements. Copies of the audited consolidated balance sheets, statements of operations, statement of changes in net assets, statements of cash flows and schedules of investments of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2021. The Administrative Agent and the Lenders acknowledge having received the financial statements referred to above.

 

(l)            Consents. Certified copies of all consents, approvals, authorizations, registrations or filings required to be made or obtained by the Borrower and all Subsidiary Guarantors in connection with the Transactions, which shall be in full force and effect.

  

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(m)            Other Documents. Such other documents as the Administrative Agent or any Lender or special New York counsel to JPMCB may reasonably request.

 

SECTION 4.02.         Each Credit Event. The obligation of each Lender to make any Loan, and of each Issuing Bank to issue, amend, renew or extend any Letter of Credit, is additionally subject to the satisfaction of the following conditions:

 

(a)            the representations and warranties of the Borrower set forth in this Agreement and in the other Loan Documents shall be true and correct in all material respects (or, in the case of the representations and warranties in Sections 3.01 (first sentence with respect to the Obligors), 3.02, 3.04, 3.11 and 3.15 of this Agreement, and in Sections 2.01, 2.02 and 2.04 through 2.09 of the Guarantee and Security Agreement, true and correct in all respects) on and as of the date of such Loan or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, or, as to any such representation or warranty that refers to a specific date, as of such specific date;

 

(b)            at the time of and immediately after giving effect to such Loan or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default or Event of Default shall have occurred and be continuing; and

 

(c)            either (i) the aggregate Covered Debt Amount (after giving effect to such extension of credit) shall not exceed the Borrowing Base reflected on the Borrowing Base Certificate most recently delivered to the Administrative Agent or (ii) the Borrower shall have delivered an updated Borrowing Base Certificate demonstrating that the Covered Debt Amount (after giving effect to such extension of credit) shall not exceed the Borrowing Base after giving effect to such extension of credit as well as any concurrent acquisitions of Portfolio Investments or payment of outstanding Loans or Permitted Indebtedness or Indebtedness incurred pursuant to Section 6.01(g), Section 6.01(i), or Section 6.01(j).

 

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in the preceding sentence.

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or been terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

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SECTION 5.01.         Financial Statements and Other Information. The Borrower will furnish to the Administrative Agent (for prompt distribution to each Lender):

 

(a)            within 90 days after the end of each fiscal year of the Borrower, the audited consolidated balance sheet and related statements of operations and cash flows of the Borrower and its Subsidiaries as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied; provided that the requirements set forth in this clause (a) may be fulfilled by providing to the Administrative Agent and the Lenders the report of the Borrower to the Securities and Exchange Commission on Form 10-K for the applicable fiscal year;

 

(b)            within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, the consolidated balance sheet and related statements of operations and cash flows of the Borrower and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for (or, in the case of the balance sheet, as of the end of) the corresponding period or periods of the previous fiscal year, all certified by a Financial Officer of the Borrower as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes; provided that the requirements set forth in this clause (b) may be fulfilled by providing to the Lenders the report of the Borrower to the Securities and Exchange Commission on Form 10-Q for the applicable quarterly period;

 

(c)            concurrently with any delivery of financial statements under clause (a) or (b) of this Section, a certificate of a Financial Officer of the Borrower (i) certifying as to whether the Borrower has knowledge that a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.01, 6.02, 6.04, 6.05 and 6.07 and (iii) stating whether any change in GAAP as applied by (or in the application of GAAP by) the Borrower has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

 

(d)            as soon as available and in any event not later than the last Business Day of the calendar month following each monthly accounting period (ending on the last day of each calendar month) of the Borrower, a Borrowing Base Certificate as at the last day of such accounting period presenting (i) the Borrower’s computation of the Borrowing Base (and including the rationale for any industry reclassification) and including a certification of a Financial Officer as to compliance with Section 6.03(d) and 6.04(d) during the period covered by such Borrowing Base Certificate and (ii) the ratio of the Gross Borrowing Base to the Combined Debt Amount (showing the components of the Combined Debt Amount);

 

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(e)            promptly but no later than five Business Days after the Borrower shall at any time have knowledge that there is a Borrowing Base Deficiency, a Borrowing Base Certificate as at the date the Borrower has knowledge of such Borrowing Base Deficiency indicating the amount of the Borrowing Base Deficiency as at the date the Borrower obtained knowledge of such deficiency and the amount of the Borrowing Base Deficiency as of the date not earlier than one Business Day prior to the date the Borrowing Base Certificate is delivered pursuant to this paragraph;

 

(f)            promptly upon receipt thereof, copies of all significant reports of the Borrower’s independent public accountants in connection with each annual, interim or special audit or review of any type of the financial statements or related internal control systems of the Borrower or any of its Subsidiaries delivered by such accountants to the management or board of directors of the Borrower;

 

(g)            promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by any of the Obligors with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of the Securities and Exchange Commission, or with any national securities exchange, as the case may be;

 

(h)            within 45 days after the end of the first three fiscal quarters of each fiscal year of the Borrower and 90 days after the end of each fiscal year of the Borrower, a schedule setting forth in reasonable detail with respect to each Portfolio Investment with respect to which there has been a sale in the most recently completed fiscal quarter (i) the quantity sold of each Portfolio Investment, (ii) the value assigned to each Portfolio Investment as of the prior quarter end, (iii) the weighted average sale price of each Portfolio Investment, and (iv) the variance between clauses (ii) and (iii) above;

 

(i)            within 45 days after the end of the first three fiscal quarters of each fiscal year of the Borrower and 90 days after the end of each fiscal year of the Borrower, a schedule setting forth in reasonable detail with respect to each Portfolio Investment, the aggregate amount of all accrued paid-in-kind interest for such Portfolio Investment during the most recently ended fiscal quarter;

   

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(j)            within 45 days after the end of the first three fiscal quarters of each fiscal year of the Borrower and 90 days after the end of each fiscal year of the Borrower, a schedule setting forth in reasonable detail with respect to each Portfolio Investment (i) the quantity held of each Portfolio Investment, (ii) the value assigned to each Portfolio Investment as of the prior quarter end, (iii) the value assigned to each Portfolio Investment as of the current quarter end, and (iv) the variance between clauses (ii) and (iii) above;

 

(k)            within 45 days after the end of the first three fiscal quarters of each fiscal year of the Borrower and 60 days after the end of each fiscal year of the Borrower, any report that the Borrower receives from the Custodian listing the Portfolio Investments, as of the current quarter end, held in an account subject to a Custodian Agreement; and

 

(l)            promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any of its Subsidiaries, or compliance with the terms of this Agreement and the other Loan Documents, as the Administrative Agent or any Lender may reasonably request.

 

Notwithstanding anything in this Section 5.01 to the contrary, the Borrower shall be deemed to have satisfied the requirements of this Section 5.01 (other than Sections 5.01(c), (d) and (e)) if the reports, documents and other information of the type otherwise so required are publicly available when required to be filed on EDGAR at the www.sec.gov website or any successor service provided by the Securities and Exchange Commission, provided notice of such availability is provided to the Administrative Agent at or prior to the time period required by this Section 5.01.

 

SECTION 5.02.         Notices of Material Events. The Borrower will furnish to the Administrative Agent for distribution to each Lender written notice of the following promptly upon becoming aware thereof:

 

(a)            the occurrence of any Default;

 

(b)            the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any of its Affiliates that would reasonably be expected to result in a Material Adverse Effect;

 

(c)            the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, would reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $50,000,000; and

 

(d)            any other development that results in, or would reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

 

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SECTION 5.03.         Existence; Conduct of Business. The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution not prohibited under Section 6.03.

 

SECTION 5.04.         Payment of Obligations. The Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including tax liabilities and material contractual obligations, that, if not paid, would reasonably be expected to result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.05.         Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.

 

SECTION 5.06.         Books and Records; Inspection Rights. The Borrower will, and will cause each of its Subsidiaries to, keep books of record and account in accordance with GAAP in all material respects. The Borrower will, and will cause each other Obligor to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice to the Borrower, to visit and inspect its properties during normal business hours, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times as reasonably requested, in each case, to the extent such inspection or requests for such information are reasonable and such information can be provided or discussed without violation of law, rule, regulation or contract and except as such inspection or requests would violate any confidentiality obligation binding on the Borrower or any of its Subsidiaries or would jeopardize any attorney-client privilege; provided that the Borrower shall be entitled to have its representatives and advisors present during any inspection of its books and records and during any discussion with its independent accountants or independent auditors; provided, further, that, so long as no Event of Default shall have occurred and be continuing, no more than one (1) such inspection shall be conducted in any calendar year.

 

SECTION 5.07.         Compliance with Laws; Anti-Corruption; Sanctions. The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules and regulations, including the Investment Company Act, any applicable rules, regulations or orders issued by the Securities and Exchange Commission thereunder and orders of any other Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions in all material respects.

  

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SECTION 5.08.         Certain Obligations Respecting Subsidiaries; Further Assurances.

 

(a)            Subsidiary Guarantors. In the event that any Obligor shall form or acquire any new Domestic Subsidiary (other than an Excluded Asset), the Borrower will cause such new Subsidiary to become a Subsidiary Guarantor (and, thereby, an Obligor) under a Guarantee Assumption Agreement within thirty (30) days (or such longer period as shall be reasonably agreed by the Administrative Agent) following such Person becoming a new Domestic Subsidiary and to deliver such proof of corporate or other action, incumbency of officers, opinions of counsel and other documents as are consistent with those delivered by the Borrower pursuant to Section 4.01 upon the Effective Date.

 

(b)            Ownership of Subsidiaries. The Borrower will, and will cause each of its Subsidiaries to, take such action from time to time as shall be necessary to ensure that each of its Subsidiaries is a wholly owned Subsidiary (other than any Subsidiary that is an Excluded Asset).

 

(c)            Further Assurances. The Borrower will, and will cause each of the Subsidiary Guarantors to, take such action from time to time as shall reasonably be requested by the Administrative Agent to effectuate the purposes and objectives of this Agreement. Without limiting the generality of the foregoing, the Borrower will, and will cause each of the Subsidiary Guarantors to, take such action from time to time (including filing appropriate Uniform Commercial Code financing statements and executing and delivering such assignments, security agreements and other instruments) as shall be reasonably requested by the Administrative Agent

 

(i)            to create, in favor of the Collateral Agent for the benefit of the Lenders (and any affiliate thereof that is a party to any Hedging Agreement entered into with the Borrower) and the holders of any Other Secured Indebtedness, perfected security interests and Liens in the Collateral; provided that any such security interest or Lien shall be subject to the relevant requirements of the Security Documents; provided further, that in the case of any Collateral consisting of voting stock of any Controlled Foreign Corporation, such security interest shall be limited to 65% of the issued and outstanding voting stock of such Controlled Foreign Corporation,

 

  

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(ii)            subject to Section 7.04 of the Security Agreement, to cause any bank or securities intermediary (within the meaning of the Uniform Commercial Code) to enter into such arrangements with the Collateral Agent as shall be appropriate in order that the Collateral Agent has “control” over each bank account or securities account of the Obligors, and in connection therewith, the Borrower agrees to cause all cash and other proceeds of Portfolio Investments received by any Obligor to be promptly deposited into such an account (or otherwise delivered to, or registered in the name of, the Collateral Agent) and, until such deposit, delivery or registration such cash and other proceeds shall be held in trust by the Borrower for and as the property of the Collateral Agent and shall not be commingled with any other funds or property of such Obligor or of any Designated Subsidiary or other Person,

 

(iii)            [Reserved].

 

(iv)            in the case of any Portfolio Investment consisting of a Bank Loan that does not constitute all of the credit extended to the underlying borrower under the relevant underlying loan documents and an Excluded Asset holds any interest in the loans or other extensions of credit under such loan documents, (x) cause such Excluded Asset to be party to such underlying loan documents as a “lender” having a direct interest (or a participation not acquired from an Obligor) in such underlying loan documents and the extensions of credit thereunder and (y) ensure that all amounts owing to such Obligor or Excluded Asset by the underlying borrower or other obligated party are remitted by such borrower or obligated party directly to separate accounts of such Obligor and such Excluded Asset,

 

(v)            in the event that any Obligor is acting as an agent or administrative agent under any loan documents with respect to any Bank Loan that does not constitute all of the credit extended to the underlying borrower under the relevant underlying loan documents, ensure that all funds held by such Obligor in such capacity as agent or administrative agent are segregated from all other funds of such Obligor and clearly identified as being held in an agency capacity and

 

(vi)            cause all loan and other documents relating to any Portfolio Investment to be held by (x) the Collateral Agent or (y) the Custodian pursuant to the terms of the Custodian Agreement (or another custodian reasonably satisfactory to the Administrative Agent), or pursuant to an appropriate intercreditor agreement, so long as the Custodian (or custodian) has agreed to grant access to such loan and other documents to the Administrative Agent and the Lenders pursuant to an access or similar agreement between the Borrower and such Custodian (or custodian) in form and substance reasonably satisfactory to the Administrative Agent.

 

SECTION 5.09.         Use of Proceeds. The Borrower will use the proceeds of the Loans only for general corporate purposes of the Borrower in the ordinary course of business, including in connection with the acquisition and funding (either directly or through one or more wholly-owned Subsidiaries) of Portfolio Investments; provided that neither the Administrative Agent nor any Lender shall have any responsibility as to the use of any of such proceeds. No part of the proceeds of any Loan will be used in violation of Sanctions or any other applicable law or, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock. Margin Stock shall be purchased by the Obligors only with the proceeds of Indebtedness not directly or indirectly secured by Margin Stock (within the meaning of Regulation U), or with the proceeds of equity capital of the Borrower. Without limiting the foregoing, no Obligor will directly or indirectly, use the proceeds of the Loans (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, businesses or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

  

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SECTION 5.10.         Status of RIC and BDC. The Borrower shall at all times maintain its status as a RIC under the Code, and as a “business development company” under the Investment Company Act.

 

SECTION 5.11.         Investment and Valuation Policies. The Borrower shall promptly advise the Lenders and the Administrative Agent of any material change in either the Investment Policies or the Valuation Policy.

 

SECTION 5.12.         Portfolio Valuation and Diversification, Etc.

 

(a)            Industry Classification Groups. For purposes of this Agreement, the Borrower shall assign each Portfolio Investment to an Industry Classification Group. Such Portfolio Investment may be assigned by the Borrower to an Industry Classification Group that is most closely correlated to such Portfolio Investment. In the absence of any correlation, the Borrower shall be permitted, upon notice to the Administrative Agent and each Lender to create up to three additional industry classification groups for purposes of this Agreement.

 

(b)            Portfolio Valuation Etc.

 

(i)            Settlement Date Basis. For purposes of this Agreement, all determinations of whether an investment is to be included as a Portfolio Investment shall be made on a settlement date basis (meaning that any investment that has been purchased will not be treated as a Portfolio Investment until such purchase has settled, and any Portfolio Investment which has been sold will not be excluded as a Portfolio Investment until such sale has settled); provided that no such investment shall be included as a Portfolio Investment to the extent it has not been paid for in full.

 

(ii)            Determination of Values. The Borrower will conduct reviews of the value to be assigned to each of its Portfolio Investments as follows:

  

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(A)            Quoted Investments—External Review. With respect to Portfolio Investments (including Cash Equivalents) for which market quotations are readily available (“Quoted Investments”), the Borrower shall, not less frequently than once each calendar week, determine the market value of such Portfolio Investments which shall, in each case, be determined in accordance with one of the following methodologies (as selected by the Borrower):

 

(w)            in the case of public and 144A securities, the average of the bid prices as determined by two Approved Dealers selected by the Borrower,

 

(x)            in the case of bank loans, the average of the bid prices as determined by at least two Approved Dealers selected by such Borrower or an Approved Pricing Service which makes reference to at least two Approved Dealers with respect to such bank loans,

 

(y)            in the case of any Portfolio Investment traded on an exchange, the closing price for such Portfolio Investment most recently posted on such exchange, and

 

(z)            in the case of any other Portfolio Investment, the fair value thereof as determined by an Approved Pricing Service; and

 

(B)            Unquoted Investments—External Review. With respect to Portfolio Investments for which market quotations are not readily available (“Unquoted Investments”), the Borrower shall value such Portfolio Investments quarterly in a manner consistent with the Valuation Policy of Benefit Street Partners L.L.C. (the “Valuation Policy”), including valuation of at least 35% by value of all Unquoted Investments using the assistance of an Approved Third Party Appraiser.

 

(C)            Internal Review. The Borrower shall, at least once each calendar week, conduct an internal review of the aggregate value of the Portfolio Investments included in the Borrowing Base, and of the Borrowing Base, which shall take into account any events of which the Borrower has knowledge that materially affect the aggregate value of the Portfolio Investments included in the Borrowing Base or the Borrowing Base. If, based upon such weekly internal review, the Borrower determines that a Borrowing Base Deficiency exists, then the Borrower shall, within five Business Days as provided in Section 5.01(c), deliver a Borrowing Base Certificate reflecting the new amount of the Borrowing Base and shall take the actions, and make the payments and prepayments (and provide cover for LC Exposure), all as more specifically set forth in Section 2.09(b).

  

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(D)            Failure to Determine Values. If the Borrower shall fail to determine the value of any Portfolio Investment as at any date pursuant to the requirements of the foregoing sub-clauses (A) through (C), the “Value” of such Portfolio Investment as at such date shall be deemed to be zero;

 

provided that, in no event shall any Portfolio Investment be valued pursuant to the foregoing requirements less frequently than annually.

 

(iii)            Scheduled Testing of Values.

 

(A)            As of March 31, June 30, September 30 and December 31 of each calendar year (each a “Valuation Testing Date”), the Administrative Agent through an Independent Valuation Provider will test the values determined pursuant to Section 5.12(b)(ii) above of those Portfolio Investments included in the Borrowing Base selected by the Administrative Agent; provided, that the aggregate fair value of such Portfolio Investments tested on any Valuation Testing Date will be approximately equal to the Tested Amount (as defined below).

 

(B)            For purposes of this Agreement, the “Tested Amount” shall be equal to the greater of: (i) an amount equal to (y) 125% of the Covered Debt Amount (as of the applicable Valuation Testing Date) minus (z) the sum of the values of all Quoted Investments included in the Borrowing Base (as of the applicable Valuation Testing Date) and (ii) 10% of the aggregate value of all Unquoted Investments included in the Borrowing Base; provided, however, in no event shall more than 25% (or, if clause (ii) applies, 10%, or as near thereto as reasonably practicable) of the aggregate value of the Unquoted Investments in the Borrowing Base be tested by the Independent Valuation Provider in respect of any applicable Valuation Testing Date.

 

(C)            With respect to any Portfolio Investment, if the value of such Portfolio Investment determined pursuant to Section 5.12(b)(ii) is not more than the lesser of (1) five points more than the midpoint of the valuation range (expressed as a percentage of par) provided by the Independent Valuation Provider (provided that the value of such Portfolio Investment is customarily quoted as a percentage of par) and (2) 110% of the midpoint of the valuation range provided by the Independent Valuation Provider, then the value for such Portfolio Investment determined in accordance with Section 5.12(b)(ii) shall be used as the “Value” for purposes of this Agreement. If the value of any Portfolio Investment determined pursuant to Section 5.12(b)(ii) is more than the lesser of the values set forth in clauses (C)(1) and (2) (to the extent applicable), then for such Portfolio Investment, the “Value” for purposes of this Agreement shall be the lesser of (x) the highest value of the valuation range provided by the Independent Valuation Provider, (y) five points more than the midpoint of the valuation range (expressed as a percentage of par) provided by the Independent Valuation Provider (provided that the value of such Portfolio Investment is customarily quoted as a percentage of par) and (z) 110% of the midpoint of the valuation range provided by the Independent Valuation Provider. For the avoidance of doubt, any values determined by the Independent Valuation Provider pursuant to this Section 5.12(b)(iii) or Section 5.12(b)(iv) shall be used solely for purposes of determining the Value of a Portfolio Investment under this Agreement and shall not be deemed to be the fair value of such asset as required under ASC 820 and the Investment Company Act.

  

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(iv)            Supplemental Testing of Values.

 

(A)            Notwithstanding the foregoing, the Administrative Agent, individually or at the request of the Required Lenders, shall at any time have the right to request, in its reasonable discretion, any Portfolio Investment included in the Borrowing Base with a value determined pursuant to Section 5.12(b)(ii) to be independently tested by the Independent Valuation Provider. There shall be no limit on the number of such tests that may be requested by the Administrative Agent in its reasonable discretion. If (x) the value determined pursuant to Section 5.12(b)(ii) is less than the value determined by the Independent Valuation Provider, then the value determined pursuant to Section 5.12(b)(ii) shall be used as the “Value” for purposes of this Agreement and (y) the value determined pursuant to Section 5.12(b)(ii) is greater than the value determined by the Independent Valuation Provider and the difference between such values is: (1) less than 5% of the value determined pursuant to Section 5.12(b)(ii), then the value determined pursuant to Section 5.12(b)(ii) shall be used as the “Value” for purposes of this Agreement; (2) between 5% and 20% of the value determined pursuant to Section 5.12(b)(ii), then the “Value” of such Portfolio Investment for purposes of this Agreement shall be the average of the value determined pursuant to Section 5.12(b)(ii) and the value determined by such Independent Valuation Provider; and (3) greater than 20% of the value determined pursuant to Section 5.12(b)(ii), then the Borrower and the Administrative Agent shall retain an additional Approved Third Party Appraiser and the “Value” of such Portfolio Investment for purposes of this Agreement shall be the average of the three valuations (with the Independent Valuation Provider’s value to be used as the “Value” until the third value is obtained).

 

(B)            The Value of any Portfolio Investment for which the Independent Valuation Provider’s value is used shall be the midpoint of the range (if any) determined by the Independent Valuation Provider. The Independent Valuation Provider shall apply a recognized valuation methodology that is commonly accepted by the business development company industry for valuing Portfolio Investments of the type being valued and held by the Obligors.

  

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(C)            All valuations shall be made on a settlement date basis. For the avoidance of doubt, the Value of any Portfolio Investment determined in accordance with this Section 5.12 shall be the Value of such Portfolio Investment for purposes of this Agreement until a new Value for such Portfolio Investment is subsequently determined in good faith in accordance with this Section 5.12.

 

(D)            The reasonable and documented out-of-pocket costs of any valuation reasonably incurred by the Administrative Agent under this Section 5.12 shall be at the expense of the Borrower.

 

(E)            In addition, the values determined by the Independent Valuation Provider shall be deemed to be Information hereunder and subject to Section 9.12 hereof.

 

(c)            Investment Company Diversification Requirements. The Borrower will, and will cause its Subsidiaries (other than Subsidiaries that are exempt from the Investment Company Act) at all times to (i) comply in all material respects with the portfolio diversification and similar requirements set forth in the Investment Company Act applicable to business development companies and (ii) subject to applicable grace periods set forth in the Code, comply with the portfolio diversification and similar requirements set forth in the Code applicable to RICs, where applicable.

 

SECTION 5.13.         Calculation of Borrowing Base. For purposes of this Agreement, the “Borrowing Base” shall be determined, as at any date of determination, as the sum of the Advance Rates of the Value of each Portfolio Investment, provided that:

 

(a)            if, as of such date, the Relevant Asset Coverage Ratio is (i) greater than or equal to 2.00:1:00, the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments of all issuers in a consolidated group of corporations or other entities in accordance with GAAP exceeding 6% of the aggregate Value of all Portfolio Investments in the Collateral Pool, shall be 50% of the otherwise applicable Advance Rate; (ii) less than 2.00:1:00 and greater than or equal to 1.75:1.00, the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments of all issuers in a consolidated group of corporations or other entities in accordance with GAAP exceeding 5% of the aggregate Value of all Portfolio Investments in the Collateral Pool, shall be 50% of the otherwise applicable Advance Rate or (iii) less than 1.75:1:00, the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments of all issuers in a consolidated group of corporations or other entities in accordance with GAAP exceeding 4% of the aggregate Value of all Portfolio Investments in the Collateral Pool, shall be 50% of the otherwise applicable Advance Rate;

 

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(b)            if, as of such date, the Relevant Asset Coverage Ratio is (i) greater than or equal to 2.00:1:00, the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments of all issuers in a consolidated group of corporations or other entities in accordance with GAAP exceeding 12% of the aggregate Value of all Portfolio Investments in the Collateral Pool shall be 0%; (ii) less than 2.00:1:00 and greater than or equal to 1.75:1.00, the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments of all issuers in a consolidated group of corporations or other entities in accordance with GAAP exceeding 10% of the aggregate Value of all Portfolio Investments in the Collateral Pool shall be 0% or (iii) less than 1.75:1:00, the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments of all issuers in a consolidated group of corporations or other entities in accordance with GAAP exceeding 8% of the aggregate Value of all Portfolio Investments in the Collateral Pool shall be 0%;

 

(c)            if, as of such date, the Relevant Asset Coverage Ratio is (i) greater than or equal to 2.00:1:00, the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments in any single Industry Classification Group that exceeds 25% of the aggregate Value of all Portfolio Investments in the Collateral Pool shall be 0%, (ii) less than 2.00:1:00 and greater than or equal to 1.75:1.00, the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments in any single Industry Classification Group that exceeds 20% of the aggregate Value of all Portfolio Investments in the Collateral Pool shall be 0%, provided that, with respect to Portfolio Investments in the Collateral Pool in a single Industry Classification Group from time to time designated by the Borrower to the Administrative Agent, such 20% figure shall be increased to 25%, or (iii) less than 1.75:1:00, the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments in any single Industry Classification Group that exceeds 20% of the aggregate Value of all Portfolio Investments in the Collateral Pool shall be 0%;

 

(d)            if, as of such date, the Relevant Asset Coverage Ratio is (i) greater than or equal to 2.00:1:00, the Advance Rate applicable to that portion of the aggregate Value of the Borrower’s investments in Non-Core Investments shall be 0% to the extent necessary so that no more than 20% of the Borrowing Base is attributable to such investments, (ii) less than 2.00:1:00 and greater than or equal to 1.75:1.00, the Advance Rate applicable to that portion of the aggregate Value of the Borrower’s investments in Non-Core Investments shall be 0% to the extent necessary so that no more than 10% of the Borrowing Base is attributable to such investments or (iii) less than 1.75:1:00, the Advance Rate applicable to that portion of the aggregate Value of the Borrower’s investments in Non-Core Investments shall be 0% to the extent necessary so that no more than 5% of the Borrowing Base is attributable to such investments;

 

(e)            if, as of such date, the Relevant Asset Coverage Ratio is (i) less than 2.00:1:00 and greater than or equal to 1.75:1.00, the Advance Rate applicable to that portion of the aggregate Value of the Borrower’s investments in Junior Investments and Non-Core Investments shall be 0% to the extent necessary so that no more than 30% of the Borrowing Base is attributable to such investments or (ii) less than 1.75:1:00, the Advance Rate applicable to that portion of the aggregate Value of the Borrower’s investments in Junior Investments and Non-Core Investments shall be 0% to the extent necessary so that no more than 20% of the Borrowing Base is attributable to such investments;

 

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(f)            the Advance Rate applicable to the Borrower’s investments in any Excluded Asset shall be 0%; and

 

(g)            if, as of such date, (i) (A) the Borrowing Base (without giving effect to any adjustment required pursuant to this paragraph (g), the “Gross Borrowing Base”) is less than 1.5 times the Senior Debt Amount and (B) the Relevant Asset Coverage Ratio is less than 2.00:1:00 and greater than or equal to 1.75:1.00, then the Borrowing Base shall be reduced to the extent necessary such that the contribution of Senior Investments to the Borrowing Base may not be less than 60% of the Covered Debt Amount, (ii) (A) the Gross Borrowing Base is less than 1.5 times the Senior Debt Amount and (B) the Relevant Asset Coverage Ratio is less than 1.75:1.00, then the Borrowing Base shall be reduced to the extent necessary such that the contribution of Senior Investments to the Borrowing Base may not be less than 75% of the Covered Debt Amount or (iii) (A) the Gross Borrowing Base is greater than or equal to 1.5 times the Senior Debt Amount and (B) the Relevant Asset Coverage Ratio is less than 1.75:1.00, then the Borrowing Base shall be reduced to the extent necessary such that the contribution of Senior Investments to the Borrowing Base may not be less than 25% of the Covered Debt Amount.

 

No Portfolio Investment may be included in the Borrowing Base until such time as such Portfolio Investment has been Delivered (as defined in the Guarantee and Security Agreement) to the Collateral Agent, and then only for so long as such Portfolio Investment continues to be Delivered as contemplated therein; provided that in the case of any Portfolio Investment in which the Collateral Agent has a first-priority perfected security interest pursuant to a valid Uniform Commercial Code filing (and for which no other method of perfection with a higher priority is possible), such Portfolio Investment may be included in the Borrowing Base so long as all remaining actions to complete “Delivery” are satisfied within 5 Business Days of such inclusion. Voting stock of any Controlled Foreign Corporation in excess of 65% of the issued and outstanding voting stock of such Controlled Foreign Corporation shall not be included as a Portfolio Investment for purposes of calculating the Borrowing Base.

 

For the avoidance of doubt, to avoid double-counting of excess concentrations, any Advance Rate reductions set forth under this Section 5.13 shall be without duplication of any other such Advance Rate reductions. For purposes of the categorization of each Portfolio Investment in accordance with this Section 5.13, the amount of any “first lien debt” or EBITDA with respect to any Portfolio Investment shall be determined using the most recent quarterly valuation determined in accordance with the Valuation Policy.

 

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As used herein, the following terms have the following meanings:

   

“Advance Rate” means, as to any Portfolio Investment as of any date and subject to adjustment as provided in Section 5.13(a) through (g) and as provided below based on the Relevant Asset Coverage Ratio as of such date, the following percentages with respect to such Portfolio Investment:

  

Portfolio Investment1						Relevant Asset Coverage Ratio > 2.00:1:00												2.00:1:00 > Relevant Asset Coverage Ratio > 1.75:1.00												1.75:1:00 > Relevant Asset Coverage Ratio > 1.50:1.00
						Quoted						Unquoted						Quoted						Unquoted						Quoted						Unquoted
Cash, Cash Equivalents and Short-Term U.S. Government Securities						100%						n.a.						100%						n.a.						100%						n.a.
Long-Term U.S. Government Securities						95%						n.a.						95%						n.a.						95%						n.a.
Performing First Lien Bank Loans						85%						75%						85%						75%						85%						75%
Performing First Lien Unitranche Bank Loans						85%						75%						80%						70%						75%						65%
Performing First Lien Last Out Bank Loans						80%						70%						75%						65%						70%						60%
Performing Second Lien Bank Loans						75%						65%						70%						60%						65%						55%
Performing Cash Pay High Yield Securities						70%						60%						65%						55%						60%						50%
Performing Cash Pay Mezzanine Investments						65%						55%						60%						50%						55%						45%
Performing Non-Cash Pay High Yield Securities						60%						50%						55%						45%						50%						40%

   

 

1 The above categories are intended to be indicative of the traditional investment types in a fully capitalized issuer. All determinations of whether a particular portfolio investment belongs to one category or another shall be made by the Borrower on a consistent basis with the foregoing.

 

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Portfolio Investment1						Relevant Asset Coverage Ratio > 2.00:1:00												2.00:1:00 > Relevant Asset Coverage Ratio > 1.75:1.00												1.75:1:00 > Relevant Asset Coverage Ratio > 1.50:1.00
						Quoted						Unquoted						Quoted						Unquoted						Quoted						Unquoted
Performing Non-Cash Pay Mezzanine Investments						55%						45%						50%						40%						45%						35%
Performing Preferred Equity						55%						45%						50%						40%						45%						35%
Non-Performing First Lien Bank Loans						45%						45%						40%						40%						35%						35%
Non-Performing First Lien Unitranche Bank Loans						45%						45%						40%						40%						35%						35%
Non-Performing First Lien Last Out Bank Loans						40%						35%						35%						30%						30%						25%
Non-Performing Second Lien Bank Loans						40%						30%						35%						25%						30%						20%
Non-Performing High Yield Securities						30%						30%						25%						25%						20%						20%
Non-Performing Mezzanine Investments						30%						25%						25%						20%						20%						20%
Performing Common Equity						30%						20%						25%						20%						20%						20%
Non-Performing Preferred Equity						0%						0%						0%						0%						0%						0%
Non-Performing Common Equity						0%						0%						0%						0%						0%						0%

  

“Bank Loans” means debt obligations (including, without limitation, term loans, revolving loans, debtor-in-possession financings, the funded and unfunded portion of revolving credit lines and letter of credit facilities and other similar loans and investments including interim loans and senior subordinated loans) which are generally under a loan or credit facility.

  

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“Capital Stock” of any Person means any and all shares of corporate stock (however designated) of, and any and all other equity interests and participations representing ownership interests (including membership interests and limited liability company interests) in, such Person. Notwithstanding anything to the contrary in this Agreement, any Portfolio Investment for which either of Encina Equipment Finance, LLC or Siena Capital Finance, LLC is the issuer or primary obligor shall be treated as Capital Stock for all purposes under this Agreement.

 

“Cash Pay Bank Loans” means First Lien Bank Loans, First Lien Unitranche Bank Loans, First Lien Last Out Bank Loans and Second Lien Bank Loans as to which, at the time of determination, all of the interest on which is payable not less frequently than quarterly and for which not less than 2/3rds of the interest (including accretions and “pay-in-kind” interest) for the current monthly or quarterly period (as applicable) is payable in cash.

 

“CDO Securities” means debt securities, equity securities or composite or combination securities (i.e. securities consisting of a combination of debt and equity securities that are issued in effect as a unit), including synthetic securities that provide synthetic credit exposure to debt securities, equity securities or composite or combination securities, that entitle the holders thereof to receive payments that (i) depend on the cash flow from a portfolio consisting primarily of ownership interests in debt securities, corporate loans or asset-backed securities or (ii) are subject to losses owing to credit events (howsoever defined) under credit derivative transactions with respect to debt securities, corporate loans or asset-backed securities.

 

“First Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a first lien and first priority perfected security interest (subject to any Permitted Prior Working Capital Lien and other customary encumbrances) on a substantial portion of the assets of the respective borrower and guarantors obligated in respect thereof, provided that any First Lien Bank Loan that is also a First Lien Unitranche Bank Loan shall be treated for purposes of determining the applicable Advance Rate as a First Lien Unitranche Bank Loan; provided, further, that any First Lien Bank Loan that is also a First Lien Last Out Bank Loan shall be treated for purposes of determining the applicable Advance Rate as a First Lien Last Out Bank Loan.

 

“First Lien Last Out Bank Loan” means a Bank Loan that is a First Lien Bank Loan, a portion of which is, in effect, subject to debt subordination and superpriority rights of other lenders following an event of default (such portion, a “last out” portion), provided, that the aggregate principal amount of the “last out” portion of such Bank Loan is at least 50% of the aggregate principal amount of any “first out” portion of such Bank Loan, provided, further, that the underlying obligor with respect to such Bank Loan shall have a ratio of first lien debt (including the “first out” portion of such Bank Loan, but excluding the “last out” portion of such Bank Loan) to EBITDA that does not exceed 3.25:1.00 and a ratio of aggregate first lien debt (including both the “first out” portion and the “last out” portion of such Bank Loan) to EBITDA that does not exceed 5.25:1.00. An Obligor’s investment in the “last out” portion of a First Lien Last Out Bank Loan shall be treated as a First Lien Last Out Bank Loan for purposes of determining the applicable Advance Rate for such Portfolio Investment under this Agreement. For the avoidance of doubt, an Obligor’s investment in the portion of such Bank Loan that is not the last out portion (the “first out” portion) shall be treated as a First Lien Bank Loan for purposes of determining the applicable Advance Rate for such Portfolio Investment under this Agreement and an Obligor’s investment in any “last out” portion of a First Lien Bank Loan that does not meet the foregoing criteria shall be treated as a Second Lien Bank Loan.

  

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“First Lien Unitranche Bank Loan” means a First Lien Bank Loan with a ratio of first lien debt to EBITDA that exceeds 5.25:1.00 and the underlying borrower of which does not also have a Second Lien Bank Loan outstanding.

 

“High Yield Securities” means debt Securities (a) issued by public or private issuers, (b) issued pursuant to an effective registration statement or pursuant to Rule 144A under the Securities Act (or any successor provision thereunder) and (c) that are not Cash Equivalents, Mezzanine Investments or Bank Loans.

 

“Junior Investments” means, collectively, Performing Cash Pay High Yield Securities and Performing Cash Pay Mezzanine Investments.

 

“Long-Term U.S. Government Securities” means U.S. Government Securities maturing more than one month from the applicable date of determination.

 

“Mezzanine Investments” means debt Securities (including convertible debt Securities (other than the “in-the-money” equity component thereof)) (a) issued by public or private issuers, (b) issued without registration under the Securities Act, (c) not issued pursuant to Rule 144A under the Securities Act (or any successor provision thereunder), (d) that are not Cash Equivalents and (e) contractually subordinated in right of payment to other debt of the same issuer.

 

“Non-Core Investments” means, collectively, Portfolio Investments in common equity, warrants, Non-Performing Bank Loans, Non-Performing High Yield Securities, Non-Performing Mezzanine Investments, Performing Non-Cash Pay High Yield Securities, Performing Preferred Equity, Performing Non-Cash Pay Mezzanine Investments and Performing Common Equity.

 

“Non-Performing Bank Loans” means, collectively, Non-Performing First Lien Bank Loans, Non-Performing First Lien Last Out Bank Loans, Non-Performing First Lien Unitranche Loans and Non-Performing Second Lien Bank Loans.

 

“Non-Performing Common Equity” means Capital Stock (other than Preferred Stock) and warrants of an issuer having any debt outstanding that is non-Performing.

  

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“Non-Performing First Lien Bank Loans” means First Lien Bank Loans other than Performing First Lien Bank Loans.

 

“Non-Performing First Lien Last Out Bank Loans” means First Lien Last Out Bank Loans other than Performing First Lien Last Out Bank Loans.

 

“Non-Performing First Lien Unitranche Bank Loans” means First Lien Unitranche Bank Loans other than Performing First Lien Unitranche Loans.

 

“Non-Performing High Yield Securities” means High Yield Securities other than Performing High Yield Securities.

 

“Non-Performing Mezzanine Investments” means Mezzanine Investments other than Performing Mezzanine Investments.

 

“Non-Performing Preferred Equity” means Preferred Equity other than Performing Preferred Equity.

 

“Non-Performing Second Lien Bank Loans” means Second Lien Bank Loans other than Performing Second Lien Bank Loans.

 

“Performing” means (a) with respect to any Portfolio Investment that is debt, the issuer of such Portfolio Investment is not in default of any payment obligations in respect thereof, after the expiration of any applicable grace period and (b) with respect to any Portfolio Investment that is Preferred Stock, the issuer of such Portfolio Investment has not failed to meet any scheduled redemption obligations or to pay its latest declared cash dividend, after the expiration of any applicable grace period.

 

“Performing Cash Pay High Yield Securities” means High Yield Securities (a) as to which, at the time of determination, not less than 2/3rds of the interest (including accretions and “pay-in-kind” interest) for the current monthly, quarterly, semi-annual or annual period (as applicable) is payable in cash and (b) which are Performing.

 

“Performing Cash Pay Mezzanine Investments” means Mezzanine Investments (a) as to which, at the time of determination, not less than 2/3rds of the interest (including accretions and “pay-in-kind” interest) for the current monthly, quarterly, semi-annual or annual period (as applicable) is payable in cash and (b) which are Performing.

 

“Performing Common Equity” means Capital Stock (other than Preferred Stock) and warrants of an issuer all of whose outstanding debt is Performing.

 

“Performing First Lien Bank Loans” means First Lien Bank Loans which are Cash Pay Bank Loans and are Performing.

  

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“Performing First Lien Last Out Bank Loans” means First Lien Last Out Bank Loans which are Cash Pay Bank Loans and are Performing.

 

“Performing First Lien Unitranche Bank Loans” means First Lien Unitranche Bank Loans which are Cash Pay Bank Loans and are Performing.

 

“Performing High Yield Securities” means High Yield Securities which are Performing.

 

“Performing Mezzanine Investments” means Mezzanine Investments which are Performing.

 

“Performing Non-Cash Pay High Yield Securities” means Performing High Yield Securities other than Performing Cash Pay High Yield Securities.

 

“Performing Non-Cash Pay Mezzanine Investments” means Performing Mezzanine Investments other than Performing Cash Pay Mezzanine Investments.

 

“Performing Preferred Equity” means Preferred Stock of an issuer that has not failed to meet any scheduled redemption obligations or to pay its latest declared cash dividend, after the expiration of any applicable grace period.

 

“Performing Second Lien Bank Loans” means Second Lien Bank Loans which are Cash Pay Bank Loans and are Performing.

 

“Permitted Prior Working Capital Lien” means, with respect to any borrower under a Bank Loan, a security interest to secure a revolving facility for such borrower and any of its subsidiaries; provided that (i) such Bank Loan has a second priority lien on the collateral that is subject to the first priority lien of such revolving facility (or a pari passu lien on such collateral where the revolving facility has a super-priority right of payment), (ii) such revolving facility is not secured by any other assets (other than a pari passu lien or a second priority lien, subject to the first priority lien of the Bank Loan) and does not benefit from any standstill rights or other agreements (other than customary rights) with respect to any other assets and (iii) the maximum outstanding amount of such revolving facility is not greater than the lower of (a) 1.0x EBITDA of the borrower under such Bank Loan, and (b) 20% of the outstanding amount of the associated First Lien Bank Loan.

 

“Preferred Stock,” as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to any shares (or other interests) of other Capital Stock of such Person, and shall include, without limitation, cumulative preferred, non-cumulative preferred, participating preferred and convertible preferred Capital Stock.

  

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“Second Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a second lien and second priority perfected security interest (subject to customary encumbrances) on a substantial portion of the assets of the respective borrower and guarantors obligated in respect thereof.

 

“Senior Investments” means Cash, Cash Equivalents, Short-Term U.S. Government Securities, Long-Term U.S. Government Securities, Performing First Lien Bank Loans, Performing First Lien Unitranche Loans, and Performing First Lien Last Out Bank Loans.

 

“Securities” means common and preferred stock, units and participations, member interests in limited liability companies, partnership interests in partnerships, notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, including debt instruments of public and private issuers and tax-exempt securities (including warrants, rights, put and call options and other options relating thereto, representing rights, or any combination thereof) and other property or interests commonly regarded as securities or any form of interest or participation therein, but not including Bank Loans.

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

“Senior Debt Amount” means, on any date, the greater of (i) the Covered Debt Amount and (ii) the Combined Debt Amount.

 

“Short-Term U.S. Government Securities” means U.S. Government Securities maturing within one month of the applicable date of determination.

 

“Value” means with respect to any Portfolio Investment, the most recent value as determined pursuant to Section 5.12.

 

SECTION 5.14. Post-Closing Matters. To the extent not delivered as of the Effective Date, not later than 60 days from the Effective Date (or such later date as may be agreed by the Administrative Agent in its sole discretion), the Borrower shall have executed and delivered (or caused to be executed and delivered) to the Administrative Agent a Control Agreement (as defined in the Guarantee and Security Agreement) with respect to each of the Deposit Accounts and Securities Accounts of the Borrower and the other Obligors required to be delivered by the Guarantee and Security Agreement. All representations and warranties contained in this Agreement and the other Loan Documents shall be deemed modified (or waived on a limited basis) to the extent necessary to give effect to the foregoing (and to permit the taking of such actions within the time periods specified above), and, to the extent any provision of this Agreement or any other Loan Document would be violated or breached (or any non-compliance with any such provision would result in a Default or Event of Default hereunder) as a result of any such extended deadline, such provision shall be deemed modified (or waived on a limited basis) to the extent necessary to give effect to this Section 5.14.

  

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ARTICLE VI

 

NEGATIVE COVENANTS

 

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

SECTION 6.01.         Indebtedness. The Borrower will not, nor will it permit any other Obligor to, create, incur, assume or permit to exist any Indebtedness, except:

 

(a)            Indebtedness created hereunder or under any other Loan Document;

 

(b)            Permitted Indebtedness in an aggregate amount that, at the time of incurrence thereof, taken together with the Indebtedness permitted under clauses (a), (g), (i), (j) and (l) of this Section 6.01, (1) does not exceed the amount required to comply with the provisions of Section 6.07(b) and (2) will not result in the Covered Debt Amount exceeding the Borrowing Base, so long as no Default or Event of Default shall have occurred or be continuing after giving effect to the incurrence of such Permitted Indebtedness;

 

(c)            Other Permitted Indebtedness;

 

(d)            Indebtedness of the Borrower to or from any other Obligor or Indebtedness of an Obligor to or from another Obligor;

 

(e)            repurchase obligations arising in the ordinary course of business with respect to U.S. Government Securities;

 

(f)            obligations payable to clearing agencies, brokers or dealers in connection with the purchase or sale of securities in the ordinary course of business;

 

(g)            other Indebtedness (including the portion of any Other Secured Indebtedness amortizing in excess of 1% per annum described in clause (i) of the definition thereof) in an aggregate outstanding principal amount not exceeding the Additional Debt Amount at any time and that, at the time of incurrence thereof, taken together with the Indebtedness permitted under clauses (a), (b), (i), (j) and (l) of this Section 6.01, (1) does not exceed the amount required to comply with the provisions of Section 6.07(b) and (2) will not result in the Covered Debt Amount exceeding the Borrowing Base, so long as no Default or Event of Default shall have occurred or be continuing after giving effect to the incurrence of such other Indebtedness;

 

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(h)            obligations (including Guarantees) in respect of Standard Securitization Undertakings;

  

(i)            at any time following the first anniversary of the Effective Date, Shorter Term Unsecured Indebtedness, so long as (x) no more than $300,000,000 of such indebtedness is incurred in reliance on this clause (i) of this Section 6.01 in any one annual period, and (y) at the time of incurrence thereof, such indebtedness, taken together with Indebtedness permitted under clauses (a), (b), (g), (j) and (l) of this Section 6.01, (1) does not exceed the amount required to comply with the provisions of Section 6.07(b), and (2) will not result in the Covered Debt Amount exceeding the Borrowing Base, so long as no Default or Event of Default shall have occurred or be continuing after giving effect to the incurrence of such Shorter Term Unsecured Indebtedness;

 

(j)            at any time prior to the first anniversary of the Effective Date, (x) Indebtedness evidenced by senior unsecured notes issued by the Borrower with a maturity date of at least three years from its issue in an aggregate principal amount not to exceed $300,000,000 and (y) Indebtedness evidenced by senior unsecured notes issued by the Borrower with a maturity date of at least five years from its issue in an aggregate principal amount not to exceed $300,000,000, provided that, in each case, at the time of incurrence thereof, no Default or Event of Default shall have occurred or be continuing after giving effect to the incurrence of such indebtedness and that, taken together with Indebtedness permitted under clauses (a), (b), (g), (i) and (l) of this Section 6.01, (1) such Indebtedness does not exceed the amount required to comply with the provisions of Section 6.07(b) and (2) the incurrence of such Indebtedness will not result in the Covered Debt Amount exceeding the Borrowing Base;

 

(k)            Permitted SBIC Guarantees;

 

(l)            any Indebtedness set forth on Schedule III;

 

(m)            obligations under Hedging Agreements entered into in the ordinary course of any Obligor’s financial planning and not for speculative purposes; and

 

(n)            Indebtedness secured by a Lien granted pursuant to Section 6.02(c) or 6.02(h) and attributable to an Obligor in accordance with clause (e) of the definition of “Indebtedness” to the extent that recourse of the underlying creditor to such Obligor is limited to the assets securing such Lien.

 

SECTION 6.02.         Liens. The Borrower will not, nor will it permit any other Obligor to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof (which, for the avoidance of doubt, shall not include participations in Investments to the extent that the portion of such Investment represented by such participation is not treated as a Portfolio Investment), except:

 

(a)            any Lien on any property or asset of the Borrower existing on the Effective Date and set forth in Part B of Schedule II, provided that (i) no such Lien shall extend to any other property or asset of the Borrower or any Subsidiary Guarantors and (ii) any such Lien shall secure only those obligations which it secures on the Effective Date and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

  

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(b)            Liens created pursuant to the Security Documents;

 

(c)            Liens on Special Equity Interests but only to the extent securing obligations in the manner provided in the definition of “Special Equity Interests” in Section 1.01;

 

(d)            Liens securing Indebtedness or other obligations (including Liens on Portfolio Investments, but only to the extent such Portfolio Investments have been released from the Lien in favor of the Collateral Agent in accordance with the requirements of Section 10.03 of the Guarantee and Security Agreement or, if such Indebtedness or obligations have been designated by the Borrower as “Designated Indebtedness” under the Guarantee and Security Agreement, such Indebtedness or obligations are secured on a pari passu basis with the Lien created under the Security Documents) in an aggregate outstanding principal amount not exceeding the Additional Debt Amount at any time, so long as at the time of the granting of such Lien, (i) the aggregate amount of Indebtedness permitted under clauses (a), (b), (g), (i), and (j) of Section 6.01 does not exceed the amount required to comply with the provisions of Section 6.07(b) and (ii) the Covered Debt Amount does not exceed the Borrowing Base;

 

(e)            Liens on an Obligor’s direct ownership interests in Excluded Assets (“Excluded Asset Liens”) but only to the extent that at the time any such Lien is incurred, no more than 25% of the Value of all Obligors’ direct ownership interests in all Excluded Assets (calculated as of the most recently delivered financial statements) have become subject to an Excluded Asset Lien or have been transferred pursuant to Section 6.03(e);

 

(f)            Permitted Liens;

 

(g)            Liens on an Obligor’s Equity Interests in any SBIC Subsidiary created in favor of the SBA;

 

(h)            Liens on the direct ownership or economic interests of any Obligor in an Excluded Asset to secure obligations owed to a creditor of such Excluded Asset; and

 

(i)            Liens on Cash and Cash Equivalents constituting cash collateral in connection with Hedging Agreements permitted under Section 6.04(c).

 

SECTION 6.03.         Fundamental Changes and Dispositions of Assets. The Borrower will not, nor will it permit any other Obligor to, enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution). The Borrower will not, nor will it permit any other Obligor to, acquire any business or property from, or capital stock of, or be a party to any acquisition of, any Person, except for purchases or acquisitions of Portfolio Investments and other assets in the normal course of the day-to-day business activities of the Borrower and its Subsidiaries and not in violation of the terms and conditions of this Agreement or any other Loan Document. The Borrower will not, nor will it permit any other Obligor to, convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, any part of its assets, whether now owned or hereafter acquired, but excluding (x) assets sold or disposed of in the ordinary course of business (including Dispositions of Portfolio Investments and to make expenditures of cash in the normal course of the day-to-day business activities of the Borrower and its Subsidiaries) (other than the transfer of Portfolio Investments to Excluded Assets), (y) subject to the provisions of clause (d) below, Portfolio Investments (to the extent not otherwise included in clause (x) of this Section) and (z) subject to the provisions of clause (e) below, any Obligor’s ownership interest in any Excluded Asset.

  

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Notwithstanding the foregoing provisions of this Section:

 

(a)            any Subsidiary Guarantor of the Borrower may be merged or consolidated with or into the Borrower or any other Subsidiary Guarantor; provided that if any such transaction shall be between a Subsidiary Guarantor and a wholly owned Subsidiary Guarantor, the wholly owned Subsidiary Guarantor shall be the continuing or surviving corporation;

 

(b)            any Obligor may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any wholly owned Subsidiary Guarantor of the Borrower;

 

(c)            the capital stock of any Subsidiary of the Borrower may be sold, transferred or otherwise disposed of (including by way of consolidation or merger) (i) to the Borrower or any wholly owned Subsidiary Guarantor of the Borrower or (ii) so long as such transaction results in an Obligor receiving the proceeds of such disposition, to any other Person, provided that in the case of this clause (ii) if such Subsidiary is a Subsidiary Guarantor or holds any Portfolio Investments, the Borrower would have been permitted to designated such Subsidiary as a “Designated Subsidiary” hereunder and would not have been prohibited from disposing of any such Portfolio Investments to such other Person under any other term of this Agreement;

 

(d)            the Obligors may sell, transfer or otherwise dispose of Portfolio Investments (other than direct ownership interests in Excluded Assets) to an Excluded Asset so long as (i) after giving effect to such sale, transfer or disposition (and any concurrent acquisitions of Portfolio Investments or payment of outstanding Loans) the Covered Debt Amount does not exceed the Borrowing Base and (ii) either (x) the amount of any excess availability under the Borrowing Base immediately prior to such sale, transfer or disposition is not diminished as a result of such release or (y) the Gross Borrowing Base immediately after giving effect to such sale, transfer or disposition is at least 110% of the Covered Debt Amount;

  

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(e)            the Obligors may sell, transfer or otherwise dispose of direct ownership interests in any Excluded Asset to any Subsidiary that is not an Obligor, if after giving effect to such sale, transfer or other disposition, no more than 25% of the Value of all Obligors’ direct ownership interests in all Excluded Assets (calculated as of the date of the most recently delivered financial statements on or prior to the date of such sale, transfer or other disposition) are subject to Excluded Asset Liens or have been sold, transferred or otherwise disposed of to a Subsidiary that is not an Obligor pursuant to this clause (e); provided that, notwithstanding that a transfer may violate such 25% limitation, such transfer shall nevertheless be permitted if it is required by law, rule, regulation or interpretive position of the Securities and Exchange Commission;

 

(f)            the Borrower may merge or consolidate with, or acquire all or substantially all of the assets of, any other Person so long as (i) the Borrower is the continuing or surviving entity in such transaction and (ii) at the time thereof and after giving effect thereto, no Default shall have occurred or be continuing;

 

(g)            the Borrower or the other Obligors may dissolve or liquidate (i) any Subsidiary that does not own, legally or beneficially, assets (including, without limitation, Portfolio Investments) which in the aggregate have a value of $1,000,000 or more at such time of dissolution or liquidation or (ii) any SBIC Subsidiary, provided that no portion of any Indebtedness or any other obligations (contingent or otherwise) of such SBIC Subsidiary (a) is, or would as a result of dissolution or liquidation hereunder become, recourse to or obligate the Borrower or any other Obligor (other than any SBIC Subsidiary) in any way, or (b) subjects, or would as a result of dissolution or liquidation hereunder subject, any property of the Borrower or any other Obligor (other than any SBIC Subsidiary) to the satisfaction of such Indebtedness;

 

(h)            the Borrower and the other Obligors may sell, lease, transfer or otherwise dispose of equipment or other property or assets that do not consist of Portfolio Investments so long as the aggregate amount of all such sales, leases, transfer and dispositions does not exceed $25,000,000 in any fiscal year; and

 

(i)            foreclosures on any assets subject to a Lien permitted by Section 6.02(c) or 6.02(h) shall be permitted by this Section;

 

provided that in no event shall the Borrower enter into any transaction of merger or consolidation or amalgamation, or effect any internal reorganization, if the surviving entity would be organized under any jurisdiction other than a jurisdiction of the United States.

 

SECTION 6.04.         Investments. The Borrower will not, nor will it permit any other Obligor to, acquire, make or enter into, or hold, any Investments except:

 

(a)            operating deposit accounts with banks;

 

(b)            Investments held by the Borrower and the Subsidiary Guarantors in the Borrower and the Subsidiary Guarantors;

  

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(c)            Hedging Agreements entered into in the ordinary course of any Obligor’s financial planning and not for speculative purposes;

 

(d)            Portfolio Investments held by the Borrower and its Subsidiaries (including investments in Excluded Assets) to the extent such Portfolio Investments are permitted under the Investment Company Act and the Investment Policies; provided that, if such Portfolio Investment is not included in the Collateral Pool, then (i) after giving effect to such Portfolio Investment (and any concurrent acquisitions of Portfolio Investments that are included in the Collateral Pool or payment of outstanding Loans), the Covered Debt Amount does not exceed the Borrowing Base and (ii) either (x) the amount of any excess availability under the Borrowing Base immediately prior to the acquisition of such Portfolio Investment is not diminished as a result of such acquisition or (y) the Gross Borrowing Base immediately after giving effect to the acquisition of such Portfolio Investment is at least 110% of the Covered Debt Amount; and

 

(e)            additional Investments up to but not exceeding $25,000,000 in the aggregate at any time outstanding.

 

For purposes of clause (e) of this Section, the aggregate amount of an Investment at any time shall be deemed to be equal to (A) the aggregate amount of cash, together with the aggregate fair value of property, loaned, advanced, contributed, transferred or otherwise invested that gives rise to such Investment (calculated at the time such Investment is acquired) minus (B) the aggregate amount of dividends, distributions or other payments received in cash in respect of such Investment; provided that in no event shall the aggregate amount of such Investment be deemed to be less than zero; provided, further, that the amount of an Investment shall not in any event be reduced by reason of any write-off of such Investment or increased by any increase in the amount of earnings retained in the Person in which such Investment is made that have not been dividended, distributed or otherwise paid out.

 

SECTION 6.05.         Restricted Payments. The Borrower will not, nor will it permit any other Obligor to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except that the Borrower or any Obligor may declare and pay:

 

(a)            dividends with respect to the capital stock of the Borrower to the extent payable in additional shares of the Borrower’s common stock;

 

(b)            dividends and distributions in either case in cash or other property (excluding for this purpose the Borrower’s common stock) in any taxable year of the Borrower in amounts not to exceed the amount that is estimated in good faith by the Borrower to be required to (i) reduce to zero for such taxable year or for the previous taxable year, its investment company taxable income (within the meaning of section 852(b)(2) of the Code), and reduce to zero the tax imposed by section 852(b)(3) of the Code, and (ii) avoid federal excise taxes for such taxable year (or for the previous taxable year) imposed by section 4982 of the Code (or analogous state Taxes payable by the Borrower);

  

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(c)            dividends and distributions in each case in cash or other property (excluding for this purpose the Borrower’s common stock) in addition to the dividends and distributions permitted under the foregoing clauses (a) and (b), so long as on the date of such Restricted Payment and after giving effect thereto:

 

(i)            no Default shall have occurred and be continuing; and

 

(ii)            the aggregate amount of Restricted Payments made during any taxable year of the Borrower after the Effective Date under this clause (c) shall not exceed the sum of (x) an amount equal to 10% of the taxable income of the Borrower for such taxable year determined under section 852(b)(2) of the Code, but without regard to subparagraphs (A), (B) or (D) thereof, minus (y) the amount, if any, by which dividends and distributions made during such taxable year pursuant to the foregoing clause (b) (whether in respect of such taxable year or the previous taxable year) based upon the Borrower’s estimate of taxable income exceeded the actual amounts specified in subclauses (i) and (ii) of such foregoing clause (b) for such taxable year;

 

(d)            other Restricted Payments so long as (i) on the date of such other Restricted Payment and after giving effect thereto (x) no Borrowing Base Deficiency exists and the Covered Debt Amount does not exceed 90% of the Gross Borrowing Base and (y) no Default shall have occurred and be continuing and (ii) on the date of such other Restricted Payment the Borrower delivers to the Administrative Agent and each Lender a Borrowing Base Certificate as at such date demonstrating compliance with subclause (x) after giving effect to such Restricted Payment. For purposes of preparing such Borrowing Base Certificate, (A) the Value of any Quoted Investment shall be the most recent quotation available for such Portfolio Investment and (B) the Value of any Unquoted Investment shall be the Value set forth in the Borrowing Base Certificate most recently delivered by the Borrower to the Administrative Agent and the Lenders pursuant to Section 5.01(d), provided that the Borrower shall reduce the Value of any Portfolio Investment referred to in this sub-clause (B) to the extent necessary to take into account any events of which the Borrower has knowledge that adversely affect the value of such Portfolio Investment.

 

In calculating the amount of Restricted Payments made by the Borrower during any period referred to in paragraph (b) or (c) above, any Restricted Payments made by Designated Subsidiaries or any other Excluded Asset that is a Subsidiary during such period (other than any such Restricted Payments that are made directly or indirectly to the Borrower or any of its wholly-owned Subsidiaries) shall be treated as Restricted Payments made by the Borrower during such period.

 

Nothing herein shall be deemed to prohibit the payment of Restricted Payments by any Subsidiary Guarantor of the Borrower to the Borrower or to any other Subsidiary Guarantor.

  

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For the avoidance of doubt, the Borrower shall not declare any dividend to the extent such declaration violates the provisions of the Investment Company Act applicable to it.

 

SECTION 6.06.         Certain Restrictions on Subsidiaries. The Borrower will not permit any of its Subsidiaries (other than Excluded Assets) to enter into or suffer to exist any indenture, agreement, instrument or other arrangement (other than the Loan Documents or any indenture, agreement, instrument or other arrangement entered into in connection with Indebtedness permitted under Section 6.01 to the extent any such indenture, agreement, instrument or other arrangement does not prohibit or restrain, in each case in any material respect, or impose materially adverse conditions upon, the requirements applicable to such Subsidiaries under the Loan Documents) that prohibits or restrains, in each case in any material respect, or imposes materially adverse conditions upon, the incurrence or payment of Indebtedness, the granting of Liens, the declaration or payment of dividends, the making of loans, advances, guarantees or Investments or the sale, assignment, transfer or other disposition of property, other than any agreement that imposes such restrictions only on Equity Interests in Excluded Assets.

 

SECTION 6.07.         Certain Financial Covenants.

 

(a)            Minimum Shareholders’ Equity. The Borrower will not permit Shareholders’ Equity at the last day of any fiscal quarter of the Borrower to be less than $975,000,000 plus 50% of the net proceeds of the sale of Equity Interests by the Borrower and its Subsidiaries after the Effective Date.

 

(b)            Asset Coverage Ratio. The Borrower will not permit the Asset Coverage Ratio to be less than 2.00 to 1.00 at any time, provided that, upon the listing of the Borrower’s common stock on any nationally recognized securities exchange in the United States or if the Borrower otherwise satisfies the requirements under the Investment Company Act to reduce such threshold, such threshold shall be reduced to 1.50 to 1.00.

 

SECTION 6.08.         Transactions with Affiliates. The Borrower will not, and will not permit any other Obligors to enter into any transactions with any of its Affiliates, even if otherwise permitted under this Agreement, except (a) transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such other Obligor than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Borrower and any other Obligors not involving any other Affiliate, (c) Restricted Payments permitted by Section 6.05, (d) the transactions provided in the Affiliate Agreements, (e) transactions described or referenced on Schedule V, (f) any Investment that results in the creation of an Affiliate, (g) transactions between or among the Obligors and any SBIC Subsidiary at prices and on terms and conditions not less favorable to the Obligors than could be obtained at the time on an arm’s-length basis from unrelated third parties, (h) transactions approved by a majority of the independent members of the board of directors of the Borrower, (i) Investments in Subsidiaries permitted by Section 6.04, (j) asset sales to Subsidiaries under Section 6.04, (k) servicing arrangements with respect to Portfolio Investments, (l) payment of compensation to directors and officers and indemnities to directors and officers and (m) Standard Securitization Undertakings.

  

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SECTION 6.09.         Lines of Business. The Borrower will not, nor will it permit any of its Subsidiaries to, engage in any business in a manner that would violate the Investment Policies in any material respect.

 

SECTION 6.10.         No Further Negative Pledge. The Borrower will not, and will not permit any other Obligors to, enter into any agreement, instrument, deed or lease which prohibits or limits in any material respect the ability of any Obligor to create, incur, assume or suffer to exist any Lien upon any of its properties, assets or revenues, whether now owned or hereafter acquired, or which requires the grant of any security for an obligation if security is granted for another obligation, except (a) this Agreement and the other Loan Documents; (b) covenants in documents creating Liens permitted by Section 6.02 prohibiting further Liens on the assets encumbered thereby; (c) customary restrictions contained in leases not subject to a waiver; (d) any agreement that imposes such restrictions only on Equity Interests in Excluded Assets; (e) the underlying governing agreements of any minority equity interest that impose such restrictions only on such equity interest; and (f) any other agreement that does not restrict in any manner (directly or indirectly) Liens created pursuant to the Loan Documents on any Collateral and does not require (other than pursuant to a grant of a Lien under the Loan Documents) the direct or indirect granting of any Lien securing any Indebtedness or other obligation by virtue of the granting of Liens on or pledge of property of any Obligor to secure the Loans, or any Hedging Agreement.

 

SECTION 6.11.         Modifications of Certain Documents. The Borrower will not consent to any modification, supplement, or waiver of (a) any of the provisions of any agreement, instrument or other document evidencing or relating to any Permitted Indebtedness, Shorter Term Unsecured Indebtedness, Specified Existing Bond Indebtedness, Contemplated Bond Indebtedness or Specified Existing Bonds that would result in such Permitted Indebtedness, Shorter Term Unsecured Indebtedness, Specified Existing Bond Indebtedness, Contemplated Bond Indebtedness, as applicable, not meeting the requirements of the definition of “Permitted Indebtedness”, “Shorter Term Unsecured Indebtedness”, “Specified Bond Indebtedness” or “Contemplated Bond Indebtedness”, as applicable, set forth in Section 1.01 of this Agreement; provided, that the Borrower may consent to any such modification, supplement, or waiver if the Indebtedness subject to such modification, supplement, or waiver would still be permitted under Section 6.01 after giving effect to such modification, supplement, or waiver, or (b) any of the Affiliate Agreements or the Custodian Agreement, unless such modification, supplement or waiver is not materially less favorable to the Borrower than could be obtained on an arm’s-length basis from unrelated third parties, in each case, without the prior consent of the Administrative Agent (with the approval of the Required Lenders).

 

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SECTION 6.12.         Payments of Other Indebtedness. The Borrower will not, nor will it permit any other Obligor to, purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of, any Permitted Indebtedness, Shorter Term Unsecured Indebtedness, Specified Existing Bond Indebtedness, Contemplated Bond Indebtedness or any other Indebtedness that is not then included in the Covered Debt Amount (other than the refinancing of such Indebtedness with Indebtedness permitted under Section 6.01), except for:

 

(a)            regularly scheduled payments, prepayments or redemptions of principal and interest in respect thereof required pursuant to the instruments evidencing such Indebtedness;

 

(b)            payments and prepayments thereof required to comply with the requirements of Section 2.09(b); and

 

(c)            other payments and prepayments of Permitted Indebtedness, Shorter Term Unsecured Indebtedness, Specified Existing Bond Indebtedness, Contemplated Bond Indebtedness or any other Indebtedness that is not then included in the Covered Debt Amount, provided that such Indebtedness has the earliest maturity of all such Indebtedness, so long as at the time of and immediately after giving effect to such payment, (i) no Default shall have occurred and be continuing and (ii) if such payment were treated as a Restricted Payment for the purposes of determining compliance with Section 6.05(d), such payment would be permitted to be made under Section 6.05(d);

 

provided that, in the case of clauses (a) through (c) above, in no event shall any Obligor be permitted to prepay or settle (whether as a result of a mandatory redemption, conversion or otherwise) any such Indebtedness, including any cash settlement of convertible debt, if after giving effect thereto, the Covered Debt Amount would exceed the Borrowing Base.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

SECTION 7.01. Events of Default. If any of the following events (“Events of Default”) shall occur and be continuing:

 

(a)            the Borrower shall (i) fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise or (ii) fail to deposit any amount into the Letter of Credit Collateral Account as required by Section 2.08(a) on the Commitment Termination Date;

 

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(b)            the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or under any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five or more Business Days;

 

(c)            any representation or warranty made (or deemed made pursuant to Section 4.02) by or on behalf of the Borrower or any of its Subsidiaries in this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, shall prove to have been incorrect when made or deemed made in any material respect and if capable of being remedied (together with its adverse consequences), shall continue (or its adverse consequences shall continue) unremedied for a period of 10 or more Business Days after the earlier of notice thereof by the Administrative Agent to the Borrower and the Borrower’s actual knowledge thereof;

 

(d)            the Borrower shall fail to observe or perform any covenant, condition or agreement contained in (i) Section 5.03 (with respect to the Borrower’s existence) or Sections 5.08(a) and (b) or in Article VI or any Obligor shall default in the performance of any of its obligations contained in Section 7 of the Guarantee and Security Agreement or (ii) Sections 5.01(d) and (e) or 5.02 and such failure shall continue unremedied for a period of five or more Business Days after notice thereof by the Administrative Agent (given at the request of any Lender) to the Borrower;

 

(e)            a Borrowing Base Deficiency shall occur and continue unremedied for a period of five or more Business Days after delivery of a Borrowing Base Certificate demonstrating such Borrowing Base Deficiency pursuant to Section 5.01(e), provided that it shall not be an Event of Default hereunder if the Borrower shall present the Administrative Agent with a reasonably feasible plan to enable such Borrowing Base Deficiency to be cured within 30 Business Days (which 30-Business Day period shall include the five Business Days permitted for delivery of such plan), so long as such Borrowing Base Deficiency is cured within such 30-Business Day period; provided further, such 30-Business Day period shall be extended to a 45-Business Day period solely to the extent provided in Section 2.09(b) in order to cure any failure to satisfy Section 5.13(g);

 

(f)            the Borrower or any other Obligor, as applicable, shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b), (d) or (e) of this Article) or any other Loan Document and such failure shall continue unremedied for a period of 30 or more days after notice thereof from the Administrative Agent (given at the request of any Lender) to the Borrower;

 

(g)            the Borrower or any of its Subsidiaries shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable, taking into account any applicable grace period;

 

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(h)            any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that shall continue unremedied for any applicable period of time sufficient to enable or permit the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity (for the avoidance of doubt, other than as permitted under Section 6.12 and that is not a result of a breach, default or other violation or failure in respect of such Material Indebtedness by the Borrower or any of its Subsidiaries and after giving effect to any applicable grace period); provided that this clause (h) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

 

(i)            an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any of its Significant Subsidiaries (or group of Subsidiaries that if consolidated would constitute a Significant Subsidiary) or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of its Significant Subsidiaries (or group of Subsidiaries that if consolidated would constitute a Significant Subsidiary) or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed and unstayed for a period of 60 or more days or an order or decree approving or ordering any of the foregoing shall be entered;

 

(j)            the Borrower or any of its Significant Subsidiaries (or group of Subsidiaries that if consolidated would constitute a Significant Subsidiary) shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of its Significant Subsidiaries (or group of Subsidiaries that if consolidated would constitute a Significant Subsidiary) or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

 

(k)            the Borrower or any of its Significant Subsidiaries (or group of Subsidiaries that if consolidated would constitute a Significant Subsidiary) shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

 

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(l)            one or more judgments for the payment of money in an aggregate amount in excess of $50,000,000 shall be rendered against the Borrower or any of its Significant Subsidiaries or any combination thereof and (i) the same shall remain undischarged for a period of 30 consecutive days following the entry of such judgment during which 30-day period such judgment shall not have been vacated, stayed, discharged or bonded pending appeal, or liability for such judgment amount shall not have been admitted by an insurer of reputable standing, or (ii) any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any of its Significant Subsidiaries to enforce any such judgment;

 

(m)            an ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, would reasonably be expected to result in a Material Adverse Effect;

 

(n)            a Change in Control shall occur;

 

(o)            Franklin BSP Lending Adviser, L.L.C. or any Affiliate of Franklin BSP Lending Adviser, L.L.C. that is organized under the laws of a jurisdiction located in the United States of America and in the business of managing or advising clients shall cease to be the investment advisor for the Borrower;

 

(p)            the Liens created by the Security Documents shall, at any time with respect to Portfolio Investments included in the Collateral Pool having an aggregate Value in excess of 5% of the aggregate Value of all Portfolio Investments included in the Collateral Pool, not be valid and perfected (to the extent perfection by filing, registration, recordation, possession or control is required herein or therein) in favor of the Administrative Agent, free and clear of all other Liens (other than Liens permitted under Section 6.02 or under the respective Security Documents); provided that if such default is a result of any action of the Administrative Agent or Collateral Agent or a failure of the Administrative Agent or Collateral Agent to take any action within its control, it shall be an Event of Default hereunder if such default shall continue unremedied for a period of ten (10) consecutive Business Days after the Borrower receives written notice thereof from the Administrative Agent;

 

(q)            except for expiration or termination in accordance with its terms, any of the Security Documents shall for whatever reason be terminated or cease to be in full force and effect in any material respect, or the enforceability thereof shall be contested by the Borrower;

 

(r)            the Obligors shall at any time, without the consent of the Required Lenders, (i) modify, supplement or waive in any material respect the Investment Policies (other than any modification, supplement or waiver required by any applicable law, rule or regulation), provided that it shall not be deemed a modification in any material respect of the Investment Policies if the permitted investment size of the Portfolio Investments proportionately increases as the size of the Borrower’s capital base changes; (ii) modify, supplement or waive in any material respect the Valuation Policy (other than any modification, supplement or waiver required under GAAP or required by any applicable law, rule or regulation), (iii) fail to comply with the Valuation Policy in any material respect, or (iv) fail to comply with the Investment Policies if the same would reasonably be expected to result in a Material Adverse Effect, and in the case of sub-clauses (iii) and (iv) of this clause (r), such failure shall continue unremedied for a period of 30 or more days after the earlier of notice thereof by the Administrative Agent (given at the request of any Lender) to the Borrower or actual knowledge thereof by a Financial Officer; or

 

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(s)            any Excluded Asset that is a Subsidiary shall either (i) make any dividend or other distribution (whether in cash, securities or other property) with respect to any shares of any class of capital stock of the Borrower, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of the Borrower or any option, warrant or other right to acquire any such shares of capital stock of the Borrower that, if such actions were undertaken by the Obligors, would not be permitted under Section 6.05 or (ii) purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of, any Permitted Indebtedness that, if such actions were undertaken by the Obligors, would not be permitted under Section 6.12;

 

then, and in every such event (other than an event with respect to the Borrower described in clause (i) or (j) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (i) or (j) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

 

In the event that the Loans shall be declared, or shall become, due and payable pursuant to the immediately preceding paragraph then, upon notice from the Administrative Agent or Lenders with LC Exposure representing more than 50% of the total LC Exposure demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall immediately deposit into the Letter of Credit Collateral Account cash in an amount equal to 102% of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (i) or (j) of this Article.

 

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ARTICLE VIII

 

THE ADMINISTRATIVE AGENT

 

Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Administrative Agent as its agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.

 

The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

 

The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise in writing by the Required Lenders, and (c) except as expressly set forth herein and in the other Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein or therein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

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The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

 

The Administrative Agent may resign at any time by notifying the Lenders, the Issuing Banks and the Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent of the Borrower not to be unreasonably withheld (or, if an Event of Default has occurred and is continuing in consultation with the Borrower), to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent’s resignation shall nonetheless become effective except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Banks under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and (2) the Required Lenders shall perform the duties of the Administrative Agent (and all payments and communications provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly) until such time as the Required Lenders appoint a successor agent as provided for above in this paragraph. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder (if not already discharged therefrom as provided above in this paragraph). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent.

 

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Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

Except as otherwise provided in Section 9.02(b) with respect to this Agreement, the Administrative Agent may, with the prior consent of the Required Lenders (but not otherwise), consent to any modification, supplement or waiver under any of the Loan Documents, provided that, without the prior consent of each Lender and each Issuing Bank, the Administrative Agent shall not (except as provided herein or in the Security Documents) release all or substantially all of the Collateral or otherwise terminate all or substantially all of the Liens under any Security Document providing for collateral security, agree to additional obligations being secured by all or substantially all of such collateral security, alter the relative priorities of the obligations entitled to the benefits of the Liens created under the Security Documents with respect to all or substantially all of the Collateral, except that no such consent shall be required, and the Administrative Agent is hereby authorized, to release any Lien covering property that is the subject of either a disposition of property permitted hereunder or a disposition to which the Required Lenders have consented.

 

Each Lender and Issuing Bank hereby agrees that (x) if the Administrative Agent notifies such Lender or Issuing Bank that the Administrative Agent has determined in its sole discretion that any funds received by such Lender or Issuing Bank from the Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, a “Payment”) were erroneously transmitted to such Lender or Issuing Bank (whether or not known to such Lender or Issuing Bank), and demands the return of such Payment (or a portion thereof), such Lender or Issuing Bank shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender or Issuing Bank to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Lender or Issuing Bank shall not assert, and hereby waives, as to the Administrative Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Payments received, including without limitation any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Lender or Issuing Bank pursuant to the foregoing shall be conclusive, absent manifest error.

 

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Each Lender and Issuing Bank hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has been made with respect to such Payment. Each Lender and Issuing Bank agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof) may have been sent in error, such Lender or Issuing Bank shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender or Issuing Bank to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.

 

The Borrower hereby agrees that (x) in the event an erroneous Payment (or portion thereof) is not recovered from any Lender or Issuing Bank that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender or Issuing Bank with respect to such amount and (y) an erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any obligations owed by the Borrower or any other Obligor, except, in each case, to the extent such Payment is, and solely with respect to the amount of such Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Obligor for the purpose of making such Payment.

 

Each party’s obligations pursuant to the foregoing shall survive the resignation or replacement of the Administrative Agent or any transfer of rights or obligations by, or the replacement of, a Lender, an Issuing Bank, the termination of the Commitments or the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

None of the Joint Lead Arrangers or the Syndication Agents shall have any responsibility under this Agreement.

 

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ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.01.         Notices; Electronic Communications

 

(a)            Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

 

(i)            if to the Borrower, to:

 

Franklin BSP Lending Corporation

c/o Benefit Street Partners L.L.C.

9 West 57th Street, Suite 4920

New York, New York 10019

Attention: Michael Frick

Telephone: (212) 588-6770

Email: m.frick@benefitstreetpartners.com

 

With a copy to:

 

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, Massachusetts 02199-3600

Attention: Patricia C. Lynch

Telephone: (617) 951-7940

Email: patricia.lynch@ropesgray.com

 

(ii)            if to the Administrative Agent, to:

 

JPMorgan Chase Bank, N.A.

500 Stanton Christiana Rd., NCC5 / Floor 1

Newark, DE 19713-2107

Attention: Andrew Weynant, Account Manager

Tel: +1 (302) 552-0714

Fax: (302) 634-8459

Email: andrew.weyant@chase.com

 

With a copy to:

 

JPMorgan Chase Bank, N.A.

500 Stanton Christiana Rd., NCC5 / Floor 1

Newark, DE 19713-2107

 

Attention: Christopher Draper, Account Manager

Tel: +1 (302) 542-6266

Fax: (302) 634-8459

Email: christopher.draper@chase.com;

 

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(iii)            if to the Collateral Agent, to:

 

JPMorgan Chase & Co

CIB DMO WLO

Mail Code NY1-C413

4 CMC, Brooklyn, NY, 11245-0001

United States;

 

(iv)            if to JPMCB in its capacity as Issuing Bank, to:

 

500 Stanton Christiana Road
NCC 5, 1st Floor
Newark, DE 19713-2107

 

(v)            if to any other Issuing Bank, to it at its address (or telecopy number) set forth in its Administrative Questionnaire; and

 

(vi)            if to any Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

 

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

 

(b)            Electronic Communications. Notices and other communications to the Lenders and the Issuing Banks hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or any Issuing Bank pursuant to Section 2.05 if such Lender or such Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless otherwise notified by the Administrative Agent to the Borrower, the Borrower may satisfy its obligation to deliver documents or notices to the Administrative Agent or the Lenders under Sections 5.01 and 5.12(a) by delivering an electronic copy to: andrew.weyant@chase.com and christopher.draper@chase.com (or such other e-mail address as provided to the Borrower in a notice from the Administrative Agent) (and the Administrative Agent shall promptly provide notice thereof to the Lenders).

 

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Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

 

In no event shall the Administrative Agent or any Lender have any liability to the Borrower or any other Person for damages of any kind (whether in tort, contract or otherwise) arising out of any transmission of communications through the internet, except in the case of direct damages, to the extent such damages are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the fraud, willful misconduct or gross negligence of such relevant Person.

 

(c)            Documents to be Delivered under Sections 5.01 and 5.12(a). For so long as a Syndtrak™ or an equivalent website is available to each of the Lenders hereunder, the Borrower may satisfy its obligation to deliver documents to the Administrative Agent or the Lenders under Sections 5.01 and 5.12(a) by delivering either an electronic copy to: christopher.draper@chase.com and andrew.weyant@chase.com (as provided in clause (b) above) or a notice identifying the website where such information is located for posting by the Administrative Agent on Syndtrak™ or such equivalent website, provided that the Administrative Agent shall have no responsibility to maintain access to Intralinks™ or an equivalent website.

 

SECTION 9.02.         Waivers; Amendments.

 

(a)            No Deemed Waivers; Remedies Cumulative. No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Banks and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the time.

 

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(b)            Amendments to this Agreement. Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall

 

(i)            increase the Commitment of any Lender without the written consent of such Lender,

 

(ii)            reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby,

 

(iii)            postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby,

 

(iv)            change Section 2.16(b), (c) or (d) or any other provision of the Loan Documents in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender affected thereby, or

 

(v)            change any of the provisions of this Section or the definition of the term “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; provided further that (x) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or any Issuing Bank hereunder without the prior written consent of the Administrative Agent or such Issuing Bank, as the case may be and (y) the consent of Lenders holding not less than two-thirds of the Credit Exposure and unused Commitments will be required (A) for any change to the provisions of this Agreement adversely affecting the calculation of the Borrowing Base (excluding changes to the provisions of Section 5.12(b)(iii) or (iv), but including changes to the provisions of Section 5.12(c)(ii) and the definitions set forth in Section 5.13) unless otherwise expressly provided herein and (B) for any release of Collateral other than for fair value or as otherwise permitted hereunder or under the other Loan Documents.

 

For purposes of this Section, the “scheduled date of payment” of any amount shall refer to the date of payment of such amount specified in this Agreement, and shall not refer to a date or other event specified for the mandatory or optional prepayment of such amount. In addition, whenever a waiver, amendment or modification requires the consent of a Lender “affected” thereby, such waiver, amendment or modification shall, upon consent of such Lender, become effective as to such Lender whether or not it becomes effective as to any other Lender, so long as the Required Lenders consent to such waiver, amendment or modification as provided above.

 

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Anything in this Agreement to the contrary notwithstanding, the Required Lenders may (i) waive any condition precedent to an extension of credit (which, for the avoidance of doubt, shall not constitute a waiver of any ongoing or resulting Default or Event of Default) or (ii) waive any default interest charged pursuant to Section 2.11(c).

 

(c)            Amendments to Security Documents. No Security Document or any provision thereof may be waived, amended or modified, nor may the Liens thereof be spread to secure any additional obligations (excluding any increase in the Loans and Letters of Credit hereunder pursuant to a Commitment Increase under Section 2.07(e)) except pursuant to an agreement or agreements in writing entered into by the Borrower, and by the Administrative Agent with the consent of the Required Lenders; provided that, (i) without the written consent of each Lender and each Issuing Bank, no such agreement shall release all or substantially all of the Obligors from their respective obligations under the Security Documents and (ii) without the written consent of each Lender and each Issuing Bank, no such agreement shall release all or substantially all of the collateral security or otherwise terminate all or substantially all of the Liens under the Security Documents, alter or subordinate the relative priorities of the obligations entitled to the Liens created under the Security Documents (except in connection with securing additional obligations equally and ratably with the Loans and other obligations hereunder) with respect to all or substantially all of the collateral security provided thereby, or release all or substantially all of the guarantors under the Guarantee and Security Agreement from their guarantee obligations thereunder, except that no such consent shall be required, and the Administrative Agent is hereby authorized (and so agrees with the Borrower) to direct the Collateral Agent under the Guarantee and Security Agreement to, and in addition to the rights of such parties under the Guarantee and Security Agreement, the Administrative Agent and the Collateral Agent under the Guarantee and Security Agreement may, (1) release any Lien covering property (and release any related guarantor) that is the subject of either a disposition of property permitted hereunder or a disposition to which the Required Lenders have consented and (2) release from the Guarantee and Security Agreement any Subsidiary Guarantor (and any property of such Subsidiary Guarantor) that is designated as a Designated Subsidiary or becomes an Excluded Asset in accordance with this Agreement or which ceases to be consolidated on the Borrower’s financial statements and is no longer required to be a Subsidiary Guarantor, so long as (A) after giving effect to any such release under this clause (2) (and any concurrent acquisitions of Portfolio Investments or payment of outstanding Loans) the Covered Debt Amount does not exceed the Borrowing Base and the Borrower delivers a certificate of a Financial Officer to such effect to the Administrative Agent, (B) either (I) the amount of any excess availability under the Borrowing Base immediately prior to such release is not diminished as a result of such release or (II) the Gross Borrowing Base immediately after giving effect to such release is at least 110% of the Covered Debt Amount and (C) no Event of Default has occurred and is continuing.

 

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(d)            Replacement of Non-Consenting Lender. If, in connection with any proposed change, waiver, discharge or termination to any of the provisions of this Agreement as contemplated by this Section 9.02, the consent of one or more Lenders whose consent is required for such proposed change, waiver, discharge or termination is not obtained, then (so long as no Event of Default has occurred and is continuing) the Borrower shall have the right, at its sole cost and expense, to replace each such non-consenting Lender or Lenders with one or more replacement Lenders pursuant to Section 2.18(b) so long as at the time of such replacement, each such replacement Lender consents to the proposed change, waiver, discharge or termination.

 

SECTION 9.03.         Expenses; Indemnity; Damage Waiver.

 

(a)            Costs and Expenses. The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable and documented out-of-pocket fees, charges and disbursements of counsel for the Administrative Agent (with respect to legal fees, limited to the reasonable and documented out-of-pocket fees, charges and disbursements of one outside counsel for the Administrative Agent and its Affiliates collectively in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof), (ii) all reasonable and documented out-of-pocket expenses incurred by any Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, any Issuing Bank or any Lender (with respect to legal fees, limited to the reasonable and documented fees, charges and disbursements of one outside counsel (and, in the case of an actual conflict of interest where the Administrative Agent, any Issuing Bank or any Lender affected by such conflict informs the Borrower of such conflict and thereafter retains its own counsel, another firm of counsel for any such affected Persons collectively) for the Administrative Agent, any Issuing Bank and any Lender collectively), in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable and documented out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect thereof and (iv) all reasonable and documented out-of-pocket costs, expenses, taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated by any Security Document or any other document referred to therein.

 

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(b)            Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent, the Issuing Banks, the Collateral Agent, the Joint Lead Arrangers and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities, including environmental liabilities, and related reasonable and documented out-of-pocket expenses (other than Taxes or Other Taxes, which shall only be indemnified by the Borrower to the extent provided in Section 2.15), limited to the reasonable and documented fees, charges and disbursements of one outside counsel (and, in the case of an actual conflict of interest where the Indemnitee affected by such conflict informs the Borrower of such conflict and thereafter retains its own counsel, another firm of counsel for any such affected Indemnitees collectively) for the Indemnitees collectively (and if reasonably necessary, of a single regulatory counsel and a single local counsel in each appropriate jurisdiction and, in the case of an actual or potential conflict of interest where the Indemnitee affected by such conflict informs the Borrower of such conflict and thereafter retains its own counsel, of another primary firm of counsel for such affected Indemnitee (and if reasonably necessary, of a single regulatory counsel and a single local counsel in each appropriate jurisdiction)), incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, (ii) the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (iii) any action taken in connection with this Agreement, including, but not limited to, the payment of principal and interest and fees, (iv) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Banks to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit) or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto (each, a “Proceeding”); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from (i) the fraud, willful misconduct or gross negligence of any Indemnitee, (ii) a claim brought against any Indemnitee for a material breach of such Indemnitee’s obligations under this Agreement or the other Loan Documents, if there has been a final and nonappealable judgment against such Indemnitee on such claim as determined by a court of competent jurisdiction or (iii) a claim arising as a result of a dispute between Indemnitees (other than (x) any dispute involving claims against the Administrative Agent, the applicable Issuing Bank, any Joint Lead Arranger or any Lender, in each case in their respective capacities as such, and (y) claims arising out of any act or omission by the Borrower or its Affiliates).

 

The Borrower shall not be liable to any Indemnitee for any special, indirect, consequential or punitive damages arising out of, in connection with, or as a result of the Transactions asserted by an Indemnitee against the Borrower or any other Obligor, provided that the foregoing limitation shall not be deemed to impair or affect the Obligations of the Borrower under the preceding provisions of this subsection.

 

Each Indemnitee shall be obligated to refund or return any and all amounts paid by the Borrower or any of its Affiliates under this Section to the extent such Indemnitee is not entitled to payment of such amounts in accordance with the terms hereof, as determined by a final and non-appealable judgment of a court of competent jurisdiction.

 

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(c)            Reimbursement by Lenders. To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent or any Issuing Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent and such Issuing Bank, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or such Issuing Bank in its capacity as such.

 

(d)            Settlements. The Borrower shall not be liable for any settlement of any Proceeding effected without the Borrower’s written consent (which consent shall not be unreasonably withheld, conditioned or delayed), but if settled with the Borrower’s written consent or if there is a final judgment by a court of competent jurisdiction in any such Proceeding, the Borrower agrees to indemnify and hold harmless each Indemnitee in the manner and to the extent set forth in this Section. The Borrower shall not, without the prior written consent of the JPMCB and its Affiliates (which consent shall not be unreasonably withheld, conditioned or delayed), effect any settlement of any pending or threatened Proceedings in respect of which indemnity could have been sought hereunder by JPMCB unless (x) such settlement includes an unconditional release of such Indemnitee in form and substance reasonably satisfactory to JPMCB from all liability on claims that are the subject matter of such Proceedings and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of JPMCB or any injunctive relief or other non-monetary remedy. The Borrower acknowledges that any failure to comply with its obligations under the preceding sentence may cause irreparable harm to JPMCB and the other Indemnitees.

 

(e)            Payments. All amounts due under this Section shall be payable within 10 Business Days of a written demand therefor, together with backup documentation supporting such indemnity request.

 

SECTION 9.04.         Successors and Assigns.

 

(a)            Assignments Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

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(b)            Assignments by Lenders.

 

(i)            Assignments Generally. Subject to the conditions set forth in clause (ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans and LC Exposure at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

 

(A)            the Borrower, provided the Borrower shall be deemed to have consented to an assignment of all or a portion of the Loans and Commitments unless it shall have objected thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof; provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, or, if an Event of Default has occurred and is continuing; and

 

(B)            the Administrative Agent and the Issuing Banks.

 

(ii)            Certain Conditions to Assignments. Assignments shall be subject to the following additional conditions:

 

(A)            except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans and LC Exposure, the amount of the Commitment or Loans and LC Exposure of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than U.S. $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default under clause (a), (i) or (j) of Article VII has occurred and is continuing;

 

(B)            each partial assignment of Commitments or Loans and LC Exposure shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement in respect of Commitments, Loans and LC Exposure;

 

(C)            the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of U.S. $3,500 (which fee shall not be payable in connection with an assignment to a Lender or to an Affiliate of a Lender) (for which the Borrower and the Guarantors shall not be obligated); and

 

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(D)            the assignee, if it shall not already be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(iii)            Effectiveness of Assignments. Subject to acceptance and recording thereof pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.03 with respect to facts and circumstances occurring prior to the effective date of such assignment). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section.

 

(c)            Maintenance of Registers by Administrative Agent. The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in New York City a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, the Issuing Banks and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, any Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d)            Acceptance of Assignments by Administrative Agent. Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

 

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(e)            Participations. Any Lender may sell to one or more banks or other entities (each, a “Participant”) participations in all or a portion of such Lender’s rights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Commitments and the Loans and LC Disbursements owing to it) without the consent of the Borrower; provided that (i) such Lender’s obligations under this Agreement and the other Loan Documents shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Loan Documents. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement or any other Loan Document; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.16(d) as though it were a Lender hereunder. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register complying with the requirements of Sections 163(f), 871(h) and 881(c)(2) of the Code and the Treasury Regulation issued hereunder on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Commitments or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

(f)            Limitations on Rights of Participants. A Participant shall not be entitled to receive any greater payment under Section 2.13, 2.14 or 2.15 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.15 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.15 as though it were a Lender and in the case of a Participant claiming exemption for portfolio interest under Section 871(h) or 881(c) of the Code, the applicable Lender shall provide the Borrower with satisfactory evidence that the participation is in registered form and shall permit the Borrower to review such register as reasonably needed for the Borrower to comply with its obligations under applicable laws and regulations.

 

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(g)            Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or assignment to a Federal Reserve Bank or any other central bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.

 

(h)            No Assignments to Natural Persons, Defaulting Lender, the Borrower or Affiliates. Anything in this Section to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan or LC Exposure held by it hereunder to any Defaulting Lender, natural person (or a holding company, investment vehicle or trust for, or owned and operated by or for the primary benefit of a natural person) or the Borrower or any of its Affiliates or Subsidiaries without the prior consent of each Lender.

 

SECTION 9.05.         Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

 

SECTION 9.06.         Counterparts; Integration; Effectiveness; Electronic Execution.

 

(a)            Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract between and among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page to this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

 

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(b)            Electronic Execution of Assignments. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other Borrowing Requests, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent (and, for the avoidance of doubt, electronic signatures utilizing the DocuSign platform shall be deemed approved), or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

SECTION 9.07.         Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

SECTION 9.08.         Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Banks and each of their Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

 

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SECTION 9.09.         Governing Law; Jurisdiction; Etc.

 

(a)            Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of New York.

 

(b)            Submission to Jurisdiction. Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court for the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.

 

(c)            Waiver of Venue. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d)            Service of Process. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

(e)            Waiver of Consequential Damages, Etc. To the extent permitted by applicable law, (i) the Administrative Agent, any Joint Lead Arranger, any Issuing Bank and any Lender, and any Related Party of any of the foregoing Persons (each such Person being called a “Lender-Related Person”) and each other party hereto shall not assert, and each party hereto hereby waives, any claim against any other party hereto or any Indemnitee for any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising from the use by others of information or other materials (including, without limitation, any personal data) obtained through telecommunications, electronic or other information transmission systems (including the Internet) and (ii) each party hereto shall not assert, and hereby waives, any claim against any other party hereto or any Lender-Related Person, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

 

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SECTION 9.10.         WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11.         Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

SECTION 9.12.         Treatment of Certain Information; Confidentiality.

 

(a)            Treatment of Certain Information. The Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Subsidiaries (in connection with this Agreement or otherwise) by any Lender or by one or more subsidiaries or affiliates of such Lender and the Borrower hereby authorizes each Lender to share any information delivered to such Lender by the Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such subsidiary or affiliate, it being understood that any such subsidiary or affiliate receiving such information shall be bound by the provisions of paragraph (b) of this Section as if it were a Lender hereunder. Such authorization shall survive the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

 

(b)            Confidentiality. Each of the Administrative Agent, the Lenders, the Joint Lead Arrangers and the Issuing Banks agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority purporting to have jurisdiction over it or its Affiliates (including any self-regulatory authority), (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party hereto or to any rating agency, (v) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (x) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement; provided that so long as no Event of Default is continuing (or, in the case of a “direct competitor” of the Borrower, so long as no Event of Default under clause (a), (b), (i), (j) or (k) of Article VII is continuing), such Person would be permitted to be an assignee or participant pursuant to the terms hereof, (y) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations or (z) any market data service, (vii) with the consent of the Borrower or (viii) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, any Issuing Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower or its Affiliates. In addition, the Administrative Agent and each Lender may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent or any Lender in connection with the administration or servicing of this Agreement, the other Loan Documents and the Commitments.

 

Senior Secured Credit Agreement

 

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For purposes of this Section, “Information” means all information received from or on behalf of the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses or any Portfolio Investment, other than any such information that is available to the Administrative Agent, any Lender or any Issuing Bank on a nonconfidential basis prior to disclosure by the Borrower or any of its Subsidiaries, provided that, in the case of information received from the Borrower or any of its Subsidiaries after the Effective Date, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

The provisions of this Sections 9.12 shall survive and remain in full force and effect for two years following the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments and the termination of this Agreement.

 

SECTION 9.13.         USA PATRIOT Act. Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with said Act.

 

SECTION 9.14.         Acknowledgment and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

 

Senior Secured Credit Agreement

 

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(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and

 

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

 

(i)  a reduction in full or in part or cancellation of any such liability;

 

(ii)  a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

 

(iii)  the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.

 

SECTION 9.15.         No Fiduciary Duty. Each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of the Obligors, their stockholders and/or their affiliates. Each Obligor agrees that nothing in the Agreement or the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Obligor, its stockholders or its affiliates, on the other. The Obligors acknowledge and agree that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Obligors, on the other, and (ii) solely in connection therewith and solely with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of any Obligor, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Obligor, its stockholders or its Affiliates on other matters) or any other obligation to any Obligor except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of any Obligor, its management, stockholders, creditors or any other Person. Each Obligor acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to the transactions contemplated by the Loan Documents and the process leading thereto. Each Obligor agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Obligor, solely in connection with the transactions contemplated by the Loan Documents or the process leading thereto.

 

Senior Secured Credit Agreement

 

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SECTION 9.16.         Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedging Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

 

In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

 

SECTION 9.17.         Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the NYFRB Rate to the date of repayment, shall have been received by such Lender.

 

[Signature pages follow]

 

Senior Secured Credit Agreement

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

			FRANKLIN BSP LENDING CORPORATION
			By:
						Name:
						Title:

 

Senior Secured Credit Agreement

 

 

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			LENDERS
			JPMORGAN CHASE BANK, N.A.,
			as a Lender, an Issuing Bank and as Administrative Agent
			By:
						Name:
						Title:

 

Senior Secured Credit Agreement

 

 

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						[Name of Lender], as a Lender
			By:
						Name:
						Title:

 

Senior Secured Credit Agreement

 

 

 

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Exhibit 31.1

I, Richard J. Byrne, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 of Franklin BSP Lending Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:			August 12, 2022			/s/ Richard J. Byrne
						Richard J. Byrne
						Chief Executive Officer, President, and Chairman of the Board of Directors (Principal Executive Officer)

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Exhibit 31.2

 

I, Nina Kang Baryski, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 of Franklin BSP Lending Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:			August 12, 2022			/s/ Nina Kang Baryski
						Nina Kang Baryski Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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Exhibit 32

 

SECTION 1350 CERTIFICATIONS

 

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Act of 1934, as amended.

 

The undersigned, who are the Principal Executive Officer and Principal Financial Officer of Franklin BSP Lending Corporation (the “Company”), each hereby certify as follows:

 

To the best of their knowledge, the Quarterly Report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated this 12th day of August 2022

 

/s/ Richard J. Byrne
Richard J. Byrne Chief Executive Officer, President, and Chairman of the Board of Directors (Principal Executive Officer)
/s/ Nina Kang Baryski
Nina Kang Baryski Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)