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As filed with the Securities and Exchange Commission on January 7, 2010
Securities Act File No. 333-148734

 
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933    x
(Check appropriate box or boxes)

 	 	Pre-Effective Amendment No. 7	 	x	
 	 	Post-Effective Amendment No.	 	¨	

SOLAR CAPITAL LTD.
(Exact name of Registrant as specified in charter)

500 Park Avenue, 5th Floor
New York, NY 10022
(Address of Principal Executive Offices)
Registrant’s telephone number, including Area Code: (212) 993-1670
Michael S. Gross
Chief Executive Officer
Solar Capital Ltd.
500 Park Avenue, 5th Floor
New York, NY 10022
(Name and address of agent for service)

COPIES TO:

Steven B. Boehm	 	Sarah E. Cogan	
John J. Mahon	 	Joseph H. Kaufman	
Sutherland Asbill & Brennan LLP	 	Simpson Thacher & Bartlett LLP	
1275 Pennsylvania Avenue, NW	 	425 Lexington Avenue	
Washington, DC 20004	 	New York, NY 10017	
(202) 383-0100	 	(212) 455-2000	

Approximate date of proposed public offering:     As soon as practicable after the effective date of this Registration Statement.
If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box.   ¨
It is proposed that this filing will become effective (check appropriate box):
¨    when declared effective pursuant to Section 8(c).
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

 	
Title of Securities Being Registered	 	Proposed Maximum
Aggregate
Offering Price(1)	 	Amount of
Registration
Fee(1)(2)	
Common Stock, $0.01 par value per share	 	$300,000,000	 	$11,790.00	

(1)	Estimated pursuant to Rule 457(o) under the Securities Act of 1933 solely for the purpose of determining the registration fee.	
(2)	Previously paid.	
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
SUBJECT TO COMPLETION, DATED                      , 2010
PRELIMINARY PROSPECTUS

             Shares
Solar Capital Ltd.
Common Stock
$         per share

We are an externally managed finance company. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in leveraged companies, including middle-market companies, in the form of senior secured loans, mezzanine loans and equity securities.
We were formed in February 2007 as Solar Capital LLC, a Maryland limited liability company, and commenced operations in March 2007. Immediately prior to the pricing of this offering, Solar Capital LLC will be merged with and into Solar Capital Ltd., a Maryland Corporation that is an externally managed, non-diversified closed-end management investment company which intends to elect to be treated as a business development company under the Investment Company Act of 1940, or the 1940 Act, prior to the consummation of this offering. We are managed by Solar Capital Partners, LLC. Solar Capital Management, LLC provides the administrative services necessary for us to operate.
This is our initial public offering, and our shares have no history of public trading. We currently expect that the initial public offering price of our common stock will be between $[    ] and $[    ] per share. We have applied to have our common stock approved for listing on the NASDAQ Global Select Market under the symbol “SLRC.”
This prospectus contains important information about us that a prospective investor should know before investing in our common stock. Please read this prospectus before investing, and keep it for future reference. Upon the completion of this offering, we will file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission. This information will be available free of charge by contacting us by mail at 500 Park Avenue, 5 th  Floor, New York, NY 10022, by telephone at (212) 993-1670 or on our website at http://www.solarcapltd.com . The Securities and Exchange Commission also maintains a website at  http://www.sec.gov  that contains such information. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider that information to be part of this prospectus.

An investment in our common stock is very risky and highly speculative. Shares of closed-end investment companies, including business development companies, frequently trade at a discount to their net asset value. If our shares trade at a discount to our net asset value, it may increase the risk of loss for purchasers in this offering. In the event our initial public offering price is $[            ] per share (the high-point of the estimated initial public offering price range), purchasers in this offering would experience immediate dilution in net asset value of approximately $           per share. See “Dilution” for more information. In addition, the companies in which we invest are subject to special risks. See “Risk Factors” beginning on page 19 to read about factors you should consider, including the risk of leverage, before investing in our common stock.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 
 	 	 	 	 	 	 	
  	  	Per Share	  	Total(1)	
Public Offering Price	  	$	            	  	$	            	
Sale Load (Underwriting Discounts and Commissions)	  	$	            	  	$	            	
Proceeds to Solar Capital Ltd. (before expenses)(2)	  	$	            	  	$	            	

 
(1)	 	We have granted the underwriters a 30-day option, which we refer to as the over-allotment option, to purchase up to an additional              shares of our common stock at the public offering price, less underwriting discounts and commissions (sales load). If the over-allotment option is exercised in full, the total public offering price will be $             and the total underwriting discounts and commissions (sales load) will be $            . The proceeds to us would be $            , before deducting expenses payable by us. See “Underwriting.”	
 
(2)	 	We estimate that we will incur approximately $                     in offering expenses in connection with this offering. Stockholders will indirectly bear such expenses as investors in Solar Capital Ltd.	

The underwriters expect to deliver the shares on or about                     , 2010.

 
 	 	 	 	 	
Citi	 	J.P. Morgan	 	Morgan Stanley	
                    , 2010

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You should rely on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information or to make representations as to matters not stated in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We are offering to sell, and seeking offers to buy, securities only in jurisdictions where offers and sales are permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. This prospectus will be amended to reflect material changes to the information contained herein.

TABLE OF CONTENTS

  	  	Page	
Summary	  	1	
Fees and Expenses	  	15	
Selected Financial and Other Data	  	17	
Risk Factors	  	19	
Forward-Looking Statements and Projections	  	35	
Use of Proceeds	  	36	
Distributions	  	36	
Solar Capital Merger	  	38	
Capitalization	  	39	
Dilution	  	40	
Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	41	
Business	  	53	
Portfolio Companies	  	67	
Management	  	71	
Portfolio Management	  	76	
Investment Advisory and Management Agreement	  	77	
Administration Agreement	  	83	
License Agreement	  	83	
Certain Relationships and Transactions	  	84	
Control Persons and Principal Stockholders	  	85	
Regulation as a Business Development Company	  	87	
Determination of Net Asset Value	  	92	
Dividend Reinvestment Plan	  	94	
Material U.S. Federal Income Tax Considerations	  	95	
Description of Securities	  	102	
Shares Eligible for Future Sale	  	109	
Underwriting	  	110	
Conflicts of Interest	  	113	
Custodian, Transfer and Distribution Paying Agent and Registrar	  	114	
Brokerage Allocation and Other Practices	  	114	
Legal Matters	  	114	
Independent Registered Public Accounting Firm	  	114	
Available Information	  	115	
Index to Financial Statements	  	F-1	
Until                     , 2010 (25 days after the date of this prospectus), federal securities laws may require all dealers that effect transactions in our common stock, whether or not participating in this offering, to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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SUMMARY
This summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read carefully the more detailed information set forth under “Risk Factors” and the other information included in this prospectus and the documents to which we have referred.
We were formed in February 2007 as Solar Capital LLC, a Maryland limited liability company, and commenced operations in March 2007. Immediately prior to the pricing of this offering, through a series of transactions Solar Capital LLC will be merged with and into Solar Capital Ltd., a Maryland corporation, which we refer to as the “Solar Capital Merger.” Except where the context suggests otherwise, the terms “we,” “us,” “our” and “Solar Capital” refer to Solar Capital LLC prior to the Solar Capital Merger, and Solar Capital Ltd. after the Solar Capital Merger. Also, the term “units” refers to units of Solar Capital LLC prior to the Solar Capital Merger and the term “shares” refers to shares of Solar Capital Ltd. after the Solar Capital Merger. In addition, the terms “Solar Capital Partners” or “investment adviser” refer to Solar Capital Partners LLC, and “Solar Capital Management” or the “administrator” refers to Solar Capital Management, LLC.
In this prospectus, we use the term “leveraged” to refer to companies of any size with non-investment grade debt outstanding or, if not explicitly rated, those which we believe would be rated as non-investment grade based on their leverage levels and other terms. In addition, we use the term “middle-market” to refer to companies with annual revenues between $50 million and $1 billion.
Unless indicated otherwise or the context requires, all information in this prospectus assumes (i) no exercise of the underwriters’ option to purchase additional shares of our common stock; and (ii) an initial public offering price of $[    ] per share (the mid-point of the estimated initial public offering price range set forth on the cover page of this prospectus).
Solar Capital
We are an externally managed finance company. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in leveraged companies, including middle-market companies, in the form of senior secured loans, mezzanine loans and equity securities. From time to time, we may also invest in public companies that are thinly traded. We are managed by Solar Capital Partners. Solar Capital Management provides the administrative services necessary for us to operate.
As of September 30, 2009, our long term investments totaled $792.4 million and our net asset value was $732.9. Our portfolio was comprised of debt and equity investments in 36 portfolio companies and our income producing assets, which represented 91% of our total portfolio, had a weighted average annualized yield of approximately 14.8%.
Upon the consummation of the Solar Capital Merger, there will be approximately 26.65 million shares and $125 million in senior unsecured notes (the “Distribution Notes”) outstanding. Giving effect to the completion of a $75 million cash distribution to our existing unit holders and the Solar Capital Merger, the September 30, 2009 net asset value would have been approximately $532.9 million, or $20.00 per share, on a pro forma as adjusted basis. As described in further detail below, we estimate that our December 31, 2009 net asset value will be between $[            ] and $[            ] million, or between $[            ] and $[            ] per share, on an as adjusted basis. As of January [      ], 2010, and on an as adjusted basis to give effect to the issuance of the Distribution Notes, our outstanding debt was approximately [      ]% of total assets, making us one of the least levered business development companies.

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Our portfolio primarily consists of direct investments in long-term subordinated loans, referred to as mezzanine loans, and senior secured loans made to private leveraged companies organized and located in the United States, including middle-market companies. We also invest in equity securities, such as preferred stock, common stock, warrants and other equity interests received in connection with our debt investments or through direct investments. Our business model is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. Our investments generally range between $20 million and $100 million each, although we expect that this investment size will vary proportionately with the size of our capital base.
In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to enhance our overall returns. These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States.
We were formed in February 2007 as Solar Capital LLC, a Maryland limited liability company, and on March 13, 2007, we conducted a private placement of units of membership interest, or units, in Solar Capital LLC, which we refer to as our initial private placement. Solar Capital Investors, LLC, an entity funded by the management of Solar Capital Partners, acquired approximately 3.3 million units in connection with the initial private placement. In addition, in connection with the initial private placement, certain funds managed by Magnetar Financial LLC, which we refer to as Magnetar, and certain entities affiliated therewith (collectively, the “Magnetar entities”), acquired approximately 35 million units. We refer to investors in the initial private placement, together with our other equity holders prior to the Solar Capital Merger, as the LLC Holders.
Immediately prior to the pricing of this offering, through a series of transactions Solar Capital LLC will be merged with and into Solar Capital Ltd., a Maryland corporation, leaving Solar Capital Ltd. as the surviving entity. An aggregate of approximately 26.65 million shares of common stock of Solar Capital Ltd. and $125 million in Distribution Notes of Solar Capital Ltd. will be issued to the LLC Holders in connection with the Solar Capital Merger. The Distribution Notes will be due on [    ] and will have a coupon of [    ]%, payable quarterly. The Distribution Notes are pre-payable at par at any time and are subject to customary terms and conditions.
Dividends
On January [    ], 2010, the board of directors of Solar Capital Ltd. declared a dividend of $[    ] per share, payable on [    ], 2010 to holders of record as of [    ], 2010. This dividend payment is contingent upon the completion of our initial public offering during the first quarter of 2010. Purchasers in this offering will be entitled to receive this dividend payment. We anticipate that the dividend will be paid from post-offering taxable earnings, including interest and capital gains generated by our investment portfolio. However, if we do not generate sufficient taxable earnings during the year, the dividend may constitute a return of capital. The specific tax characteristics of our dividends will be reported to shareholders after the end of each calendar year. See “Distributions.”
Recent Developments
Estimated Net Asset Value
Our December 31, 2009 unaudited net asset value per share is estimated to be between $[        ] and $[        ] on an as adjusted basis reflecting the $75 million cash distribution to LLC Holders described below and adjusted for the Solar Capital Merger. On January [    ], 2010, our board of directors approved the fair value of our portfolio assets as of December 31, 2009 in accordance with our valuation policy. Our December 31, 2009 net asset value estimate is based on this board-approved fair value of our portfolio investments as well as other

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factors, including expected investment income earned on the portfolio and the Pre-IPO Distribution. The increase in net asset value per share from September 30, 2009 to December 31, 2009 is primarily due to the appreciation of our portfolio assets and our retained investment income for the quarter.
New Revolving Credit Facility
On January [      ], 2010, Solar Capital Ltd. received commitments to amend and restate its Senior Secured Revolving Credit Facility with Citigroup Global Markets Inc. (“Citi”) and various other lenders, which will become effective upon the completion of our initial public offering. The facility size will be $[        ] million, which may be increased up to $600 million, and expires on [        ]. Per this agreement, base rate borrowings bear interest at the London Interbank Offered Rates (LIBOR) plus 3.25%.
New Investment
During the fourth quarter of 2009, we purchased approximately $48 million of Rug Doctor, L.P. mezzanine debt. Rug Doctor, L.P. is one the largest manufacturers and marketers of consumer carpet care machines and cleaning products in the United States.
Distributions to LLC Holders
In December 2009, Solar Capital LLC declared a $75 million cash distribution (the “Pre-IPO Distribution”) to be paid to LLC Holders on a pro-rata basis prior to the completion of the Solar Capital Merger.
In addition, an aggregate of approximately 26.65 million shares of common stock of Solar Capital Ltd. and $125 million in Distribution Notes of Solar Capital Ltd. will be issued to the LLC Holders in connection with the Solar Capital Merger.
About Solar Capital Partners
Solar Capital Partners is controlled by Michael S. Gross, our chairman and chief executive officer, and is led by Mr. Gross and Bruce Spohler, our chief operating officer, and is supported by a team of 12 dedicated investment professionals, including Brian Gerson, Cedric Henley and David Mait. We refer to Messrs. Gross, Spohler, Gerson, Henley and Mait as Solar Capital Partners’ senior investment professionals. Solar Capital Partners’ investment team has extensive experience in the private equity and leveraged lending industries, as well as significant contacts with financial sponsors operating in those industries. The investment team led by Messrs. Gross and Spohler has invested in 52 different portfolio companies for Solar Capital, which investments involved an aggregate of more than 44 different financial sponsors, through September 30, 2009. Since Solar Capital’s inception, these investment professionals have used their relationships in the middle-market financial sponsor and financial intermediary community to originate direct investment opportunities.
Mr. Gross, the former chairman and chief executive officer of Apollo Investment Corporation, a publicly traded business development company that he founded, has over 20 years of experience in the private equity, distressed debt and mezzanine lending businesses and has been involved in originating, structuring, negotiating, consummating and managing private equity, distressed debt and mezzanine lending transactions. Since July 2006, Mr. Gross has been a partner in Magnetar Capital Partners LP, a multi-strategy investment manager.
Mr. Gross is also a founder and a former senior partner of Apollo Management, L.P., a leading private equity firm. During his tenure at Apollo Management, L.P., Mr. Gross was a member of the investment committee that was responsible for overseeing more than $13 billion of investments in over 150 companies.

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Between February 2004 and February 2006, Mr. Gross was the president and chief executive officer of Apollo Investment Corporation, a publicly traded business development company that he founded and on whose board of directors and investment committee he served as chairman from February 2004 to July 2006. Under his management, Apollo Investment Corporation raised approximately $930 million in gross proceeds in an initial public offering in April 2004, built a dedicated investment team and infrastructure and invested approximately $2.3 billion in over 65 companies in conjunction with 50 different private equity sponsors. Mr. Gross was also the managing partner of Apollo Distressed Investment Fund, L.P., an investment fund he founded in 2003 to invest principally in debt and other securities of leveraged companies.
Mr. Gross also currently serves on the boards of directors of three public companies, and in the past has served on the boards of directors of more than 20 public and private companies. As a result, Mr. Gross has developed an extensive network of private equity sponsor relationships as well as relationships with management teams of public and private companies, investment bankers, attorneys and accountants that we believe should provide us with significant business opportunities.
We also rely on the more than 20 years of experience of Mr. Spohler, who has served as our chief operating officer and a partner of Solar Capital Partners since inception. Previously, Mr. Spohler was a managing director and a former co-head of U.S. Leveraged Finance for CIBC World Markets. He held numerous senior roles at CIBC World Markets, including serving on the U.S. Management Committee, Global Executive Committee and the Deals Committee, which approves all of CIBC World Markets’ U.S. corporate finance debt capital decisions. During Mr. Spohler’s tenure, he was responsible for senior loan, high yield and mezzanine origination and execution, as well as CIBC World Markets’ below investment grade loan portfolio in the United States. As a co-head of U.S. Leveraged Finance, Mr. Spohler oversaw over 300 capital raising and merger and acquisition transactions, comprising over $40 billion in market capitalization.
In addition to Messrs. Gross and Spohler, Solar Capital Partners’ senior investment professionals include Messrs. Gerson, Henley and Mait, each of whom has extensive experience in originating, evaluating and structuring investments in the types of middle-market companies we currently target. Solar Capital Partners’ senior investment professionals have an average of over 20 years of experience in the private equity and leveraged lending industries.
Solar Capital Partners’ senior investment professionals have been active participants in the primary and secondary leveraged credit markets throughout their careers. They have effectively managed portfolios of distressed and mezzanine debt as well as other investment types. The depth of their experience and credit market expertise has led them through various stages of the economic cycle as well as several market disruptions.
Market Opportunity
Solar Capital invests primarily in senior secured loans, mezzanine loans and equity securities of leveraged companies organized and located in the United States. We believe that the size of the leveraged company market, coupled with the demands of these companies for flexible sources of capital at attractive terms and rates, create an attractive investment environment for us.
 
 	•	 	Middle-market companies have faced increasing difficulty in accessing the capital markets.    While many middle-market companies were formerly able to raise funds by issuing high-yield bonds, we believe this approach to financing has become more difficult in recent years as institutional investors have sought to invest in larger, more liquid offerings. In addition, many private finance companies that, until recently, financed their lending and investing activities through securitization transactions have lost that source of funding and cut back lending significantly.	

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 	•	 	There is a large pool of uninvested private equity capital likely to seek additional capital to support their private investments.     We believe there is a large pool of uninvested private equity capital available to middle-market companies. While we expect the rate of investment to be slower than in prior periods, we expect that private equity firms will continue to be active investors in middle-market companies and that these private equity firms will seek to supplement their investments with senior and junior debt securities and loans and equity co-investments from other sources, such as Solar Capital.	
 
 	•	 	Middle-market companies are increasingly seeking private sources for debt and equity capital.    We believe that many middle-market companies prefer to execute transactions with private capital providers such as Solar Capital, rather than execute high-yield bond or equity transactions in the public markets, which may necessitate increased financial and regulatory compliance and reporting obligations. We expect that the volume of domestic “public-to-private” transactions, as well as the number of companies selecting a “sale” alternative versus raising capital in the public equity markets as a means of increasing liquidity, will remain large.	
 
 	•	 	Consolidation among commercial banks has reduced the focus on middle-market business.    We believe that many senior lenders have de-emphasized their service and product offerings to middle-market companies in favor of lending to large corporate clients, managing capital markets transactions and providing other non-credit services to their customers. We believe this has resulted in fewer key players and the reduced availability of debt capital to the companies we target.	
 
 	•	 	Current disruptions within the credit markets generally have brought a reduction in competition and a more lender-friendly environment.     Current credit market dislocation has caused many of the alternative methods of obtaining middle-market debt financing to significantly decrease in scope and availability while demand for financings has remained robust. We believe the segment’s strong growth prospects, combined with the growing demand for the capital and corporate finance and advisory services we offer, creates an attractive investment environment for us.	
 
 	    	Furthermore, we believe that given the credit market uncertainty, Solar Capital has a greater opportunity to move beyond middle-market deals into larger transactions, as banks are less willing to commit capital. We believe these larger deals can be structured with more attractive terms such as lower leverage, higher yields, better covenants, and longer duration than was typical before the current market dislocation.	
 
 	•	 	Current price declines may present secondary market opportunities.    We believe that opportunities may exist for Solar Capital to generate attractive total returns through acquisitions of higher-rated senior secured loans in the secondary markets. As a result of current price declines, the relative value of some senior secured loans has improved in comparison with historical default and recovery rates. We believe the technical weakness that has been dominating the marketplace will provide attractive risk-adjusted investment opportunities for Solar Capital.	
Therefore, we believe that there is an opportunity to invest in senior secured loans, mezzanine loans and equity securities of leveraged companies and that we are well positioned to serve this market.

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Competitive Advantages and Strategy
We believe that we have the following competitive advantages over other providers of financing to leveraged companies:
Management Expertise
As managing partner, Mr. Gross has principal management responsibility for Solar Capital Partners, to which he currently dedicates substantially all of his time. Mr. Gross has over 20 years of experience in leveraged finance, private equity and distressed debt investing. Mr. Spohler, our chief operating officer and a partner of Solar Capital Partners, has over 20 years of experience in evaluating and executing leverage finance transactions. We believe that Messrs. Gross and Spohler have developed a strong reputation in the capital markets, and that this experience provides us with a competitive advantage in identifying and investing in leveraged companies with the potential to generate returns. We believe that our investment team has extensive experience in the private equity and leveraged lending industries, as well as significant contacts with financial sponsors operating in those industries. We believe that our investment team has a proven track record of valuing companies and assets and negotiating transactions.
In addition to Messrs. Gross and Spohler, Solar Capital Partners’ senior investment professionals include Messrs. Gerson, Henley and Mait, each of whom has extensive experience in originating, evaluating and structuring investments in the types of middle-market companies we currently target. Solar Capital Partners’ senior investment professionals have an average of over 20 years of experience in the private equity and leveraged lending industries.
Solar Capital Partners’ senior investment professionals have been active participants in the primary and secondary leveraged credit markets throughout their careers. They have effectively managed portfolios of distressed and mezzanine debt as well as other investment types. The depth of their experience and credit market expertise has led them through various stages of the economic cycle as well as several market disruptions.
Investment Portfolio
Our portfolio investments consist of portfolio companies that have strong cash flows and have shown resolve despite the recent economic climate. As of September 30, 2009, 99.7% of our total portfolio value was comprised of performing assets. The majority of our assets have been seasoned, which has allowed us to gain a solid understanding of our borrowers and the industries in which they compete. Additionally, over time, we have established strong relationships with our borrowers. As of September 30, 2009, our portfolio was focused within relatively recession-resistant industries. Approximately 40% of our portfolio was invested in Beverage, Food, and Tobacco and Aerospace and Defense industries, which are considered defensive, or safe havens, during times of economic turmoil. As of September 30, 2009, the companies in our portfolio had an average EBITDA (earnings before interest, taxes, depreciation, and amortization) of $174.21 million and were levered an average of 2.75 and 4.81 times through their senior debt and through the Solar Capital investment tranche, respectively.
Investment Capacity
The proceeds from this offering and the borrowing capacity under our new credit facility will provide us with a substantial amount of capital available for deployment into new investment opportunities. We believe we are well positioned for the current marketplace. We believe that in the current economic environment financing needs of many companies will increase while funding options are limited, allowing us to capitalize on favorable investment opportunities.

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Solar Capital’s Limited Leverage
As of January [    ], 2010, and on an as adjusted basis to give effect to the issuance of the Distribution Notes, our outstanding debt was approximately [     ]% of total assets, making us one of the least levered business development companies. We believe our relatively low level of leverage provides us with a competitive advantage, allowing us to provide a stable and sustainable dividend to our investors as proceeds from our investments are available for reinvestment as opposed to being consumed by debt repayment. To the extent borrowing conditions improve and leverage becomes available on more attractive terms, we may increase our relative level of debt in the future. However, we do not currently anticipate operating with a substantial amount of debt relative to our total assets. Furthermore, by maintaining prudent leverage levels, we will be better positioned to weather future market downturns.
Proprietary Sourcing and Origination
We believe that Solar Capital Partners’ senior investment professionals’ longstanding relationships with financial sponsors, commercial and investment banks, management teams and other financial intermediaries provide us with a strong pipeline of proprietary origination opportunities. We believe the broad expertise of Solar Capital Partners’ senior investment professionals and their ability to draw upon their average of 20 years of investment experience enable us to identify, assess and structure investments successfully. We expect to continue leveraging the relationships Mr. Gross established while sourcing and originating investments at Apollo Investment Corporation as well as the financial sponsor relationships Mr. Spohler developed while he was a co-head of CIBC World Markets’ U.S. Leveraged Finance Group.
Our investment team’s strong relationship network is enhanced by the collaborative role Solar Capital plays in the private equity industry. We offer tailored solutions to our portfolio companies, and we believe that this role provides us with greater deal flow as opposed to being viewed as a competitor bidding for control stakes. Because Solar Capital is not associated with a private equity firm, we are not precluded from partnering with most of the top tier financial sponsors.
These direct investments enable us to perform more in-depth due diligence and play an active role in structuring financings. We believe that effectuating the transaction terms and having greater insight into a portfolio company’s operations and financial picture assist Solar Capital in minimizing downside potential, while reinforcing Solar Capital as a trusted partner who delivers comprehensive financing solutions. Since our inception, Solar Capital Partners has sourced investments in 52 different portfolio companies for Solar Capital, which investments involved an aggregate of more than 44 different financial sponsors, through September 30, 2009.
Versatile Transaction Structuring and Flexibility of Capital
We believe our senior investment professionals’ broad expertise and ability to draw upon their extensive experience enable us to identify, assess and structure investments successfully across all levels of a company’s capital structure and to manage potential risk and return at all stages of the economic cycle. While we will be subject to significant regulation as a business development company, we will not be subject to many of the regulatory limitations that govern traditional lending institutions such as banks. As a result, we believe that we can be more flexible than such lending institutions in selecting and structuring investments, adjusting investment criteria, transaction structures and, in some cases, the types of securities in which we invest. We believe financial sponsors, management teams and investment banks see this flexibility as a benefit, making us an attractive financing partner. We believe that this approach enables us to procure attractive investment opportunities throughout the economic cycle so that we can make investments consistent with our stated investment objective even during turbulent periods in the capital markets.

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Emphasis on Achieving Strong Risk-Adjusted Returns
Solar Capital Partners uses a disciplined investment and risk management process that emphasizes a rigorous fundamental research and analysis framework. Solar Capital Partners seeks to build our portfolio on a “bottom-up” basis, choosing and sizing individual positions based on their relative risk/reward profiles as a function of the associated downside risk, volatility, correlation with the existing portfolio and liquidity. At the same time, Solar Capital Partners takes into consideration a variety of factors in managing our portfolio and imposes portfolio-based risk constraints promoting a more diverse portfolio of investments and limiting issuer and industry concentration. Our value-oriented investment philosophy focuses on preserving capital and ensuring that our investments have an appropriate return profile in relation to risk. When market conditions make it difficult for us to invest according to our criteria, we are highly selective in deploying our capital. We do not pursue short-term origination targets. We believe this approach enables us to build an attractive investment portfolio that meets our return and value criteria over the long term.
We believe it is critical to conduct extensive due diligence on investment targets. In evaluating new investments we, through Solar Capital Partners, conduct a rigorous due diligence process that draws upon investment experience, industry expertise and network of contacts of our senior investment professionals, as well as the other members of our investment team. Among other things, our due diligence is designed to ensure that a prospective portfolio company will be able to meet its debt service obligations.
We have the ability to invest across an issuer’s capital structure, which we believe enables us to provide comprehensive financing solutions for our portfolio companies, as well as access the best risk-adjusted opportunities. The overall transaction size and product mix is based upon the needs of the customer, as well as our risk-return hurdles. We also focus on downside protection and preservation of capital throughout the structuring process.
Deep Industry Focus with Substantial Information Flow
We concentrate our investing activities in industries characterized by strong cash flow and in which Solar Capital Partners’ investment professionals have deep investment experience. During his time with the Apollo entities, Mr. Gross oversaw investments in over 200 companies in 20 industries. As a result of their investment experience, Messrs. Gross and Spohler, together with Solar Capital Partners’ other investment professionals, have long-term relationships with management consultants and management teams in the industries we target, as well as substantial information concerning those industries. Solar Capital Partners’ investment team also has significant experience in evaluating and making investments in the industries we target. We believe that the in-depth experience of Solar Capital Partners’ investment team in investing throughout various stages of the economic cycle provides our investment adviser with access to ongoing market insights in addition to a powerful asset for investment sourcing. See “Business — Investments.”
Longer Investment Horizon
Unlike private equity and venture capital funds, we will not be subject to standard periodic capital return requirements. Such requirements typically stipulate that the capital of these funds, together with any capital gains on such invested funds, can only be invested once and must be returned to investors after a pre-agreed time period. We believe that our flexibility to make investments with a long-term view and without the capital return requirements of traditional private investment vehicles provides us with the opportunity to generate favorable returns on invested capital and enables us to be a better long-term partner for our portfolio companies.

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Risk Factors
The value of our assets, as well as the market price of our shares, will fluctuate. Our investments may be risky, and you may lose all or part of your investment in us. Investing in Solar Capital involves other risks, including the following:
 
 	•	 	We have only nearly a three year operating history;	
 
 	•	 	We are dependent upon Solar Capital Partners’ key personnel for our future success;	
 
 	•	 	We operate in a highly competitive market for investment opportunities;	
 
 	•	 	The lack of liquidity in our investments may adversely affect our business;	
 
 	•	 	We may borrow money, which would magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us;	
 
 	•	 	To the extent we use debt to finance our investments, changes in interest rates will affect our cost of capital and net investment income;	
 
 	•	 	There will be uncertainty as to the value of our portfolio investments;	
 
 	•	 	We may experience fluctuations in our quarterly results;	
 
 	•	 	We will become subject to corporate-level income tax on all of our income if we are unable to qualify as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, which would have a material adverse effect on our financial performance;	
 
 	•	 	We cannot assure you that the market price of shares of our common stock will not decline below our net asset value per share;	
 
 	•	 	Our common stock price may be volatile and may decrease substantially;	
 
 	•	 	There is a risk that our stockholders may not receive distributions or that our distributions may not grow over time;	
 
 	•	 	Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock; and	
 
 	•	 	Regulations governing our operation as a business development company affect our ability to, and the way in which we, raise additional capital. As a business development company, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.	
See “Risk Factors” beginning on page 19, and the other information included in this prospectus, for additional discussion of factors you should carefully consider before deciding to invest in shares of our common stock.
Operating and Regulatory Structure
Immediately prior to the pricing of this offering, Solar Capital LLC will be merged with and into Solar Capital Ltd., a Maryland corporation that is an externally managed, non-diversified closed-end management investment company which intends to elect to be treated as a business development company under the 1940 Act prior to consummation of this offering. As a business development company, we will be required to meet regulatory tests, including the requirement to invest at least 70% of our total assets in “qualifying assets.” Qualifying assets generally include, among other things, securities of “eligible portfolio companies.” “Eligible

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portfolio companies” generally include U.S. companies that are not investment companies and that do not have securities listed on a national exchange. See “Regulation as a Business Development Company.” We may also borrow funds to make investments, including before we have fully invested the proceeds of this offering. In addition, we intend to elect to be treated for federal income tax purposes, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code. See “Material U.S. Federal Income Tax Considerations.”
Our investment activities are managed by Solar Capital Partners and supervised by our board of directors. Solar Capital Partners is an investment adviser that is registered under the Investment Advisers Act of 1940, as amended, or the Advisers Act. Under our investment advisory and management agreement, which we refer to as the Investment Advisory and Management Agreement, we have agreed to pay Solar Capital Partners an annual base management fee based on our gross assets as well as an incentive fee based on our performance. See “Investment Advisory and Management Agreement.” We have also entered into an administration agreement, which we refer to as the Administration Agreement, under which we have agreed to reimburse Solar Capital Management for the allocable portion of overhead and other expenses incurred by Solar Capital Management in performing its obligations under the Administration Agreement, including furnishing us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities, as well as providing us with other administrative services. See “Administration Agreement.”
Our Corporate Information
Our offices are located at 500 Park Avenue, 5th Floor, New York, New York 10022, and our telephone number is (212) 993-1670.

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THE OFFERING
 
Common Stock Offered by Us	             shares, plus              shares issuable pursuant to the over-allotment option granted to the underwriters.	
 
Common Stock to be Outstanding After this Offering	Approximately [                ] shares (including approximately 26.65 million shares to be issued to the LLC Holders in connection with the Solar Capital Merger), plus              shares issuable pursuant to the over-allotment option granted to the underwriters.	
 
Use of Proceeds	Our net proceeds from this offering will be approximately $                     or, approximately $                     if the underwriters fully exercise their over-allotment option, in each case assuming an initial public offering price of $[    ] per share (the mid-point of the estimated initial public offering price range set forth on the cover page of this prospectus). We plan to use the net proceeds of this offering for new investments in portfolio companies in accordance with our investment objective and strategies as described in this prospectus, for general working capital purposes, and, to the extent outstanding, for temporary repayment of debt. We will also pay operating expenses, including management and administrative fees, and may pay other expenses such as due diligence expenses of potential new investments, from the net proceeds of this offering. We anticipate that substantially all of the net proceeds of this offering will be used for the above purposes within three to six months from the consummation of this offering, depending on the availability of investment opportunities that are consistent with our investment objective and other market conditions. Pending such investments, we will invest the net proceeds primarily in cash, cash equivalents, U.S. government securities and other high-quality debt investments that mature 12 months or less from the date of investment. See “Use of Proceeds.”	
 
Proposed Trading Symbol	We have applied to have our common stock listed on the NASDAQ Global Select Market under the symbol “SLRC.”	
 
Distributions	Subsequent to the completion of this offering, and to the extent that we have income available, we intend to distribute quarterly dividends to our stockholders, beginning with our first full quarter after the completion of this offering. The amount of our dividends, if any, will be determined by our board of directors. Any dividends to our stockholders will be declared out of assets legally available for distribution. On January [            ], 2010, the board of directors of Solar Capital Ltd. declared a dividend of $[            ] per share, payable on [            ], 2010 to holders of record as of [            ], 2010. This dividend payment is contingent upon the completion of our initial public offering during the first quarter of 2010. Purchasers in this offering will be entitled to receive this dividend payment. We anticipate that the dividend will be paid from post-offering taxable earnings, including interest and capital gains generated by our	

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 	investment portfolio. However, if we do not generate sufficient taxable earnings during the year, the dividend may constitute a return of capital. The specific tax characteristics of our dividends will be reported to shareholders after the end of each calendar year.	
 
Lock-up Agreements	Each of the LLC Holders, other than Magnetar Capital Fund, LP, has agreed that for a period of 120 days from the date of this offering, they will not, without the prior written consent of Citi and J.P. Morgan Securities Inc. (“J.P. Morgan”), dispose of or hedge any shares of our common stock or securities convertible or exchangeable for shares of our common stock. Each of our officers and directors, including Messrs. Gross and Spohler, has agreed to similar lock-up restrictions for a period of 180 days from the date of this offering. Messrs. Gross and Spohler, through Solar Capital Investors, LLC (an entity controlled by Mr. Gross), have also agreed to extend such lock-up period until 365 days from the date of this offering with respect to 50% of the shares of common stock they hold immediately prior to completion of this offering. In connection with our issuance of the Distribution Notes, certain of the LLC Holders, including Magnetar Capital Fund, LP, that elect to receive such Distribution Notes will be required to agree to lock-up restrictions and periods that are the same as those applicable to Messrs. Gross and Spohler.	
 
Taxation	We intend to elect to be treated for federal income tax purposes, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code. As a RIC, we generally will not have to pay corporate-level federal income taxes on any ordinary income or capital gains that we distribute to our stockholders as dividends. To obtain and maintain our RIC tax treatment, we must meet specified source-of-income and asset diversification requirements and distribute annually at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. See “Distributions” and “Material U.S. Federal Income Tax Considerations.”	
 
Investment Advisory Fees	We pay Solar Capital Partners a fee for its services under the Investment Advisory and Management Agreement consisting of two components — a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 2.00% of our gross assets, which includes any borrowings for investment purposes. The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and equals 20% of our “pre-incentive fee net investment income” for the immediately preceding quarter, subject to a preferred return, or “hurdle,” and a “catch up” feature. The second part is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory and Management Agreement) in an amount equal to 20% of our realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative	

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 	basis, less the aggregate amount of any previously paid capital gain incentive fees. See “Investment Advisory and Management Agreement.”	
 
Administration Agreement	We reimburse Solar Capital Management for the allocable portion of overhead and other expenses incurred by Solar Capital Management in performing its obligations under the Administration Agreement, including furnishing us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities, as well as providing us with other administrative services. In addition, we reimburse Solar Capital Management for the fees and expenses associated with performing compliance functions, and our allocable portion of the compensation of our chief financial officer and any administrative support staff. See “Administration Agreement.”	
 
Trading	Shares of closed-end investment companies frequently trade at a discount to their net asset value. The risk that our shares may trade at a discount to our net asset value is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our shares will trade above, at or below net asset value.	
 
License Agreement	We have entered into a license agreement with Solar Capital Partners, pursuant to which Solar Capital Partners has agreed to grant us a non-exclusive license to use the name “Solar Capital.” See “License Agreement.”	
 
Dividend Reinvestment Plan	We have adopted an “opt out” dividend reinvestment plan. If your shares of common stock are registered in your own name, your distributions will automatically be reinvested under our dividend reinvestment plan in additional whole and fractional shares of common stock, unless you “opt out” of our dividend reinvestment plan so as to receive cash dividends by delivering a written notice to our plan administrator. If your shares are held in the name of a broker or other nominee, you should contact the broker or nominee for details regarding opting out of our dividend reinvestment plan. Stockholders who receive distributions in the form of stock will be subject to the same federal, state and local tax consequences as stockholders who elect to receive their distributions in cash. See “Dividend Reinvestment Plan.”	
 
Certain Anti-Takeover Measures	Our charter and bylaws, as well as certain statutory and regulatory requirements, contain certain provisions that may have the effect of discouraging a third party from making an acquisition proposal for us. These anti-takeover provisions may inhibit a change in control in circumstances that could give the holders of our common stock the opportunity to realize a premium over the market price for our common stock. See “Description of Securities.”	
 
Available Information	After the completion of this offering, we will be required to file periodic reports, current reports, proxy statements and other information with the SEC. This information will be available at the	

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 	SEC’s public reference room at 100 F Street, NE, Washington, D.C. 20549 and on the SEC’s website at  http://www.sec.gov.  The public may obtain information on the operation of the SEC’s public reference room by calling the SEC at (202) 551-8090. This information will also be available free of charge by contacting us at Solar Capital Ltd., 500 Park Avenue, 5 th  Floor, New York, NY 10022, by telephone at (212) 993-1670 or on our website at  http://www.solarcapltd.com .	
 
Conflicts of Interest	We intend to use at least 5% of the net proceeds of this offering to repay indebtedness owed by us to certain affiliates of the underwriters who are lenders under our credit facility. See “Use of Proceeds.” Accordingly, this offering is being made in compliance with the requirements of NASD Conduct Rule 2720 of the Financial Industry Regulatory Authority. This rule provides that if at least 5% of the net proceeds from the sale of securities, not including underwriting compensation, are used to reduce or retire the balance of a loan or credit facility extended by the underwriters or their affiliates, a “qualified independent underwriter” meeting certain standards must participate in the preparation of the registration statement and the prospectus and exercise the usual standards of due diligence with respect thereto.                                                       is assuming the responsibilities of acting as the qualified independent underwriter in connection with this offering. See “Conflicts of Interest.”	

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FEES AND EXPENSES
The following table is intended to assist you in understanding the costs and expenses that you will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “us” or “Solar Capital,” or that “we” will pay fees or expenses, you will indirectly bear such fees or expenses as an investor in Solar Capital Ltd.

Stockholder transaction expenses:	  	 	 	
Sales load (as a percentage of offering price)	  	    	%(1) 	
Offering expenses borne by us (as a percentage of offering price)	  	    	%(2) 	
Dividend reinvestment plan expenses	  	None	   (3) 	
 	  	 	 	
Total stockholder transaction expenses (as a percentage of offering price)	  	    	% 	
 	 	
Annual expenses (as a percentage of net assets attributable to common stock):	  	 	 	
Base management fee	  	2.25	%(4) 	
Incentive fees payable under our Investment Advisory and Management Agreement	  	2.25	%(5) 	
Interest payments on borrowed funds	  	0.28	%(6) 	
Other expenses (estimated)	  	0.97	%(7) 	
 	  	 	 	
Total annual expenses (estimated)	  	5.75	% 	
Example
The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed that our annual operating expenses would remain at the levels set forth in the table above. See Note 6 below for additional information regarding certain assumptions regarding our level of leverage subsequent to this offering.

 	  	1 Year	  	3 Years	  	5 Years	  	10 Years	
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return	  	$	            	  	$	            	  	$	            	  	$	            	
 
(1)	The underwriting discounts and commissions (the sales load) with respect to shares sold in this offering, which is a one-time fee, is the only sales load paid in connection with this offering.	
(2)	 	Amount reflects estimated offering expenses of approximately $                    .	
(3)	 	The expenses of the dividend reinvestment plan are included in “other expenses.”	
(4)	Our base management fee under the Investment Advisory and Management Agreement is based on our gross assets, which is defined as all the assets of Solar Capital, including those acquired using borrowings for investment purposes, and assumes the base management fee remains consistent for the complete fiscal year based on the fee incurred for the nine months ended September 30, 2009. See “Investment Advisory and Management Agreement.”	
(5)	Assumes that annual incentive fees earned by our investment adviser, Solar Capital Partners, remain consistent for the complete fiscal year based on the incentive fees earned by Solar Capital Partners for the nine months ended September 30, 2009. The incentive fee consists of two parts:	
The first part, which was payable quarterly in arrears beginning with the quarter ended March 31, 2007, equals 20% of the excess, if any, of our “Pre-Incentive Fee Net Investment Income” that exceeds a 1.75% quarterly (7.00% annualized) hurdle rate, which we refer to as the Hurdle, subject to a “catch-up” provision measured at the end of each calendar quarter. The first part of the incentive fee is computed and paid on income that may include interest that is accrued but not yet received in cash. The operation of the first part of the incentive fee for each quarter is as follows:
 
 	•	 	no incentive fee is payable to our investment adviser in any calendar quarter in which our Pre-Incentive Fee Net Investment Income does not exceed the Hurdle of 1.75%;	
 
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 	•	 	100% of our Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the Hurdle but is less than 2.1875% in any calendar quarter (8.75% annualized) is payable to our investment adviser. We refer to this portion of our Pre-Incentive Fee Net Investment Income (which exceeds the Hurdle but is less than 2.1875%) as the “catch-up.” The “catch-up” is meant to provide our investment adviser with 20% of our Pre-Incentive Fee Net Investment Income, as if a Hurdle did not apply when our Pre-Incentive Fee Net Investment Income exceeds 2.1875% in any calendar quarter; and	
 	•	 	20% of the amount of our Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to our investment adviser (once the Hurdle is reached and the catch-up is achieved, 20% of all Pre-Incentive Fee Investment Income thereafter is allocated to our investment adviser).	
The second part of the incentive fee equals 20% of our “Incentive Fee Capital Gains,” if any, which equals our realized capital gains on a cumulative basis from inception through 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. The second part of the incentive fee is payable, in arrears, at the end of each calendar year (or upon termination of the Investment Advisory and Management Agreement, as of the termination date), commencing with the period ending December 31, 2007. For a more detailed discussion of the calculation of this fee, see “Investment Advisory and Management Agreement.”
 
(6)	 	We may borrow funds from time to time to make investments to the extent we determine that the economic situation is conducive to doing so. The costs associated with our outstanding borrowings are indirectly born by our investors. For purposes of this section, we have assumed that our interest payments on borrowed funds remain consistent for the complete fiscal year based on such payments for the nine months ended September 30, 2009. We have also included the amortization of fees incurred in establishing such credit facilities. As of September 30, 2009, we had $25.6 million outstanding and $174.4 million remaining available to us under our revolving credit facility. Upon completion of this offering, we will also have approximately $125 million of the Distribution Notes outstanding. We may also issue preferred stock, subject to our compliance with applicable requirements under the 1940 Act.	
 
(7)	 	“Other expenses” are for the complete fiscal year based on amounts for the nine months ended September 30, 2009 and include our estimated overhead expenses, including payments under our Administration Agreement based on our estimated allocable portion of overhead and other expenses incurred by Solar Capital Management in performing its obligations under the Administration Agreement. See “Administration Agreement.”	
The example and the expenses in the tables above should not be considered a representation of our future expenses, and actual expenses may be greater or less than those shown.  While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. The incentive fee under the Investment Management Agreement, which, assuming a 5% annual return, would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the example. This illustration assumes that we will not realize any capital gains (computed net of all realized capital losses and unrealized capital depreciation) in any of the indicated time periods. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses and returns to our investors would be higher. In addition, the example assumes inclusion of the sales load of $            . Also, while the example assumes reinvestment of all dividends at net asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by the market price per share of our common stock at the close of trading on the dividend payment date, which may be at, above or below net asset value. See “Dividend Reinvestment Plan” for additional information regarding our dividend reinvestment plan.
 
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SELECTED FINANCIAL AND OTHER DATA
The selected financial and other data below should be read in conjunction with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto. Financial information is presented for the period from March 13, 2007 (inception) through December 31, 2007, for the fiscal year ended December 31, 2008 and for the nine months ended September 30, 2009 (unaudited). Financial information for the periods ending 2007 and 2008 has been derived from our financial statements that were audited by KPMG LLP (“KPMG”), an independent registered public accounting firm. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below for more information.

 	  	Nine months ended
September 30, 2009
(unaudited)	 	 	Year ended
December 31, 2008	 	 	Period from March 13,
2007 (inception) through
December 31, 2007	 	
 	  	(dollars in thousands)	 	 	(dollars in thousands)	 	 	(dollars in thousands)	 	
Income statement data:	  	 	 	 	 	 	 	 	 	 	 	 	
Total investment income	  	$	81,214	  	 	$	133,959	  	 	$	78,455	  	
Total expenses	  	 	31,637	  	 	 	46,560	  	 	 	25,461	  	
Net investment income	  	 	49,577	  	 	 	87,399	  	 	 	52,994	  	
Net realized gain (loss) from investments	  	 	(237,616	) 	 	 	(937	) 	 	 	(10,489	) 	
Net unrealized appreciation (depreciation) on investments	  	 	235,019	  	 	 	(492,290	) 	 	 	6,595	  	
Net increase (decrease) in net assets resulting from operations	  	 	46,980	  	 	 	(405,828	) 	 	 	49,100	  	
 	 	 	 	
Other data:	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted average annualized yield on income producing investments:	  	 	 	 	 	 	 	 	 	 	 	 	
On fair value(1)(4)	  	 
	14.8
	% 
	 	 
	17.1
	% 
	 	 
	12.9
	% 
	
On cost(2)(4)	  	 	13.3	% 	 	 
	11.9
	% 
	 	 	12.7	% 	
Number of portfolio companies at period end	  	 	36	  	 	 	44	  	 	 	38	  	
 	 	 	 	
 	  	As of
September 30, 2009
(unaudited)	 	 	As of
December 31, 2008	 	 	As of
December 31, 2007	 	
 	  	(dollars in thousands)	 	 	(dollars in thousands)	 	 	(dollars in thousands)	 	
Balance sheet data:	  	 	 	 	 	 	 	 	 	 	 	 	
Total investment portfolio	  	$	792,394	  	 	$	768,215	  	 	$	1,178,736	  	
Total cash and cash equivalents	  	 
	18,011
	  
	 	 	65,841	  	 	 	169,692	  	
Total assets	  	 
	856,450
	  
	 	 	873,026	  	 	 	1,396,545	  	
Net assets	  	 
	732,947
	  
	 	 	852,673	  	 	 	1,258,501	  	
 	 	 	 	
Per unit data:	  	 	 	 	 	 	 	 	 	 	 	 	
Net asset value per unit(3)	  	$	8.97	  	 	$	10.44	  	 	$	15.40	  	
Net investment income	  	 	0.61	  	 	 	1.07	  	 	 	0.65	  	
Net realized and unrealized gain (loss)	  	 	(0.04	) 	 	 	(6.03	) 	 	 	(0.05	) 	
Distributions declared	  	 	(2.04	) 	 	 	—  	  	 	 	—  	  	
 
(1)	Throughout this document, the weighted average yield on income producing investments is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities, plus the effective interest yield on preferred shares divided by (b) total income producing investments at fair value. The weighted average yield is computed as of the balance sheet date and excludes assets on non-accrual status as of such date.	
 
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(2)	For this calculation, the weighted average yield on income producing investments is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities, plus the effective interest yield on preferred shares divided by (b) total income producing investments at cost. The weighted average yield is computed as of the balance sheet date and excludes assets on non-accrual status as of such date.	
(3)	Based on 81,702,847 units of Solar Capital LLC outstanding as of September 30, 2009, December 31, 2008 and December 31, 2007. The outstanding units of Solar Capital LLC will be converted into the right to receive shares of common stock of Solar Capital Ltd., or a combination of common stock and Distribution Notes of Solar Capital Ltd., in connection with the Solar Capital Merger, which is expected to be completed immediately prior to the pricing of this offering.	
(4)	Unaudited.	
 
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RISK FACTORS
Before you invest in our common stock, you should be aware of various risks, including those described below. You should carefully consider these risk factors, together with all of the other information included in this prospectus, before you decide whether to make an investment in our common stock. The risks set out below are not the only risks we face. If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected. In such case, our net asset value could decline, and you may lose all or part of your investment.
Risks Related to Our Investments
We operate in a highly competitive market for investment opportunities.
A number of entities compete with us to make the types of investments that we target in leveraged companies. We compete with public and private funds, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity funds. Additionally, because competition for investment opportunities generally has increased during the past several years among alternative investment vehicles, such as hedge funds, those entities have begun to invest in areas they have not traditionally invested in, including making investments in leveraged companies. As a result of these new entrants, competition for investment opportunities at leveraged companies has generally intensified during the past several years, and we expect the trend to continue after the current recession has ended. Many of our potential competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments than we do, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act will impose on us. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we can offer no assurance that we will be able to identify and make investments that are consistent with our investment objective.
We do not seek to compete primarily based on the interest rates we will offer, and we believe that some of our competitors may make loans with interest rates that will be comparable to or lower than the rates we offer. We may lose investment opportunities if we do not match our competitors’ pricing, terms and structure. However, if we match our competitors’ pricing, terms and structure, we may experience decreased net interest income and increased risk of credit loss.
Our investments are very risky and highly speculative.
We invest primarily in senior secured term loans, mezzanine debt and select equity investments issued by leveraged companies.
Senior Secured Loans.    When we make a senior secured term loan investment in a portfolio company, we generally take a security interest in the available assets of the portfolio company, including the equity interests of its subsidiaries, which we expect to help mitigate the risk that we will not be repaid. However, there is a risk that the collateral securing our loans may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of the portfolio company to raise additional capital, and, in some circumstances, our lien could be subordinated to claims of other creditors. In addition, deterioration in a portfolio company’s financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the loan. Consequently, the fact that a loan is secured does not guarantee that we will receive principal and interest payments according to the loan’s terms, or at all, or that we will be able to collect on the loan should we be forced to enforce our remedies.
 
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Mezzanine Loans.    Our mezzanine debt investments are generally subordinated to senior loans and are generally unsecured. As such, other creditors may rank senior to us in the event of an insolvency. This may result in an above average amount of risk and loss of principal.
Equity Investments.    When we invest in senior secured loans or mezzanine loans, we may acquire equity securities as well. In addition, we may invest directly in the equity securities of portfolio companies. Our goal is ultimately to dispose of such equity interests and realize gains upon our disposition of such interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.
In addition, investing in middle-market companies involves a number of significant risks, including:
 
 	•	 	these companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees we may have obtained in connection with our investment;	
 
 	•	 	they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns;	
 
 	•	 	they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us;	
 
 	•	 	they generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position. In addition, our executive officers, directors and our investment adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies; and	
 
 	•	 	they may have difficulty accessing the capital markets to meet future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity.	
The lack of liquidity in our investments may adversely affect our business.
We generally make investments in private companies. Substantially all of these securities are subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. In addition, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we have material non-public information regarding such portfolio company.
We have not yet identified all of the portfolio company investments we will acquire using the proceeds of this offering.
While we currently hold a portfolio of investments, we have not yet identified all of the additional potential investments for our portfolio that we will acquire with the proceeds of this offering. As a result, you will be unable to evaluate any future portfolio company investments prior to purchasing our shares. Additionally, our investment adviser will select our investments subsequent to the closing of this offering, and our stockholders will have no input with respect to such investment decisions. These factors increase the uncertainty, and thus the risk, of investing in our common stock.
 
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Our portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry.
Our portfolio may be concentrated in a limited number of portfolio companies and industries. Beyond the asset diversification requirements associated with our qualification as a RIC under the Code, we do not have fixed guidelines for diversification, and while we are not targeting any specific industries, our investments may be concentrated in relatively few industries. As a result, the aggregate returns we realize may be significantly adversely affected if a small number of investments perform poorly or if we need to write down the value of any one investment. Additionally, a downturn in any particular industry in which we are invested could also significantly impact the aggregate returns we realize.
We are currently in a period of capital markets disruption and recession and we do not expect these conditions to improve in the near future.
The U.S. capital markets have been experiencing extreme volatility and disruption for more than 2 years and the U.S. economy is currently in a period of recession. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. We believe these conditions may continue for a prolonged period of time or worsen in the future. A prolonged period of market illiquidity may have an adverse effect on our business, financial condition and results of operations. Unfavorable economic conditions could also increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could limit our investment originations, limit our ability to grow and negatively impact our operating results.
The current economic recession could impair our portfolio companies and harm our operating results.
Many of our portfolio companies may be susceptible to the current recession and may be unable to repay our loans during this period. Therefore, our non-performing assets are likely to increase and the value of our portfolio is likely to decrease during this period. The current adverse economic conditions also may decrease the value of collateral securing some of our loans and the value of our equity investments. The current recession could lead to financial losses in our portfolio and a decrease in revenues, net income and the value of our assets.
A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, if one of our portfolio companies were to go bankrupt, even though we may have structured our interest as senior debt, depending on the facts and circumstances, including the extent to which we actually provided managerial assistance to that portfolio company, a bankruptcy court might recharacterize our debt holding and subordinate all or a portion of our claim to that of other creditors.
Price declines and illiquidity in the corporate debt markets have adversely affected, and may continue to adversely affect, the fair value of our portfolio investments, reducing our net asset value through increased net unrealized depreciation.
As a business development company, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or under the direction of our board of directors. Decreases in the market values or fair values of our investments are recorded as unrealized depreciation. The continuing unprecedented declines in prices and liquidity in the corporate debt markets have resulted in significant net unrealized depreciation in our portfolio, reducing our net asset value. Depending on market conditions, we could continue to incur substantial losses in future periods, which could further reduce our net asset value and have a material adverse impact on our business, financial condition and results of operations.
 
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Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.
Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments, in order to: (i) increase or maintain in whole or in part our equity ownership percentage; (ii) exercise warrants, options or convertible securities that were acquired in the original or subsequent financing; or (iii) attempt to preserve or enhance the value of our investment. We may elect not to make follow-on investments or otherwise lack sufficient funds to make those investments. We will have the discretion to make any follow-on investments, subject to the availability of capital resources. The failure to make follow-on investments may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful operation. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our concentration of risk, either because we prefer other opportunities or because we are subject to business development company requirements that would prevent such follow-on investments or the desire to maintain our RIC tax status.
Because we generally do not hold controlling equity interests in our portfolio companies, we may not be in a position to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments.
Although we may do so in the future, we do not currently hold controlling equity positions in our portfolio companies. As a result, we are subject to the risk that a portfolio company may make business decisions with which we disagree, and that the management and/or stockholders of a portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity of the debt and equity investments that we typically hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company and may therefore suffer a decrease in the value of our investments.
An investment strategy focused primarily on privately held companies presents certain challenges, including the lack of available information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greater vulnerability to economic downturns.
We invest primarily in privately held companies. Generally, little public information exists about these companies, and we are required to rely on the ability of Solar Capital Partners’ investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and we may lose money on our investments. Also, privately held companies frequently have less diverse product lines and smaller market presence than larger competitors. These factors could adversely affect our investment returns as compared to companies investing primarily in the securities of public companies.
Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.
We invest primarily in senior secured loans, mezzanine loans and equity securities issued by our portfolio companies. Our portfolio companies typically have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt securities in which we invest. By their terms, such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of the debt securities in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking
 
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equally with debt securities in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.
Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.
Our investment strategy contemplates potential investments in debt securities of foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.
Although most of our investments will be U.S. dollar-denominated, any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments. We may employ hedging techniques to minimize these risks, but we can offer no assurance that we will, in fact, hedge currency risk, or that if we do, such strategies will be effective.
We may expose ourselves to risks if we engage in hedging transactions.
If we engage in hedging transactions, we may expose ourselves to risks associated with such transactions. We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transaction may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. It may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not related to currency fluctuations.
Our investment adviser may not be able to achieve the same or similar returns as those achieved by our senior investment professionals while they were employed at prior positions.
Although in the past Mr. Gross held senior positions at a number of investment firms, including Apollo Investment Corporation and Apollo Management, L.P., Mr. Gross’ track record and achievements are not necessarily indicative of future results that will be achieved by our investment adviser. In his role at such other firms, Mr. Gross was part of an investment team, and he was not solely responsible for generating investment ideas. In addition, such investment teams arrived at investment decisions by consensus.
 
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Risks Relating to This Offering
Prior to our initial public offering, there will be no public market for our common stock, and we cannot assure you that the market price of shares of our common stock will not decline following our initial public offering.
Before our initial public offering, there will be no public trading market for our common stock, and we cannot assure you that one will develop or be sustained after our initial public offering. We cannot predict the prices at which our common stock will trade. The initial public offering price for our common stock will be determined through our negotiations with the underwriters and may not bear any relationship to the market price at which it may trade after our initial public offering. Shares of closed-end management investment companies offered in an initial public offering often trade at a discount to the initial public offering price due to sales loads, including underwriting discounts, and related offering expenses. In addition, shares of closed-end management investment companies have in the past frequently traded at discounts to their net asset values and our stock may also be discounted in the market. This characteristic of closed-end management investment companies is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether shares of our common stock will trade above, at or below our net asset value. The risk of loss associated with this characteristic of closed-end management investment companies may be greater for investors expecting to sell shares of common stock purchased in the offering soon after the offering. In addition, if our common stock trades below its net asset value, we will generally not be able to sell additional shares of our common stock to the public at its market price without first obtaining the approval of our stockholders (including our unaffiliated stockholders) and our independent directors for such issuance.
Our common stock price may be volatile and may decrease substantially.
The trading price of our common stock may fluctuate substantially. The price of our common stock that will prevail in the market after our initial public offering may be higher or lower than the price you pay, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, but are not limited to, the following:
 
 	•	 	price and volume fluctuations in the overall stock market from time to time;	
 
 	•	 	investor demand for our shares;	
 
 	•	 	significant volatility in the market price and trading volume of securities of business development companies or other companies in our sector, which are not necessarily related to the operating performance of these companies;	
 
 	•	 	changes in regulatory policies or tax guidelines with respect to RICs or business development companies;	
 
 	•	 	failure to qualify as a RIC, or the loss of RIC status;	
 
 	•	 	any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;	
 
 	•	 	changes, or perceived changes, in the value of our portfolio investments;	
 
 	•	 	departures of Solar Capital Partners’ key personnel;	
 
 	•	 	operating performance of companies comparable to us; or	
 
 	•	 	general economic conditions and trends and other external factors.	
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Due to the potential volatility of our stock price
 
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once a market for our stock is established, we may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from our business.
We cannot assure you that we will be able to successfully deploy the proceeds of our initial public offering within the timeframe we have contemplated.
We currently anticipate that substantially all of the net proceeds of our initial public offering will be invested in accordance with our investment objective within three to six months after the completion of our initial public offering. We cannot assure you, however, that we will be able to locate a sufficient number of suitable investment opportunities to allow us to successfully deploy substantially all of the net proceeds of our initial public offering in that timeframe. To the extent we are unable to invest substantially all of the net proceeds of our initial public offering within our contemplated timeframe after the completion of our initial public offering, our investment income, and in turn our results of operations, will likely be materially adversely affected.
There is a risk that our stockholders may not receive distributions or that our distributions may not grow over time.
We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. In addition, due to the asset coverage test applicable to us as a business development company, we may be limited in our ability to make distributions.
We will have broad discretion over the use of proceeds of our initial public offering and will use proceeds in part to satisfy operating expenses.
We will have significant flexibility in applying the proceeds of our initial public offering and may use the net proceeds from our initial public offering in ways with which you may not agree, or for purposes other than those contemplated at the time of our initial public offering. We will also pay operating expenses, and may pay other expenses such as due diligence expenses of potential new investments, from net proceeds. Our ability to achieve our investment objective may be limited to the extent that net proceeds of our initial public offering, pending full investment, are used to pay operating expenses.
Investors in our initial public offering may incur dilution.
Assuming an initial offering price of $[    ] per share (the high-point of the estimated initial public offering price range set forth on the cover page of this prospectus), the net cash proceeds that we receive from this offering will be net of the underwriting discount of $             per share as well as other offering and organizational expenses of approximately $             per share. As a result, our net asset value per share immediately after the completion of this offering and related transactions is estimated to be approximately $             per share, compared to an estimated offering price of $[    ] per share (the high-point of the estimated initial public offering price range set forth on the cover page of this prospectus). Accordingly, assuming an initial offering price of $[    ] per share (the high-point of the estimated initial public offering price range set forth on the cover page of this prospectus), investors purchasing shares in this offering would pay a price per share of common stock that exceeds the net asset value per share of common stock after this offering by $             and will bear the costs of the underwriting discount and, indirectly, other offering expenses. See “Dilution.”
Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock.
All of the approximately 26.65 million shares of our common stock to be issued to existing LLC Holders in the Solar Capital Merger are subject to lock-up periods ranging from 120 to 365 days. Upon expiration of these lock-up
 
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periods, or earlier upon the consent of Citi or J.P. Morgan, such shares will generally be freely tradable in the public market, subject to the provisions of Rule 144 promulgated under the Securities Act of 1933, as amended, or the Securities Act. Sales of substantial amounts of our common stock, or the availability of such common stock for sale, could adversely affect the prevailing market prices for our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities should we desire to do so.
Risks Relating to Our Business and Structure
We have only nearly a three year operating history.
We were formed in February 2007 and commenced operations in March 2007. As a result of our relatively short operating history, we are subject to many of the business risks and uncertainties associated with more recently formed businesses, including the risk that we will not achieve our investment objective and that the value of your investment could decline substantially. Although we have an existing portfolio of investments, we anticipate that it will take us between three and six months to invest substantially all of the net proceeds of this offering. During this period, we will invest these amounts in temporary investments, such as cash, cash equivalents, U.S. government securities and other short-term high quality debt instruments, which we expect will earn yields substantially lower than the income that we anticipate receiving in respect of investments in senior secured loans, mezzanine loans and equity securities.
We are dependent upon Solar Capital Partners’ key personnel for our future success.
We depend on the diligence, skill and network of business contacts of Messrs. Gross and Spohler, who serve as the managing member and a partner of Solar Capital Partners, respectively, and who lead Solar Capital Partners’ investment team. Messrs. Gross and Spohler, together with the other 12 dedicated investment professionals available to Solar Capital Partners, evaluate, negotiate, structure, close and monitor our investments. Our future success will depend on the continued service of Messrs. Gross and Spohler and the other investment professionals available to Solar Capital Partners. We cannot assure you that unforeseen business, medical, personal or other circumstances would not lead any such individual to terminate his employment. The loss of Mr. Gross or Mr. Spohler, or any of the other senior investment professionals who serve on Solar Capital Partners’ investment team, could have a material adverse effect on our ability to achieve our investment objective as well as on our financial condition and results of operations. In addition, we can offer no assurance that Solar Capital Partners will remain our investment adviser.
The senior investment professionals of Solar Capital Partners are and may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us, and may have conflicts of interest in allocating their time. We expect that Messrs. Gross and Spohler will dedicate a significant portion of their time to the activities of Solar Capital; however, they will be engaged in other business activities which could divert their time and attention in the future.
An extended continuation of the disruption in the capital markets and the credit markets could negatively affect our business.
As a business development company, we must maintain our ability to raise additional capital for investment purposes. Without sufficient access to the capital markets or credit markets, we may be forced to curtail our business operations or we may not be able to pursue new business opportunities. Since the middle of 2007, the capital markets and the credit markets have been experiencing extreme volatility and disruption and, accordingly, there has been and will continue to be uncertainty in the financial markets in general. Ongoing disruptive conditions in the financial industry and the impact of new legislation in response to those conditions could restrict our business operations and could adversely impact our results of operations and financial condition.
If the fair value of our assets declines substantially, we may fail to maintain the asset coverage ratios imposed upon us by the 1940 Act. Any such failure would affect our ability to issue senior securities, including
 
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borrowings, and pay dividends, which could materially impair our business operations. Our liquidity could be impaired further by an inability to access the capital markets or to draw on our credit facilities. For example, we cannot be certain that we will be able to renew our credit facilities as they mature or to consummate new borrowing facilities to provide capital for normal operations, including new originations. Reflecting concern about the stability of the financial markets, many lenders and institutional investors have reduced or ceased providing funding to borrowers. This market turmoil and tightening of credit have led to increased market volatility and widespread reduction of business activity generally.
If we are unable to renew or replace such facilities and consummate new facilities on commercially reasonable terms, our liquidity will be reduced significantly. If we are unable to repay amounts outstanding under such facilities and are declared in default or are unable to renew or refinance these facilities, we would not be able to initiate significant originations or to operate our business in the normal course. These situations may arise due to circumstances that we may be unable to control, such as inaccessibility to the credit markets, a severe decline in the value of the U.S. dollar, a further economic downturn or an operational problem that affects third parties or us, and could materially damage our business. Moreover, we are unable to predict when economic and market conditions may become more favorable. Even if such conditions improve broadly and significantly over the long term, adverse conditions in particular sectors of the financial markets could adversely impact our business.
Our financial condition and results of operations will depend on our ability to manage future growth effectively.
Our ability to achieve our investment objective and to grow depends on Solar Capital Partners’ ability to identify, invest in and monitor companies that meet our investment criteria.
Accomplishing this result on a cost-effective basis is largely a function of Solar Capital Partners’ structuring of the investment process, its ability to provide competent, attentive and efficient services to us and its ability to access financing for us on acceptable terms. The investment team of Solar Capital Partners has substantial responsibilities under the Investment Advisory and Management Agreement, and they may also be called upon to provide managerial assistance to our portfolio companies as the principals of our administrator. Such demands on their time may distract them or slow our rate of investment. In order to grow, we and Solar Capital Partners will need to retain, train, supervise and manage new investment professionals. However, we can offer no assurance that any such investment professionals will contribute effectively to the work of the investment adviser. Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations.
Any failure on our part to maintain our status as a business development company would reduce our operating flexibility.
We intend to qualify as a business development company under the 1940 Act prior to consummation of this offering. The 1940 Act imposes numerous constraints on the operations of business development companies. For example, business development companies are required to invest at least 70% of their total assets in specified types of securities, primarily in private companies or thinly-traded U.S. public companies, cash, cash equivalents, U.S. government securities and other high quality debt investments that mature in one year or less. Furthermore, any failure to comply with the requirements imposed on business development companies by the 1940 Act could cause the SEC to bring an enforcement action against us and/or expose us to claims of private litigants. In addition, upon approval of a majority of our stockholders, we may elect to withdraw our status as a business development company. If we decide to withdraw our election, or if we otherwise fail to qualify, or maintain our qualification, as a business development company, we may be subject to the substantially greater regulation under the 1940 Act as a closed-end investment company. Compliance with such regulations would significantly decrease our operating flexibility, and could significantly increase our costs of doing business.
 
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Regulations governing our operation as a business development company affect our ability to, and the way in which we, raise additional capital. As a business development company, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.
We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we will be permitted, as a business development company, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. Furthermore, as a result of issuing senior securities, we would also be exposed to typical risks associated with leverage, including an increased risk of loss. As of September 30, 2009, we had $25.6 million outstanding and $174.4 million remaining available to us under our revolving credit facility. As of January 6, 2010, we had $88.5 million outstanding under our revolving credit facility. Upon completion of this offering, we will also have approximately $125 million of the Distribution Notes outstanding. If we issue preferred stock, the preferred stock would rank “senior” to common stock in our capital structure, preferred stockholders would have separate voting rights on certain matters and might have other rights, preferences, or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of our common stock or otherwise be in your best interest.
We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if our board of directors determines that such sale is in the best interests of Solar Capital and its stockholders, and our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount). If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will decrease, and you might experience dilution.
We may borrow money, which would magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us.
The use of leverage magnifies the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in our securities. We may borrow from and issue senior debt securities to banks, insurance companies and other lenders. Lenders of these senior securities will have fixed dollar claims on our assets that are superior to the claims of our common stockholders and we would expect such lenders to seek recovery against our assets in the event of a default. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, 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 also negatively affect our ability to make dividend payments on our common stock. Leverage is generally considered a speculative investment technique. Our ability to service any debt that we incur will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as the management fee payable to our investment adviser, Solar Capital Partners, will be payable based on our gross assets, including those assets acquired through the use of leverage, Solar Capital Partners will have a financial incentive to incur leverage which may not be consistent with our stockholders’ interests. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of leverage, including any increase in the management fee payable to Solar Capital Partners.
 
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As a business development company, we generally are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 200%. If this ratio declines below 200%, we may not be able to incur additional debt and could be required by law to sell a portion of our investments to repay some debt when it is disadvantageous to do so, which could have a material adverse effect on our operations, and we may not be able to make distributions. The amount of leverage that we employ will depend on our investment adviser’s and our board of directors’ assessment of market and other factors at the time of any proposed borrowing. We cannot assure you that we will be able to obtain credit at all or on terms acceptable to us.
In addition, any debt facility into which we may enter would likely impose financial and operating covenants that restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC under Subchapter M of the Code.
As of September 30, 2009, we had $25.6 million outstanding and $174.4 million remaining available to us under our revolving credit facility. As of January 6, 2010, we had $88.5 million outstanding under our revolving credit facility. Upon completion of this offering, we will also have approximately $125 million of the Distribution Notes outstanding.
To the extent we use debt to finance our investments, changes in interest rates will affect our cost of capital and net investment income.
To the extent we borrow money to make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income in the event we use debt to finance our investments. In periods of rising interest rates, our cost of funds would increase, which could reduce our net investment income. We expect that our long-term fixed-rate investments will be financed primarily with equity and long-term debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act.
You should also be aware that a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments. Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee hurdle rate and may result in a substantial increase of the amount of incentive fees payable to our investment adviser with respect to our pre-incentive fee net investment income.
As of September 30, 2009, we had $25.6 million outstanding and $174.4 million remaining available to us under our revolving credit facility. As of January 6, 2010, we had $88.5 million outstanding under our revolving credit facility. Upon completion of this offering, we will also have approximately $125 million of the Distribution Notes outstanding.
There will be uncertainty as to the value of our portfolio investments.
A large percentage of our portfolio investments are in the form of securities that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable. We value these securities on a quarterly basis in accordance with our valuation policy, which is at all times consistent with generally accepted accounting principles. Our board of directors utilizes the services of third-party valuation firms to aid it in determining the fair value of these securities. The board of directors discusses valuations and determines the fair value in good faith based on the input of our investment adviser and the respective third-party valuation firms. The factors that may be considered in fair value pricing our investments include the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings, the markets in which the portfolio company does business, comparisons to publicly traded companies, discounted cash flow and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies,
 
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are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such securities.
We may experience fluctuations in our quarterly results.
We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the debt securities we acquire, the default rate on such securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.
There are significant potential conflicts of interest which could impact our investment returns.
Our executive officers and directors, as well as the current and future partners of our investment adviser, Solar Capital Partners, serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do. Accordingly, they may have obligations to investors in those entities, the fulfillment of which obligations might not be in the best interests of us or our stockholders. Some of Solar Capital Partners’ investment professionals currently advise Magnetar on certain investments which coincide with those of Solar Capital. In addition, we note that any affiliated investment vehicle formed in the future and managed by our investment adviser or its affiliates may, notwithstanding different stated investment objectives, have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. As a result, Solar Capital Partners may face conflicts in allocating investment opportunities between us and such other entities. Although Solar Capital Partners will endeavor to allocate investment opportunities in a fair and equitable manner, it is possible that, in the future, we may not be given the opportunity to participate in investments made by investment funds managed by our investment adviser or an investment manager affiliated with our investment adviser. In any such case, when Solar Capital Partners identifies an investment, it will be forced to choose which investment fund should make the investment.
Solar Capital Partners and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole and in part, with ours. Solar Capital Partners and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, Solar Capital Partners or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with Solar Capital Partners’ allocation procedures.
If our investment adviser forms other affiliates in the future, we may co-invest on a concurrent basis with such other affiliates, subject to compliance with applicable regulations and regulatory guidance and our allocation procedures.
In the course of our investing activities, we pay management and incentive fees to Solar Capital Partners and reimburse Solar Capital Partners for certain expenses it incurs. As a result, investors in our common stock will invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in a lower rate of return than an investor might achieve through direct investments. Accordingly, there may be times when the management team of Solar Capital Partners has interests that differ from those of our stockholders, giving rise to a conflict.
We have entered into a royalty-free license agreement with our investment adviser, pursuant to which our investment adviser has granted us a non-exclusive license to use the name “Solar Capital.” Under the license agreement, we have the right to use the “Solar Capital” name for so long as Solar Capital Partners or one of its affiliates remains our investment adviser. In addition, we pay Solar Capital Management, an affiliate of Solar
 
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Capital Partners, our allocable portion of overhead and other expenses incurred by Solar Capital Management in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the compensation of our chief financial officer and any administrative support staff. These arrangements create conflicts of interest that our board of directors must monitor.
Our relationship with Magnetar may create conflicts of interest.
Since July 2006, Mr. Gross has been a partner in Magnetar Capital Partners LP, a multi-strategy investment manager. The Magnetar entities own as of September 30, 2009, either directly or indirectly, approximately 42.84% of our outstanding equity, and are expected to own, either directly or indirectly, between     % and     % of our outstanding shares of common stock upon the completion of this offering. Magnetar also provides certain services to Solar Capital Partners and Solar Capital Management, and is reimbursed by Solar Capital Partners and Solar Capital Management for the expenses it incurs in connection with providing such services. Magnetar also has had and may continue to have a financial interest in Solar Capital Partners. Some of Solar Capital Partners’ investment professionals currently advise Magnetar on certain investments which coincide with those of Solar Capital. In addition, the Magnetar entities may make investments similar to those targeted by Solar Capital in the future.
Our incentive fee may induce Solar Capital Partners to pursue speculative investments.
The incentive fee payable by us to Solar Capital Partners may create an incentive for Solar Capital Partners to pursue investments on our behalf that are riskier or more speculative than would be the case in the absence of such compensation arrangement. The incentive fee payable to our investment adviser is calculated based on a percentage of our return on invested capital. This may encourage our investment adviser to use leverage to increase the return on our investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would impair the value of our common stock. In addition, the investment adviser receives the incentive fee based, in part, upon net capital gains realized on our investments. Unlike that portion of the incentive fee based on income, there is no hurdle rate applicable to the portion of the incentive fee based on net capital gains. As a result, the investment adviser may have a tendency to invest more capital in investments that are likely to result in capital gains as compared to income producing securities. Such a practice could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.
The incentive fee payable by us to our investment adviser also may induce Solar Capital Partners to invest on our behalf in instruments that have a deferred interest feature, even if such deferred payments would not provide cash necessary to enable us to pay current distributions to the LLC Holders. Under these investments, we would accrue interest over the life of the investment but would not receive the cash income from the investment until the end of the term. Our net investment income used to calculate the income portion of our investment fee, however, includes accrued interest. Thus, a portion of this incentive fee would be based on income that we have not yet received in cash. In addition, the “catch-up” portion of the incentive fee may encourage Solar Capital Partners to accelerate or defer interest payable by portfolio companies from one calendar quarter to another, potentially resulting in fluctuations in timing and dividend amounts.
We may invest, to the extent permitted by law, in the securities and instruments of other investment companies, including private funds, and, to the extent we so invest, will bear our ratable share of any such investment company’s expenses, including management and performance fees. We will also remain obligated to pay management and incentive fees to Solar Capital Partners with respect to the assets invested in the securities and instruments of other investment companies. With respect to each of these investments, each of our stockholders will bear his or her share of the management and incentive fee of Solar Capital Partners as well as indirectly bearing the management and performance fees and other expenses of any investment companies in which we invest.
 
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We will become subject to corporate-level income tax if we are unable to qualify as a regulated investment company under Subchapter M of the Code.
Although we intend to elect to be treated as a RIC under Subchapter M of the Code for 2009 and succeeding tax years, no assurance can be given that we will be able to qualify for and maintain RIC status. To obtain and maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source and asset diversification requirements.
 
 	•	 	The annual distribution requirement for a RIC will be satisfied if we distribute to our stockholders on an annual basis at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Because we may use debt financing, we are subject to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirement. If we are unable to obtain cash from other sources, we could fail to qualify for RIC tax treatment and thus become subject to corporate-level income tax.	
 
 	•	 	The income source requirement will be satisfied if we obtain at least 90% of our income for each year from dividends, interest, gains from the sale of stock or securities or similar sources.	
 
 	•	 	The asset diversification requirement will be satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year. Failure to meet those requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private companies, and therefore will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses.	
If we fail to qualify for RIC tax treatment for any reason and remain or become subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.
We may have difficulty satisfying the annual distribution requirement in order to qualify and maintain RIC status if we recognize income before or without receiving cash representing such income.
For federal income tax purposes, we will include in income certain amounts that we have not yet received in cash, such as original issue discount, which may arise if we receive warrants in connection with the making of a loan or possibly in other circumstances, or contracted “payment in kind,” or PIK, interest, which represents contractual interest added to the loan balance and due at the end of the loan term. We also may be required to include in income certain other amounts that we will not receive in cash.
Because in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty satisfying the annual distribution requirement applicable to RICs. Accordingly, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investments to meet these distribution requirements. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus be subject to corporate-level income tax.
Our board of directors is authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock, which could convey special rights and privileges to its owners.
Under Maryland General Corporation Law and our charter, our board of directors is authorized to classify and reclassify any authorized but unissued shares of stock into one or more classes of stock, including preferred stock. Prior to issuance of shares of each class or series, the board of directors is required by Maryland law and our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the board of directors could authorize the issuance of shares of preferred stock with terms and conditions
 
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which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest. The cost of any such reclassification would be borne by our existing common stockholders. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of common stock on a proposal to cease operations as a business development company. In addition, the 1940 Act provides that holders of preferred stock are entitled to vote separately from holders of common stock to elect two preferred stock directors. We currently have no plans to issue preferred stock. The issuance of preferred shares convertible into shares of common stock might also reduce the net income and net asset value per share of our common stock upon conversion, provided, that we will only be permitted to issue such convertible preferred stock to the extent we comply with the requirements of Section 61 of the 1940 Act, including obtaining common stockholder approval. These effects, among others, could have an adverse effect on your investment in our common stock.
Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.
The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more difficult a change in control of Solar Capital or the removal of our directors. We are subject to the Maryland Business Combination Act, subject to any applicable requirements of the 1940 Act. Our board of directors has adopted a resolution exempting from the Business Combination Act any business combination between us and any other person, subject to prior approval of such business combination by our board, including approval by a majority of our disinterested directors. If the resolution exempting business combinations is repealed or our board does not approve a business combination, the Business Combination Act may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer. Our bylaws exempt from the Maryland Control Share Acquisition Act acquisitions of our stock by any person. If we amend our bylaws to repeal the exemption from the Control Share Acquisition Act, the Control Share Acquisition Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such a transaction.
We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our charter classifying our board of directors in three classes serving staggered three-year terms, and authorizing our board of directors to classify or reclassify shares of our stock in one or more classes or series, to cause the issuance of additional shares of our stock, to amend our charter without stockholder approval and to increase or decrease the number of shares of stock that we have authority to issue. These provisions, as well as other provisions of our charter and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders.
Our board of directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval.
Our board of directors has the authority to modify or waive certain of our operating policies and strategies without prior notice (except as required by the 1940 Act) and without stockholder approval. However, absent stockholder approval, we may not change the nature of our business so as to cease to be, or withdraw our election as, a business development company. We cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results and value of our stock. Nevertheless, the effects may adversely affect our business and impact our ability to make distributions.
Changes in laws or regulations governing our operations may adversely affect our business.
We and our portfolio companies are subject to regulation by laws at the local, state and federal levels. These laws and regulations, as well as their interpretation, may be changed from time to time. Accordingly, any change in these laws or regulations could have a material adverse affect on our business.
 
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Our investment adviser can resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.
Our investment adviser has the right, under the Investment Advisory and Management Agreement, to resign at any time upon not more than 60 days’ written notice, whether we have found a replacement or not. If our investment adviser resigns, we may not be able to find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our shares may decline. In addition, the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by our investment adviser and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our financial condition, business and results of operations.
We will incur significant costs as a result of being a publicly traded company.
As a publicly traded company, we will incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002, and other rules implemented by the SEC.
 
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FORWARD-LOOKING STATEMENTS AND PROJECTIONS
This prospectus contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about Solar Capital, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
 
 	•	 	an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;	
 
 	•	 	a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;	
 
 	•	 	interest rate volatility could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;	
 
 	•	 	currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars; and	
 
 	•	 	the risks, uncertainties and other factors we identify in “Risk Factors” and elsewhere in this prospectus and in our filings with the SEC.	
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this prospectus should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in “Risk Factors” and elsewhere in this prospectus. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus. The forward-looking statements and projections contained in this prospectus are excluded from the safe harbor protection provided by Section 27A of the Securities Act.
 
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USE OF PROCEEDS
We estimate that the net proceeds we will receive from the sale of              shares of our common stock in this offering will be approximately $                    , or approximately $                     if the underwriters fully exercise their over-allotment option, in each case assuming an initial public offering price of $[    ] per share (the mid-point of the estimated initial public offering price range set forth on the cover page of this prospectus), after deducting the underwriting discounts and commissions and estimated organization and offering expenses of approximately $             payable by us.
We plan to use the net proceeds of this offering for new investments in portfolio companies in accordance with our investment objective and strategies described in this prospectus, for general working capital purposes, and, to the extent outstanding, for temporary repayment of debt. We will also pay operating expenses, including management and administrative fees, and may pay other expenses such as due diligence expenses of potential new investments, from the net proceeds of this offering. We anticipate that substantially all of the net proceeds of this offering will be used for the above purposes within three to six months, depending on the availability of appropriate investment opportunities consistent with our investment objective and market conditions. We cannot assure you we will achieve our targeted investment pace.
Pending such investments, we will invest the net proceeds primarily in cash, cash equivalents, U.S. government securities and other high-quality investments that mature in one year or less from the date of investment. The management fee payable by us will not be reduced while our assets are invested in such securities. See “Regulation as a Business Development Company — Temporary Investments” for additional information about temporary investments we may make while waiting to make longer-term investments in pursuit of our investment objective.
DISTRIBUTIONS
To the extent that we have income available, we intend to distribute quarterly dividends to our stockholders, beginning with our first full quarter after the completion of this offering. Our quarterly dividends, if any, will be determined by our board of directors. Any dividends to our stockholders will be declared out of assets legally available for distribution.
On January [            ], 2010, the board of directors of Solar Capital Ltd. declared a dividend of $[            ] per share, payable on [            ], 2010 to holders of record as of [            ], 2010. This dividend payment is contingent upon the completion of our initial public offering during the first quarter of 2010. Purchasers in this offering will be entitled to receive this dividend payment. We anticipate that the dividend will be paid from post-offering taxable earnings, including interest and capital gains generated by our investment portfolio. However, if we do not generate sufficient taxable earnings during the year, the dividend may constitute a return of capital. The specific tax characteristics of our dividends will be reported to shareholders after the end of each calendar year.
We intend to elect to be treated, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code beginning with our 2009 taxable year. To obtain and maintain RIC tax treatment, we must, among other things, distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. In order to avoid certain excise taxes imposed on RICs, we currently intend to distribute during each calendar year an amount at least equal to the sum of: (1) 98% of our ordinary income for the calendar year; (2) 98% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year; and, (3) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which we paid no federal income tax. In addition, although we currently intend to distribute realized net capital gains (i.e., net long term capital gains in excess of short term capital losses), if any, at least annually, we may in the future decide to retain such capital gains for investment and elect to treat such gains as deemed distributions to you. If this happens, you will be treated as if you had
 
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received an actual distribution of the capital gains we retain and reinvested the net after tax proceeds in us. In this situation, you would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to your allocable share of the tax we paid on the capital gains deemed distributed to you. See “Material U.S. Federal Income Tax Considerations.” We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, to the extent that we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.
Our current intention is to make any distributions in additional shares of our common stock under our dividend reinvestment plan out of assets legally available therefore, unless you elect to receive your dividends and/or long-term capital gains distributions in cash. See “Dividend Reinvestment Plan.” If you hold shares in the name of a broker or financial intermediary, you should contact the broker or financial intermediary regarding your election to receive distributions in cash. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.
 
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SOLAR CAPITAL MERGER
We were formed in February 2007 as Solar Capital LLC, a Maryland limited liability company, and commenced operations in March 2007. Immediately prior to the pricing of this offering, through a series of transactions Solar Capital LLC will be merged with and into Solar Capital Ltd., a Maryland corporation, leaving Solar Capital Ltd. as the surviving entity. An aggregate of approximately 26.65 million shares of common stock of Solar Capital Ltd. and $125 million in Distribution Notes of Solar Capital Ltd. will be issued to the LLC Holders pursuant to an exemption from registration under the Securities Act in connection with the Solar Capital Merger. The obligations under the Distribution Notes will be those of Solar Capital Ltd. LLC Holders that elect to receive the Distribution Notes will be required to agree to an extension of their applicable lock-up period, with half of their equity position subject to a 180-day lock-up and the remainder subject to a 365-day lock-up. The Distribution Notes will be due on [                    ] and will have a coupon of [    ]%, payable quarterly. The Distribution Notes are pre-payable at par at any time and are subject to customary terms and conditions.
 
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CAPITALIZATION
The following table sets forth:
 
 	•	 	the actual capitalization of Solar Capital LLC at September 30, 2009; and	
 
 	•	 	the pro forma capitalization of Solar Capital Ltd. as adjusted to reflect (a) the sale of              shares of our common stock in this offering at an assumed public offering price of $[    ] per share (the mid-point of the estimated initial public offering price range set forth on the cover page of this prospectus) after deducting the underwriting discounts and commissions and offering expenses of approximately $                         payable by us; (b) completion of the Solar Capital Merger, including the conversion of the outstanding units of Solar Capital LLC into shares of common stock of Solar Capital Ltd. and the issuance of the Distribution Notes of Solar Capital Ltd. in connection therewith, and (c) completion of the Pre-IPO Distribution.	

 	 	As of September 30, 2009
(unaudited)	
 	 	Solar Capital LLC	 	Solar Capital Ltd.	
 	 	Actual	 	Pro Forma As Adjusted	
 	 	(in thousands)	 	(in thousands)	
Assets:	 	 	 	 	 	 	
 	 	 	
Cash and cash equivalents	 	$	18,011	 	$	            	
 	 	 	
Investments at fair value	 	$	792,394	 	$	792,394	
 	 	 	
Other assets	 	$	46,045	 	$	            	

Total assets	 	$	856,450	 	$	            	
 	 	 	
Liabilities:	 	 	 	 	 	 	
 	 	 	
Credit facility payable	 	$	25,584	 	$	            	
 	 	 	
Senior unsecured notes	 	 	—  	 	$	            	
 	 	 	 	 	 	 	
LLC Holders’ equity:	 	 	 	 	 	 	
Net assets	 	$	732,947	 	$	            	
 	 	 	 	 	 	 	
Stockholders’ equity:	 	 	 	 	 	 	
 	 	 	
Common stock, par value $0.01 per share; 200,000,000 shares authorized,              shares outstanding, pro forma, as adjusted	 	 	 	 	$	            	
 	 	 	
Capital in excess of par value	 	 	 	 	$	            	

Total stockholders’ equity	 	 	 	 	$	            	

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DILUTION
The potential dilution to investors in this offering would be represented by the amount by which the offering price per share exceeds our pro forma net asset value per share after (a) the completion of the Pre-IPO Distribution; (b) the completion of this offering; and (c) the conversion of the outstanding units of Solar Capital LLC into shares of common stock of Solar Capital Ltd. and the issuance of the Distribution Notes of Solar Capital Ltd. in connection with the Solar Capital Merger. Net asset value per share is determined by dividing our net asset value, which is our total assets less total liabilities, by the number of outstanding shares.
Upon completion of the Solar Capital Merger and the Pre-IPO Distribution, the September 30, 2009 pro forma net asset value of Solar Capital Ltd. would have been $532.9 million, or approximately $20.00 per share, on an as adjusted basis. After giving effect to the sale of              shares of our common stock in this offering at an assumed public offering price of $[    ] per share (the high-point of the estimated initial public offering price range set forth on the cover page of this prospectus) and after deducting the underwriting discounts and commissions and estimated organization and offering expenses of approximately $             payable by us, the pro forma net asset value of Solar Capital Ltd. is expected to be approximately $                    , or approximately $             per share, representing an immediate decrease in net asset value of $             per share, or     %, to shares sold in this offering. The foregoing assumes no exercise of the underwriters’ over-allotment option. If the underwriters’ over-allotment option is exercised in full, there would be an immediate decrease in net asset value of $             per share, or     %, to shares sold in this offering.
The following table illustrates the dilution to the shares on a per share basis, taking into account the assumptions set forth above:

Offering price per share (the high-point of the estimated initial public offering price range set forth on the cover page of this prospectus)	  	$	[    	] 	
Pro forma September 30, 2009 net asset value before this offering but after completion of the Solar Capital Merger and Pre-IPO Distribution	  	$	20.00	  	
Decrease attributable to stockholders	  	$	0.00	  	
Pro forma September 30, 2009 net asset value after this offering and completion of the Solar Capital Merger and Pre-IPO Distribution	  	$	 	  	
Dilution to stockholders (without exercise of the over-allotment option)	  	$	 	  	
 
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this section should be read in conjunction with the Selected Financial and Other Data and our Financial Statements and notes thereto appearing elsewhere in this prospectus.
Overview
We are an externally managed finance company. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in leveraged companies, including middle-market companies, in the form of senior secured loans, mezzanine loans and equity securities. From time to time, we may also invest in public companies that are thinly traded. We are managed by Solar Capital Partners. Solar Capital Management provides the administrative services necessary for us to operate.
As of September 30, 2009, our long term investments totaled $792.4 million and our net asset value was $732.9 million. Our portfolio was comprised of debt and equity investments in 36 portfolio companies and our income producing assets, which represented 91% of our total portfolio, had a weighted average annualized yield of approximately 14.8%.
Upon the consummation of the Solar Capital Merger, there will be approximately 26.65 million shares and $125 million in Distribution Notes outstanding. Giving effect to the completion of a $75 million cash distribution to our existing unit holders and the Solar Capital Merger, the September 30, 2009 net asset value would have been approximately $532.9 million, or $20.00 per share, on a pro forma as adjusted basis. As described in further detail below, we estimate that our December 31, 2009 net asset value will be between $[            ] and $[            ] million, or between $[            ] and $[            ] per share, on an as adjusted basis. As of January [            ], 2010, and on an as adjusted basis to give effect to the issuance of the Distribution Notes, our outstanding debt was approximately [            ]% of total assets, making us one of the least levered business development companies.
Our portfolio primarily consists of direct investments in long-term subordinated loans, referred to as mezzanine loans, and senior secured loans made to private leveraged companies organized and located in the United States, including middle-market companies. We also invest in equity securities, such as preferred stock, common stock, warrants and other equity interests received in connection with our debt investments or through direct investments. Our business model is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. Our investments generally range between $20 million and $100 million each, although we expect that this investment size will vary proportionately with the size of our capital base.
In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to enhance our overall returns. These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States.
We were formed in February 2007 as Solar Capital LLC, a Maryland limited liability company. Immediately prior to the pricing of this offering, Solar Capital LLC will be merged with and into Solar Capital Ltd., a Maryland corporation that is an externally managed, non-diversified closed-end management investment company which intends to elect to be treated as a business development company under the 1940 Act prior to consummation of this offering. In addition, we intend to elect to be treated for federal income tax purposes, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code.
Dividends
On January [    ], 2010, the board of directors of Solar Capital Ltd. declared a dividend of $[    ] per share, payable on [    ], 2010 to holders of record as of [    ], 2010. This dividend payment is contingent upon the
 
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completion of our initial public offering during the first quarter of 2010. Purchasers in this offering will be entitled to receive this dividend payment. We anticipate that the dividend will be paid from post-offering taxable earnings, including interest and capital gains generated by our investment portfolio. However, if we do not generate sufficient taxable earnings during the year, the dividend may constitute a return of capital. The specific tax characteristics of our dividends will be reported to shareholders after the end of each calendar year. See “Distributions.”
Recent Developments
Estimated Net Asset Value
Our December 31, 2009 unaudited net asset value per share is estimated to be between $[            ] and $[            ] on an as adjusted basis reflecting the Pre-IPO Distribution and adjusted for the Solar Capital Merger. On January [    ], 2010, our board of directors approved the fair value of our portfolio assets as of December 31, 2009 in accordance with our valuation policy. Our December 31, 2009 net asset value estimate is based on this board-approved fair value of our portfolio investments as well as other factors, including expected investment income earned on the portfolio and the Pre-IPO Distribution. The increase in net asset value per share from September 30, 2009 to December 31, 2009 is primarily due to the appreciation of our portfolio assets and our retained investment income for the quarter.
New Revolving Credit Facility
On January [    ], 2010, Solar Capital Ltd. received commitments to amend and restate its Senior Secured Revolving Credit Facility with Citi and various other lenders, which will become effective upon the completion of our initial public offering. The facility size will be $[            ] million, which may be increased up to $600 million, and expires on [    ]. Per this agreement, base rate borrowings bear interest at the London Interbank Offered Rates (LIBOR) plus 3.25%.
New Investment
During the fourth quarter of 2009, we purchased approximately $48 million of Rug Doctor, L.P. mezzanine debt. Rug Doctor, L.P. is one the largest manufacturers and marketers of consumer carpet care machines and cleaning products in the United States.
Distributions to LLC Holders
In December 2009, Solar Capital LLC declared a $75 million cash distribution to be paid to LLC Holders on a pro-rata basis prior to the completion of the Solar Capital Merger.
Current Market Environment
There have been significant developments in the worldwide capital markets recently. We have entered into a period of disruption as evidenced by a lack of liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of certain major financial institutions. Despite actions of the U.S. federal government and foreign governments, these events have contributed to worsening general economic conditions that are materially and adversely impacting the broader financial and credit markets and reducing the availability of debt and equity capital for the market as a whole.
These recent events have temporarily, and in some cases permanently, forced a number of capital providers to reduce or even eliminate their exposure to leveraged loans and bonds. As a result, the market has experienced significant contraction in liquidity over the last year and lenders that remain active in the market have, to date, benefited from a broad re-pricing of risk, rationalization of leverage levels, and generally favorable deal terms.
As a result of the continuing credit crisis, the spread between the yields realized on risk-free and higher risk securities has increased, resulting in illiquidity in parts of the capital markets. These conditions, as well as the current recession, may continue for a prolonged period of time or worsen in the future. A prolonged period of market illiquidity may have an adverse effect on our business, financial condition, and results of operations. Unfavorable economic conditions could also increase our funding costs, limit our access to the capital markets or result in a decision
 
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by lenders not to extend credit to us. These events could limit our investment originations, limit our ability to grow and negatively impact our operating results.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.
Valuation of Portfolio Investments
We will conduct the valuation of our assets, pursuant to which our net asset value will be determined, at all times consistent with generally accepted accounting principles, or “GAAP,” and the 1940 Act. Our valuation procedures are set forth in more detail below:
Securities for which market quotations are readily available on an exchange will be valued at such price as of the closing price on the day of valuation. 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 sufficient according to GAAP to determine the fair value of the security. If determined adequate, we use the quote obtained.
Securities for which reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of our investment adviser or board of directors, does not represent fair value, shall each be valued as follows: (i) each portfolio company or investment is initially valued by the investment professionals responsible for the portfolio investment; (ii) preliminary valuation conclusions are documented and discussed with our senior management; (iii) independent third-party valuation firms engaged by, or on behalf of, the board of directors will conduct independent appraisals and review management’s preliminary valuations and make their own assessment for all material assets; (iv) the board of directors will discuss valuations and determine the fair value of each investment in our portfolio in good faith based on the input of the investment adviser and, where appropriate, the respective third-party valuation firms.
The recommendation of fair value will generally be based on the following factors, as relevant:
 
 	•	 	the nature and realizable value of any collateral;	
 
 	•	 	the portfolio company’s ability to make payments;	
 
 	•	 	the portfolio company’s earnings and discounted cash flow;	
 
 	•	 	the markets in which the issuer does business; and	
 
 	•	 	comparisons to publicly traded securities.	
Securities for which market quotations are not readily available or for which a pricing source is not sufficient may include, but are not limited to, the following:
 
 	•	 	private placements and restricted securities that do not have an active trading market;	
 
 	•	 	securities whose trading has been suspended or for which market quotes are no longer available;	
 
 	•	 	debt securities that have recently gone into default and for which there is no current market;	
 
 	•	 	securities whose prices are stale;	
 
 	•	 	securities affected by significant events; and	
 
 	•	 	securities that the investment adviser believes were priced incorrectly.	
 
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Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements.
Revenue Recognition
Our revenue recognition policies are as follows:
Sales: Gains or losses on the sale of investments are calculated by using the specific identification method.
Interest Income: Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Origination, closing and/or commitment fees associated with investments in portfolio companies are accreted into interest income over the respective terms of the applicable loans. Upon the prepayment of a loan or debt security, any prepayment penalties and unamortized loan origination, closing and commitment fees are recorded as part of interest income. We have loans in our portfolio that contain a PIK provision. PIK interest is accrued at the contractual rates and added to the loan principal on the reset dates.
Non-accrual: Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.
Portfolio Composition, Investment Activity and Yield
The total value of our investments was approximately $792.4 million at September 30, 2009, $768.2 million at December 31, 2008, and $1.2 billion at December 31, 2007. During the nine months ended September 30, 2009, we originated approximately $72.9 million of new investments in 2 portfolio companies and approximately $47.8 million was invested in existing portfolio companies, substantially all of which was during the second quarter. For the year ended December 31, 2008, we originated approximately $158 million of new investments in 7 portfolio companies and approximately $73.1 million was invested in existing portfolio companies. From March 13, 2007 (inception) through December 31, 2007, referred to as our 2007 operating period, we originated approximately $764 million all from new investments in 27 portfolio companies. The foregoing amounts are in addition to the approximately $478 million of portfolio investments originated by investment professionals at Magnetar who are currently a part of Solar Capital Partners’ investment team that we acquired from the Magnetar entities prior to and immediately following the initial private placement.
In certain instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments may fluctuate significantly from period to period. Our portfolio activity also reflects sales of securities. For the nine months ended September 30, 2009, we had approximately $33.5 million in debt repayments in existing portfolio companies and sales of securities in 9 portfolio companies for approximately $156.5 million. For the year ended December 31, 2008, we had approximately $92 million of debt repayments in 6 portfolio companies and sales of securities in 4 portfolio companies of approximately $36.4 million.
In addition, during the nine months ended September 30, 2009 we had net unrealized and realized gains on 28 portfolio company investments totaling approximately $118.9 million, which was offset by net unrealized and realized losses on 16 portfolio company investments totaling approximately $108.2 million. During the year ended December 31, 2008, we had unrealized appreciation on 1 portfolio company investment totaling approximately $7.1 million, which was more than offset by unrealized depreciation on 43 portfolio company investments totaling approximately $503.4 million.
 
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At September 30, 2009, we had investments in debt and preferred securities of 32 portfolio companies, totaling approximately $734.4 million, and equity investments in 10 portfolio companies, totaling approximately $58.0 million. At December 31, 2008, we had investments in debt and preferred securities of 36 portfolio companies, totaling approximately $685 million, and equity investments in 17 portfolio companies, totaling approximately $83.2 million.
The following table shows the fair value of our portfolio of investments by asset class as of September 30, 2009, December 31, 2008 and December 31, 2007:

 	 	September 30, 2009	 	December 31, 2008	 	December 31, 2007	
 	 	Cost	 	Fair Value	 	Cost	 	Fair Value	 	Cost	 	Fair Value	
Bank Debt/Senior Secured	 	$	182,362	 	$	159,915	 	$	250,473	 	$	146,907	 	$	312,077	 	$	302,628	
Subordinated Debt/Corporate Notes	 	 	744,833	 	 	574,402	 	 	751,116	 	 	531,949	 	 	619,203	 	 	617,738	
Preferred Equity	 	 	39	 	 	39	 	 	61,101	 	 	6,145	 	 	55,299	 	 	55,299	
Common Equity/Partnership Interests/Warrants	 	 
	115,739
	 	 	58,038	 	 	194,044	 	 	76,016	 	 	184,336	 	 	203,071	
Put/Call Options Purchased or Written	 	 	—  	 	 	—  	 	 	—  	 	 	7,198	 	 	—  	 	 	—  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	1,042,973	 	$	792,394	 	$	1,256,734	 	$	768,215	 	$	1,170,915	 	$	1,178,736	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As of September 30, 2009, and December 31, 2008, the weighted average yield on income producing investments in our portfolio was approximately 14.8% and 17.1%, respectively. The weighted average yield on income producing investments was lower as of September 30, 2009 due to a decline in the average LIBOR rates applicable to our LIBOR-based income producing assets and the increase in fair value of these assets since December 2008.
Results of Operations for the Three Months Ended September 30, 2009 compared to the Three Months Ended September 30, 2008
Revenue

 	  	For the Three Months
Ended September 30,	  	% Change	 	
 	  	2009	  	2008	  	 	 	
 	  	(in thousands)	  	 	 	
Investment income	  	$	27,785	  	$	32,464	  	(14	)% 	
The decrease in investment income for the three months ended September 30, 2009 compared to the same period in 2008 was primarily due to lower average LIBOR rates and the placement of certain assets on nonaccrual status; this was partially offset by a higher average invested balance during 2009. LIBOR rates fell below 1% preceding the third quarter of 2009 compared to LIBOR rates near 2.8% heading into the third quarter of 2008.
Expenses

 	  	For the Three Months
Ended September 30,	  	% Change	 	 	
 	  	2009	  	2008	  	 	 	 	
 	  	(in thousands)	  	 	 	 	
Performance-based incentive fee	  	$	4,096	  	$	712	  	475	% 	 	
Investment advisory and management fees	  	 	4,273	  	 	6,378	  	(33	)% 	 	
Interest and other credit facility expenses	  	 	536	  	 	1,227	  	(56	)% 	 	
Administrative service fee	  	 	479	  	 	787	  	(39	)% 	 	
Other general and administrative expenses	  	 	2,018	  	 	1,371	  	47	% 	 	
 	  	 	 	  	 	 	  	 	 	 	
Total expenses	  	$	11,402	  	$	10,475	  	9	% 	 	

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Total expenses increased by approximately $0.9 million for the three months ended September 20, 2009 compared to the same period in 2008. Investment advisory and management fees, which are based on gross assets, were lower in the third quarter of 2009 than 2008 primarily due to the reduced fair value of our investment portfolio. The performance-based incentive fee, which is computed based on percentage returns on our net asset value, was higher in the third quarter of 2009 compared to 2008 as our investment adviser surpassed the specified thresholds during 2009. (See Note 4 of the Notes to the September 30, 2009 Consolidated Financial Statements for the details on this calculation.)
Interest and other credit facility expenses were lower in the third quarter of 2009 compared to 2008 because a large portion of the amortization of set-up costs associated with the facilities ended in the first quarter of 2009 as the Company’s other credit facility (referred to below as the Warehouse Facility) expired. The increase in other general and administrative expenses in the third quarter of 2009 compared to 2008 is primarily due to approximately $1.4 million in nonrecurring legal costs associated with our public offering, that did not qualify for deferral. During 2009, recurring other general and administrative costs declined due to a reduction in corporate overhead and a decrease in unincorporated business tax.
Net Realized and Unrealized Gains and Losses

 	  	For the Three Months
Ended September 30,	 	
 	  	2009	 	 	2008	 	
 	  	(in thousands)	 	
Net realized gain (loss) investments	  	$	(151,269	) 	 	$	18	  	
Net realized gain (loss) forward contracts	  	 	(1,844	) 	 	 	13,370	  	
Net realized loss foreign currency exchange	  	 	(284	) 	 	 	(357	) 	
Net unrealized gain (loss) investments	  	 	175,839	  	 	 	(128,332	) 	
Net unrealized gain forward contracts	  	 	1,726	  	 	 	4,675	  	
Net unrealized gain (loss) foreign currency exchange	  	 	(1,987	) 	 	 	1,985	  	
 	  	 	 	 	 	 	 	 	
Total net realized and unrealized gain (loss)	  	$	22,181	  	 	$	(108,641	) 	
 	  	 	 	 	 	 	 	 	
The increase in unrealized gains on investments for the third quarter of 2009 was primarily due to the reversal of unrealized losses on investments sold or deemed worthless and an increase in the fair value of our assets during the third quarter of 2009 compared to an overall weakening in the economy during the same period in 2008.
The net realized loss during the third quarter of 2009 was primarily due to four common and preferred equity positions that were deemed worthless resulting in a realized loss of $121.6 million as well as from the sales of six debt and equity investments resulting in a realized loss of $29.6 million.
Additionally, we have exposure to foreign currencies (Euro, British Pounds and Australian dollars) through various investments. Those investments are converted into U.S. dollars at the balance sheet date, and as such, we are exposed to movements in exchange rates. To limit our exposure to movements in exchange rates we enter into foreign exchange forward contracts or borrow under our multi-currency revolving credit facility in those currencies. For the third quarter of 2009 the relative weakening of the U.S. dollar resulted in net realized/unrealized losses on forward contracts compared to a relative strengthening of the U.S. dollar in the same period in 2008 which resulted in net realized/unrealized gains on forward contracts.
Results of Operations for the Nine Months Ended September 30, 2009 compared to the Nine Months Ended September 30, 2008
Revenue

 	  	For the Nine Months
Ended September 30,	  	% Change	 	
 	  	2009	  	2008	  	 	 	
 	  	(in thousands)	  	 	 	
Investment income	  	$	81,214	  	$	95,923	  	(15	)% 	
 
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The decrease in investment income for the first nine months of 2009 compared to the same period in 2008 was primarily due to lower average LIBOR rates and the placement of certain assets on nonaccrual status; this was partially offset by a higher average invested balance during 2009. LIBOR rates fell below 1.5% preceding the first quarter of 2009 and continued to fall throughout the year (dropping below 1% preceeding the third quarter) compared to LIBOR rates near 5% heading into the first quarter of 2008.
Expenses

 	  	For the Nine Months
Ended September 30,	  	% Change	 	
 	  	2009	  	2008	  	 	 	
 	  	(in thousands)	  	 	 	
Performance-based incentive fee	  	$	12,395	  	$	3,503	  	254	% 	
Investment advisory and management fees	  	 	12,348	  	 	19,003	  	(35	)% 	
Interest and other credit facility expenses	  	 	1,565	  	 	2,393	  	(35	)% 	
Administrative service fee	  	 	1,512	  	 	2,492	  	(39	)% 	
Other general and administrative expenses	  	 	3,817	  	 	3,213	  	19	% 	
 	  	 	 	  	 	 	  	 	 	
Total expenses	  	$	31,637	  	$	30,604	  	3	% 	
 	  	 	 	  	 	 	  	 	 	
Total expenses remained relatively constant for the first nine months of 2009 compared to the same period in 2008. The performance-based incentive fee, which is computed based on percentage returns on our net asset value, was higher in the first nine months of 2009 compared to 2008 as we surpassed the specified thresholds during 2009. Investment advisory and management fees, which are based on gross assets, were lower in the first nine months of 2009 than 2008 primarily due to the reduced fair value of our investment portfolio. (See Note 4 of the Notes to the September 30, 2009 Consolidated Financial Statements for the details on this calculation.)
The decrease in the administrative service fee for the first nine months of 2009 compared to 2008 was primarily due to the internalization of various operational functions. The increase in other general and administrative expenses for the first nine months of 2009 compared to the same period in 2008 is primarily due to approximately $1.4 million in nonrecurring legal costs associated with our public offering, that did not qualify for deferral. During 2009, recurring other general and administrative costs declined due to a reduction in corporate overhead and a decrease in unincorporated business tax.
Net Realized and Unrealized Gains and Losses

 	  	For the Nine Months
Ended September 30,	 	
 	  	2009	 	 	2008	 	
 	  	(in thousands)	 	
Net realized loss investments	  	$	(227,191	) 	 	$	(181	) 	
Net realized gain (loss) forward contracts	  	 	(9,674	) 	 	 	2,219	  	
Net realized gain (loss) foreign currency exchange	  	 	(751	) 	 	 	465	  	
Net unrealized gain (loss) investments	  	 	237,940	  	 	 	(160,671	) 	
Net unrealized gain (loss) forward contracts	  	 	(963	) 	 	 	2,883	  	
Net unrealized gain (loss) foreign currency exchange	  	 	(1,958	) 	 	 	1,251	  	
 	  	 	 	 	 	 	 	 	
Total net realized and unrealized loss	  	$	(2,597	) 	 	$	(154,034	) 	
 	  	 	 	 	 	 	 	 	
The increase in unrealized gains on investments for the first nine months of 2009 was primarily due to the reversal of unrealized losses on the investments sold or deemed worthless and an increase in the fair value of our assets compared to overall weakening in the economy during the same period in 2008.
 
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The net realized loss during the first nine months of 2009 was primarily due to realized losses of approximately $72.7 million on the sale of three debt investments as well as losses of approximately $147.5 million due to five debt and equity securities that were deemed worthless.
Additionally, we have exposure to foreign currencies (Euro, British Pounds and Australian dollars) through various investments. Those investments are converted into U.S. dollars at the balance sheet date and as such we are exposed to movements in exchange rates. To limit our exposure to movements in exchange rates we enter into foreign exchange forward contracts or borrow under our multi-currency revolving credit facility in those currencies. For the first nine months of 2009 the relative weakening of the U.S. dollar resulted in net realized/unrealized losses on forward contracts compared to a relative strengthening of the U.S. dollar in the same period in 2008 which resulted in net realized/unrealized gains on forward contracts.
Results of Operations for the Year Ended December 31, 2008 compared to the Period from March 13, 2007 (inception) to December 31, 2007
Revenue

 	  	Year Ended
December 31, 2008	  	Period From
March 13
(inception) to
December 31, 2007	  	% Change	 	
 	  	(in thousands)	  	 	 	
Investment income	  	$	133,959	  	$	78,455	  	71	% 	
The increase in interest income for the year ended December 31, 2008 compared to the period ended December 31, 2007 was primarily due to twelve months of income during 2008 versus a partial year in 2007 and a higher average invested balance versus outstanding cash during 2008. The average cash balance during the period ended December 31, 2007 was $530.0 million compared to $40.3 million in 2008.
Operating Expenses

 	  	Year Ended
December 31, 2008	  	Period From
March 13
(inception) to
December 31, 2007	  	% Change	 	
 	  	(in thousands)	  	 	 	
Investment advisory and management fees	  	$	24,297	  	$	19,719	  	23	% 	
Performance-based incentive fee	  	 	9,008	  	 	—  	  	—  	  	
Interest and other credit facility expenses	  	 	3,343	  	 	—  	  	—  	  	
Administrative service fee	  	 	3,430	  	 	1,474	  	133	% 	
Other general and administrative expenses	  	 	4,300	  	 	3,579	  	20	% 	
 	  	 	 	  	 	 	  	 	 	
Total operating expenses	  	$	44,378	  	$	24,772	  	79	% 	
 	  	 	 	  	 	 	  	 	 	
Almost two-thirds of the $19.6 million increase in total operating expenses during 2008 was attributable to the recognition of the performance-based incentive fee, as the respective hurdle rates were surpassed, and interest and other credit facility expenses related to our credit facilities established during 2008. Investment advisory and management fees were higher in 2008 primarily because 2008 included a full year of expense versus a partial year in 2007. Other general and administrative expenses and administrative service fees also increased during 2008 due to the partial year comparison and the build out of our corporate infrastructure.
 
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Net Realized and Unrealized Gains and Losses

 	 	Year Ended
December 31, 2008	 	 	Period From
March 13
(inception) to
December 31, 2007	 	
 	 	(in thousands)	 	
Net realized gain (loss) investments	 	$	(16,878	) 	 	$	(3,557	) 	
Net realized gain (loss) forward contracts	 	 	13,086	  	 	 	(7,125	) 	
Net realized gain (loss) foreign currency exchange	 	 	2,915	  	 	 	12	  	
Net unrealized gain (loss) investments	 	 	(496,340	) 	 	 	7,821	  	
Net unrealized gain (loss) forward contracts	 	 	4,087	  	 	 	(1,235	) 	
Net unrealized gain (loss) foreign currency exchange	 	 	(37	) 	 	 	9	  	
 	 	 	 	 	 	 	 	 	
Total net realized and unrealized gain (loss) before taxes	 	$	(493,167	) 	 	$	(4,075	) 	
 	 	 	 	 	 	 	 	 	
The increase in unrealized losses on investments for the year ended December 31, 2008 was primarily due to significantly lower fair value determinations on many of our investments. Lower fair values were driven primarily by the general market dislocation, illiquidity in the capital markets, and lower market prices for comparable publicly traded debt. Fair values were lower across all investment types.
We have exposure to foreign currencies (Euro, British Pounds and Australian dollars) through various investments. These investments are converted into U.S. dollars at the balance sheet date, exposing us to movements in exchange rates. To limit our exposure to fluctuations in exchange rates, we enter into foreign exchange forward contracts or borrow in those currencies under our multi-currency revolving credit facility. For the year ended December 31, 2008, the strengthening of the U.S. dollar resulted in net realized and unrealized gains from forward contracts of $13.1 million and $4.1 million, and a $2.9 million gain on the repayment of foreign denominated borrowings. For the period ended December 31, 2007, the relative weakening of the U.S. dollar resulted in net realized and unrealized losses.
Income Tax

 	  	Year Ended
December 31, 2008	  	Period From
March 13
(inception) to
December 31, 2007	 	 	% Change	 	
 	  	(in thousands)	 	 	 	 	
Income tax expense on net investment income	  	$	2,182	  	$	689	  	 	217	% 	
Income tax expense (benefit) on realized gain (loss)	  	 	60	  	 	(181	) 	 	133	% 	
 	  	 	 	  	 	 	 	 	 	 	
Total income tax expense (benefit)	  	$	2,242	  	$	508	  	 	 	 	
 	  	 	 	  	 	 	 	 	 	 	
We are subject to New York City unincorporated business tax (UBT), which is imposed on the business income of every unincorporated business that is carried on in New York City. The UBT is imposed for each taxable year at a rate of 4 percent of taxable income that is allocable to New York City. Estimated UBT for 2008 and 2007 was approximately $1.6 million and $0.4 million, respectively.
We are also subject to taxes in Luxembourg, through Solar Capital Luxembourg I S.a.r.l., a wholly-owned subsidiary. Under the laws of Luxembourg, we pay a corporate income tax and a municipal business tax on our subsidiary’s taxable income.
After the completion of this offering, we intend to elect to be treated for income tax purposes as a RIC. As a RIC, we generally will not have to pay corporate-level federal income taxes on ordinary income or capital gains that we distribute to our stockholders as dividends. See “Material U.S. Federal Income Tax Considerations.” In addition, after completion of this offering and Solar Capital Merger, we will be a corporation and no longer be subject to unincorporated business tax.
 
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Liquidity and Capital Resources
We were formed in February 2007 as Solar Capital LLC, a Maryland limited liability company, and commenced operations in March 2007. On March 13, 2007, we conducted a private placement of units in Solar Capital LLC. Approximately 46.7 million units were issued in connection with the initial private placement. In addition, in connection with the initial private placement, the Magnetar entities acquired approximately 35 million units. The consideration paid by the Magnetar entities in connection with such transactions consisted of a portfolio of debt and equity investments, together with accrued and unpaid interest thereon and additional funding commitments in such investments, as well as a cash investment.
At September 30, 2009 and December 31, 2008, we had cash and cash equivalents of approximately $18.0 million and $65.8 million, respectively. Cash provided by and used by operating activities for the nine months ended September 30, 2009 and the year ended December 31, 2008 was approximately $11.8 million and $106.8 million, respectively, consisting primarily of the items described in “— Results of Operations.”
During the first quarter of 2009, we agreed to make certain specified distributions to the LLC Holders on a periodic basis to the extent we had not yet completed our initial public offering. In accordance therewith, on March 17, 2009, we made a pro rata distribution to the existing LLC Holders. This distribution was equal to 10% of our December 31, 2008 net asset value and totaled approximately $85.3 million, or $1.04 per outstanding unit. On October 28, 2009 we made another pro rata distribution, declared in September 2009, to the existing LLC Holders. This distribution was equal to 10% of our September 30, 2009 net asset value and totaled approximately $81.4 million, or $1.00 per outstanding unit. In December 2009, Solar Capital LLC declared a $75 million cash distribution to be paid to LLC Holders on a pro-rata basis prior to the completion of the Solar Capital Merger.
In connection with the Solar Capital Merger, Solar Capital Ltd will issue $125 million of Distribution Notes to the LLC Holders. The Distribution Notes will be due on [                    ] and will have a coupon of [    ]%, payable quarterly. The Distribution Notes are pre-payable at par at any time and are subject to customary terms and conditions.
As a business development company, we will have an ongoing need to raise additional capital for investment purposes. As a result, we expect from time to time to access the debt and/or equity markets when we believe it is necessary and appropriate to do so. Since the middle of 2007, global credit and other financial markets have suffered substantial stress, volatility, illiquidity and disruption. These events have significantly diminished overall confidence in the debt and equity markets and caused increasing economic uncertainty. A further deterioration in the financial markets or a prolonged period of illiquidity without improvement could materially impair our ability to raise equity capital or locate debt capital on commercially reasonable terms.
Credit Facility
On January     , 2010, Solar Capital Ltd. received commitments to amend and restate its $[        ] million Senior Secured Revolving Credit Facility (the “Credit Facility”) with Citi, various lenders and Citibank, N.A., as administrative agent for the lenders. Citi acted as the sole lead bookrunner and the sole lead arranger for the Credit Facility. Under the terms of the Credit Facility, the lenders agreed to extend credit to Solar Capital (the “Borrower”) in an aggregate principal or face amount not exceeding $[            ] million at any one time outstanding. The Credit Facility also allows the Borrower and the lenders to provide for a commitment increase to an amount not greater than $600 million. The Credit Facility is a three-year multi-currency revolving facility (with a stated maturity date of [                    ]) and is secured by substantially all of the assets of Solar Capital’s investment portfolio. Interest rate options include Base Rate (“BR”) loans, indexed to currency specific London Interbank Offered Rates (LIBOR), and Alternate Base Rate (“ABR”) loans, indexed to the Prime or Fed Funds rates. Borrowings bear interest at a rate per annum equal to the BR plus 3.25% and ABR plus for 2.25%. The
 
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Credit Facility contains affirmative and negative covenants customary for financings of this type. The Credit Facility will be used to supplement Solar Capital’s equity capital to make additional investments and for other general corporate purposes.
Distribution Notes
The Distribution Notes consist of $125 million in senior unsecured notes, which will bear interest at a rate of [ ]% per annum, payable quarterly in cash, and will mature in [ ]. The Distribution Notes are redeemable at any time, in whole or in part, at a price of 100% of their principal amount, plus accrued and unpaid interest to the date of redemption. Further, Solar Capital Ltd. must use the net cash proceeds from the issuance of any other senior unsecured notes either to redeem or make an offer to purchase the outstanding Distribution Notes at a price of 100% of their principal amount, plus accrued and unpaid interest to the date of redemption. The Distribution Notes subject Solar Capital Ltd. to customary covenants, including, among other things, (i) a requirement to maintain an “asset coverage ratio” of 2.00 to 1.00; (ii) a requirement that in the event of a “change of control” (as defined in the agreement governing the Distribution Notes) Solar Capital Ltd. will be required to offer to repurchase the Distribution Notes at a price of 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase; and (iii) a restriction on incurring any debt on a junior lien basis, or any debt that is contractually subordinated in right of payment to any other debt unless it is also subordinated to the Distribution Notes on substantially identical terms. The agreement under which the Distribution Notes will be issued will contain customary events of default.
Contractual Obligations
We have certain commitments pursuant to our Investment Advisory and Management Agreement entered into with Solar Capital Partners. We have agreed to pay a fee for investment advisory and management services consisting of two components — a base management fee and an incentive fee. Payments under the Investment Advisory and Management Agreement are equal to (1) a percentage of the value of our average gross assets and (2) a two-part incentive fee. See “Investment Advisory and Management Agreement.” We have also entered into a contract with Solar Capital Management to serve as our administrator. Payments under the Administration Agreement are equal to an amount based upon our allocable portion of Solar Capital Management’s overhead in performing its obligation under the agreement, including rent, fees, and other expenses inclusive of our allocable portion of the compensation of our chief financial officer and any administrative staff. See “Administration Agreement.”
Off-Balance Sheet Arrangements
In the normal course of its business, we trade various financial instruments and may enter into various investment activities with off-balance sheet risk, which include forward foreign currency contracts. Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at specific terms at future dates. These financial instruments contain varying degrees of off-balance sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount recognized in our Statement of Assets and Liabilities.
Borrowings
We had borrowings of $25.6 million and $0 outstanding as of September 30, 2009 and December 31, 2008, respectively, under the Credit Facility. See “Credit Facility” for a description of the Credit Facility. Upon completion of this offering, we will also have approximately $125 million of the Distribution Notes outstanding.
 
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Distributions
During the first quarter of 2009, we agreed to make certain specified distributions to the LLC Holders on a periodic basis to the extent we had not yet completed our initial public offering. In accordance therewith, on March 17, 2009, we made a pro rata distribution to the existing LLC Holders. This distribution was equal to 10% of our December 31, 2008 net asset value and totaled approximately $85.3 million, or $1.04 per outstanding unit. On October 28, 2009 we made another pro rata distribution, declared in September 2009, to the existing LLC Holders. This distribution was equal to 10% of our September 30, 2009 net asset value and totaled approximately $81.4 million, or $1.00 per outstanding unit. In December 2009, Solar Capital LLC declared a $75 million cash distribution to be paid to LLC Holders on a pro-rata basis prior to the completion of the Solar Capital Merger.
Related Parties
We have entered into a number of business relationships with affiliated or related parties, including the following:
 
 	•	 	We have entered into an Investment Advisory and Management Agreement with Solar Capital Partners. Mr. Gross, our chairman and chief executive officer, is the managing member and a senior investment professional of, and has financial and controlling interests in, Solar Capital Partners. In addition, Mr. Spohler, our chief operating officer is a partner and a senior investment professional of, and has financial interests in, Solar Capital Partners.	
 
 	•	 	Solar Capital Management provides us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our Administration Agreement. We reimburse Solar Capital Management for the allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and the compensation of our chief compliance officer, our chief financial officer and any administrative support staff. Solar Capital Partners, our investment adviser, is the sole member of and controls Solar Capital Management.	
 
 	•	 	We have entered into a license agreement with Solar Capital Partners, pursuant to which Solar Capital Partners has granted us a non-exclusive, royalty-free license to use the name “Solar Capital.”	
 
 	•	 	Since July 2006, Mr. Gross, our chairman and chief executive officer, has been a partner in Magnetar Capital Partners LP, a multi-strategy investment manager. Mr. Spohler, our chief operating officer together with Solar Capital Partners’ other investment professionals, currently advise Magnetar on certain investments which coincide with those of Solar Capital. Magnetar has had and may continue to have a financial interest in Solar Capital Partners. As a result of certain transactions prior to and immediately following our initial private placement, the Magnetar entities own as of September 30, 2009, either directly or indirectly, approximately 42.84% of our outstanding equity, and are expected to own, either directly or indirectly, between     % and     % of our outstanding shares of common stock upon the completion of this offering.	
Solar Capital Partners and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole and in part, with ours. Solar Capital Partners and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, Solar Capital Partners or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with Solar Capital Partners’ allocation procedures.
In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.
 
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BUSINESS
Solar Capital
We are an externally managed finance company. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in leveraged companies, including middle-market companies, in the form of senior secured loans, mezzanine loans and equity securities. From time to time, we may also invest in public companies that are thinly traded. We are managed by Solar Capital Partners. Solar Capital Management provides the administrative services necessary for us to operate.
As of September 30, 2009, our long term investments totaled $792.4 million and our net asset value was $732.9 million. Our portfolio was comprised of debt and equity investments in 36 portfolio companies and our income producing assets, which represented 91% of our total portfolio, had a weighted average annualized yield of approximately 14.8%.
Upon the consummation of the Solar Capital Merger, there will be approximately 26.65 million shares and $125 million in Distribution Notes outstanding. Giving effect to the completion of a $75 million cash distribution to our existing unit holders and the Solar Capital Merger, the September 30, 2009 net asset value would have been approximately $532.9 million, or $20.00 per share, on a pro forma as adjusted basis. As described in further detail below, we estimate that our December 31, 2009 net asset value will be between $[            ] and $[            ] million, or between $[            ] and $[            ] per share, on an as adjusted basis. As of January [    ], 2010, and on an as adjusted basis to give effect to the issuance of the Distribution Notes, our outstanding debt was approximately [            ]% of total assets, making us one of the least levered business development companies.
Our portfolio primarily consists of direct investments in long-term subordinated loans, referred to as mezzanine loans, and senior secured loans made to private leveraged companies organized and located in the United States, including middle-market companies. We also invest in equity securities, such as preferred stock, common stock, warrants and other equity interests received in connection with our debt investments or through direct investments. Our business model is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. Our investments generally range between $20 million and $100 million each, although we expect that this investment size will vary proportionately with the size of our capital base.
In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to enhance our overall returns. These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States.
We were formed in February 2007 as Solar Capital LLC, a Maryland limited liability company, and commenced operations in March 2007. On March 13, 2007, we conducted a private placement of units of membership interests, or units, in Solar Capital LLC, which we refer to as our initial private placement. Approximately 46.7 million units were issued in connection with the initial private placement. Solar Capital Investors, LLC, an entity funded by the management of Solar Capital Partners, acquired approximately 3.3 million units in connection with the initial private placement. In addition, in connection with the initial private placement, the Magnetar entities acquired approximately 35 million units. The consideration paid by the Magnetar entities in connection with such transactions consisted of a portfolio of debt and equity investments, originated by investment professionals at Magnetar who are currently a part of Solar Capital Partners’ investment team together with accrued and unpaid interest thereon and additional funding commitments in such investments, as well as a cash investment.
Dividends
On January [    ], 2010, the board of directors of Solar Capital Ltd. declared a dividend of $[    ] per share, payable on [    ], 2010 to holders of record as of [    ], 2010. This dividend payment is contingent upon the completion of our initial public offering during the first quarter of 2010. Purchasers in this offering will be
 
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entitled to receive this dividend payment. We anticipate that the dividend will be paid from post-offering taxable earnings, including interest and capital gains generated by our investment portfolio. However, if we do not generate sufficient taxable earnings during the year, the dividend may constitute a return of capital. The specific tax characteristics of our dividends will be reported to shareholders after the end of each calendar year. See “Distributions.”
Recent Developments
Estimated Net Asset Value
Our December 31, 2009 unaudited net asset value per share is estimated to be between $[            ] and $[            ] on an as adjusted basis reflecting the Pre-IPO Distribution and adjusted for the Solar Capital Merger. On January [    ], 2010, our board of directors approved the fair value of our portfolio assets as of December 31, 2009 in accordance with our valuation policy. Our December 31, 2009 net asset value estimate is based on this board-approved fair value of our portfolio investments as well as other factors, including expected investment income earned on the portfolio and the Pre-IPO Distribution. The increase in net asset value per share from September 30, 2009 to December 31, 2009 is primarily due to the appreciation of our portfolio assets and our retained investment income for the quarter.
New Revolving Credit Facility
On January [    ], 2010, Solar Capital Ltd. received commitments to amend and restate its Senior Secured Revolving Credit Facility with Citi and various other lenders, which will become effective upon the completion of our initial public offering. The facility size will be $[            ] million, which may be increased up to $600 million, and expires on [            ]. Per this agreement, base rate borrowings bear interest at the London Interbank Offered Rates (LIBOR) plus 3.25%.
New Investment
During the fourth quarter of 2009, we purchased approximately $48 million of Rug Doctor, L.P. mezzanine debt. Rug Doctor, L.P. is one the largest manufacturers and marketers of consumer carpet care machines and cleaning products in the United States.
Distributions to LLC Holders
In December 2009, Solar Capital LLC declared a $75 million cash distribution to be paid to LLC Holders on a pro-rata basis prior to the completion of the Solar Capital Merger.
About Solar Capital Partners
Solar Capital Partners is controlled by Michael S. Gross, our chairman and chief executive officer, is led by Mr. Gross and Bruce Spohler, our chief operating officer, and is supported by a team of 12 dedicated investment professionals, including Brian Gerson, Cedric Henley and David Mait. We refer to Messrs. Gross, Spohler, Gerson, Henley and Mait as Solar Capital Partners’ senior investment professionals. Solar Capital Partners’ investment team has extensive experience in the private equity and leveraged lending industries, as well as significant contacts with financial sponsors operating in those industries. The investment team led by Messrs. Gross and Spohler have invested in 52 different portfolio companies for Solar Capital, which investments involved an aggregate of more than 44 different financial sponsors, through September 30, 2009. Since Solar Capital’s inception, these investment professionals have used their relationships in the middle-market financial sponsor and financial intermediary community to generate deal flow.
Mr. Gross, the former chairman and chief executive officer of Apollo Investment Corporation, a publicly traded business development company that he founded, has over 20 years of experience in the private equity, distressed debt and mezzanine lending businesses and has been involved in originating, structuring, negotiating, consummating and managing private equity, distressed debt and mezzanine lending transactions. Since July 2006, Mr. Gross has been a partner in Magnetar Capital Partners LP, a multi-strategy investment manager.
 
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Mr. Gross is also a founder and a former senior partner of Apollo Management, L.P., a leading private equity firm. During his tenure at Apollo Management, L.P., Mr. Gross was a member of the investment committee that was responsible for overseeing more than $13 billion of investments in over 150 companies. Between February 2004 and February 2006, Mr. Gross was the president and chief executive officer of Apollo Investment Corporation, a publicly traded business development company that he founded and on whose board of directors and investment committee he served as chairman from February 2004 to July 2006. Under his management, Apollo Investment Corporation raised approximately $930 million in gross proceeds in an initial public offering in April 2004, built a dedicated investment team and infrastructure and invested approximately $2.3 billion in over 65 companies in conjunction with 50 different private equity sponsors. Mr. Gross was also the managing partner of Apollo Distressed Investment Fund, L.P., an investment fund he founded in 2003 to invest principally in debt and other securities of leveraged companies.
Mr. Gross also currently serves on the boards of directors of three public companies, and in the past has served on the boards of directors of more than 20 public and private companies. As a result, Mr. Gross has developed an extensive network of private equity sponsor relationships as well as relationships with management teams of public and private companies, investment bankers, attorneys and accountants that we believe should provide us with significant business opportunities.
We also rely on the more than 20 years of experience of Mr. Spohler, who has served as our chief operating officer and a partner of Solar Capital Partners since inception. Previously, Mr. Spohler was a managing director and a former co-head of U.S. Leveraged Finance for CIBC World Markets. He held numerous senior roles at CIBC World Markets, including serving on the U.S. Management Committee, Global Executive Committee and the Deals Committee, which approves all of CIBC World Markets’ U.S. corporate finance debt capital decisions. During Mr. Spohler’s tenure, he was responsible for senior loan, high yield and mezzanine origination and execution, as well as CIBC World Markets’ below investment grade loan portfolio in the U.S. As a co-head of U.S. Leveraged Finance, Mr. Spohler oversaw over 300 capital raising and merger and acquisition transactions, comprising over $40 billion in market capitalization.
In addition to Messrs. Gross and Spohler, Solar Capital Partners’ senior investment professionals include Messrs. Gerson, Henley and Mait, each of whom has extensive experience in originating, evaluating and structuring investments in the types of middle-market companies we currently target. Solar Capital Partners’ senior investment professionals have an average of over 20 years of experience in the private equity and leveraged lending industries.
Solar Capital Partners’ senior investment professionals have been active participants in the primary and secondary leveraged credit markets throughout their careers. They have effectively managed portfolios of distressed and mezzanine debt as well as other investment types. The depth of their experience and credit market expertise has led them through various stages of the economic cycle as well as several market disruptions.
Market Opportunity
Solar Capital invests primarily in senior secured loans, mezzanine loans and equity securities of leveraged companies organized and located in the United States. We believe that the size of the leveraged company market, coupled with the demands of these companies for flexible sources of capital at attractive terms and rates, create an attractive investment environment for us.
 
 	•	 	Middle-market companies have faced increasing difficulty in accessing the capital markets.    While many middle-market companies were formerly able to raise funds by issuing high-yield bonds, we believe this approach to financing has become more difficult in recent years as institutional investors have sought to invest in larger, more liquid offerings. In addition, many private finance companies that, until recently, financed their lending and investing activities through securitization transactions have lost that source of funding and cut back lending significantly.	
 
 	•	 	There is a large pool of uninvested private equity capital likely to seek additional capital to support their private investments.    We believe there is a large pool of uninvested private equity capital available to	
 
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 	middle-market companies. While we expect the rate of investment to be slower than in prior periods, we expect that private equity firms will continue to be active investors in middle-market companies and that these private equity firms will seek to supplement their investments with senior and junior debt securities and loans and equity co-investments from other sources, such as Solar Capital.	
 
 	•	 	Middle-market companies are increasingly seeking private sources for debt and equity capital.    We believe that many middle-market companies prefer to execute transactions with private capital providers such as Solar Capital, rather than execute high-yield bond or equity transactions in the public markets, which may necessitate increased financial and regulatory compliance and reporting obligations. We expect that the volume of domestic “public-to-private” transactions, as well as the number of companies selecting a “sale” alternative versus raising capital in the public equity markets as a means of increasing liquidity, will remain large.	
 
 	•	 	Consolidation among commercial banks has reduced the focus on middle-market business.    We believe that many senior lenders have de-emphasized their service and product offerings to middle-market companies in favor of lending to large corporate clients, managing capital markets transactions and providing other non-credit services to their customers. We believe this has resulted in fewer key players and the reduced availability of debt capital to the companies we target.	
 
 	•	 	Current disruptions within the credit markets generally have brought a reduction in competition and a more lender-friendly environment.     Current credit market dislocation has caused many of the alternative methods of obtaining middle-market debt financing to significantly decrease in scope and availability while demand for financings has remained robust. We believe the segment’s strong growth prospects, combined with the growing demand for the capital and corporate finance and advisory services we offer, creates an attractive investment environment for us.	
Furthermore, we believe that given the credit market uncertainty, Solar Capital has a greater opportunity to move beyond middle-market deals into larger transactions, as banks are less willing to commit capital. We believe these larger deals can be structured with more attractive terms such as lower leverage, higher yields, better covenants, and longer duration than was typical before the current market dislocation.
 
 	•	 	Current price declines may present secondary market opportunities.    We believe that opportunities may exist for Solar Capital to generate attractive total returns through acquisitions of higher-rated senior secured loans in the secondary markets. As a result of current price declines, the relative value of some senior secured loans has improved in comparison with historical default and recovery rates. We believe the technical weakness that has been dominating the marketplace will provide attractive risk-adjusted investment opportunities for Solar Capital.	
Therefore, we believe that there is an opportunity to invest in senior secured loans, mezzanine loans and equity securities of leveraged companies and that we are well positioned to serve this market.
Competitive Advantages and Strategy
We believe that we have the following competitive advantages over other providers of financing to leveraged companies:
Management Expertise
As managing partner, Mr. Gross has principal management responsibility for Solar Capital Partners, to which he currently dedicates substantially all of his time. Mr. Gross has over 20 years of experience in leveraged finance, private equity and distressed debt investing. Mr. Spohler, our chief operating officer and a partner of Solar Capital Partners, has over 20 years of experience in evaluating and executing leverage finance transactions.
 
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We believe that Messrs. Gross and Spohler have developed a strong reputation in the capital markets, and that this experience provides us with a competitive advantage in identifying and investing in leveraged companies with the potential to generate returns. We believe that our investment team has extensive experience in the private equity and leveraged lending industries, as well as significant contacts with financial sponsors operating in those industries. We believe that our investment team has a proven track record of valuing companies and assets and negotiating transactions.
In addition to Messrs. Gross and Spohler, Solar Capital Partners’ senior investment professionals include Messrs. Gerson, Henley and Mait, each of whom has extensive experience in originating, evaluating and structuring investments in the types of middle-market companies we currently target. Solar Capital Partners’ senior investment professionals have an average of over 20 years of experience in the private equity and leveraged lending industries.
Solar Capital Partners’ senior investment professionals have been active participants in the primary and secondary leveraged credit markets throughout their careers. They have effectively managed portfolios of distressed and mezzanine debt as well as other investment types. The depth of their experience and credit market expertise has led them through various stages of the economic cycle as well as several market disruptions.
Investment Portfolio
Our portfolio investments consist of portfolio companies that have strong cash flows and have shown resolve despite the recent economic climate. As of September 30, 2009, 99.7% of our total portfolio value was comprised of performing assets. The majority of our assets have been seasoned, which has allowed us to gain a solid understanding of our borrowers and the industries in which they compete. Additionally, over time, we have established strong relationships with our borrowers. As of September 30, 2009, our portfolio was focused within relatively recession-resistant industries. Approximately 40% of our portfolio was invested in Beverage, Food, and Tobacco and Aerospace and Defense industries, which are considered defensive, or safe havens, during times of economic turmoil. As of September 30, 2009, the companies in our portfolio had an average EBITDA (earnings before interest, taxes, depreciation, and amortization) of $174.21 million and were levered an average of 2.75 and 4.81 times through their senior debt and through the Solar Capital investment tranche, respectively.
Investment Capacity
The proceeds from this offering and the borrowing capacity under our new credit facility will provide us with a substantial amount of capital available for deployment into new investment opportunities. We believe we are well positioned for the current marketplace. We believe that in the current economic environment financing needs of many companies will increase while funding options are limited, allowing us to capitalize on favorable investment opportunities.
Solar Capital’s Limited Leverage
As of January [    ], 2010, and on an as adjusted basis to give effect to the issuance of the Distribution Notes, our outstanding debt was approximately [        ]% of total assets, making us one of the least levered business development companies. We believe our relatively low level of leverage provides us with a competitive advantage, allowing us to provide a stable and sustainable dividend to our investors as proceeds from our investments are available for reinvestment as opposed to being consumed by debt repayment. To the extent borrowing conditions improve and leverage becomes available on more attractive terms, we may increase our relative level of debt in the future. However, we do not currently anticipate operating with a substantial amount of debt relative to our total assets. Furthermore, by maintaining prudent leverage levels, we will be better positioned to weather future market downturns.
 
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Proprietary Sourcing and Origination
We believe that Solar Capital Partners’ senior investment professionals’ longstanding relationships with financial sponsors, commercial and investment banks, management teams and other financial intermediaries provide us with a strong pipeline of proprietary origination opportunities. We believe the broad expertise of Solar Capital Partners’ senior investment professionals and their ability to draw upon their average of 20 years of investment experience enable us to identify, assess and structure investments successfully. We expect to continue leveraging the relationships Mr. Gross established while sourcing and originating investments at Apollo Investment Corporation as well as the financial sponsor relationships Mr. Spohler developed while he was a co-head of CIBC World Markets’ U.S. Leveraged Finance Group.
Our investment team’s strong relationship network is enhanced by the collaborative role Solar Capital plays in the private equity industry. We offer tailored solutions to our portfolio companies, and we believe that this role provides us with greater deal flow as opposed to being viewed as a competitor bidding for control stakes. Because Solar Capital is not associated with a private equity firm, we are not precluded from partnering with most of the top tier financial sponsors.
These direct investments enable us to perform more in-depth due diligence and play an active role in structuring financings. We believe that effectuating the transaction terms and having greater insight into a portfolio company’s operations and financial picture assist Solar Capital in minimizing downside potential, while reinforcing Solar Capital as a trusted partner who delivers comprehensive financing solutions. Since our inception, Solar Capital Partners has sourced investments in 52 different portfolio companies for Solar Capital, which investments involved an aggregate of more than 44 different financial sponsors, through September 30, 2009.
Versatile Transaction Structuring and Flexibility of Capital
We believe our senior investment professionals’ broad expertise and ability to draw upon their extensive experience enable us to identify, assess and structure investments successfully across all levels of a company’s capital structure and to manage potential risk and return at all stages of the economic cycle. While we will be subject to significant regulation as a business development company, we will not be subject to many of the regulatory limitations that govern traditional lending institutions such as banks. As a result, we believe that we can be more flexible than such lending institutions in selecting and structuring investments, adjusting investment criteria, transaction structures and, in some cases, the types of securities in which we invest. We believe financial sponsors, management teams and investment banks see this flexibility as a benefit, making us an attractive financing partner. We believe that this approach enables us to procure attractive investment opportunities throughout the economic cycle so that we can make investments consistent with our stated investment objective even during turbulent periods in the capital markets.
Emphasis on Achieving Strong Risk-Adjusted Returns
Solar Capital Partners uses a disciplined investment and risk management process that emphasizes a rigorous fundamental research and analysis framework. Solar Capital Partners seeks to build our portfolio on a “bottom-up” basis, choosing and sizing individual positions based on their relative risk/reward profiles as a function of the associated downside risk, volatility, correlation with the existing portfolio and liquidity. At the same time, Solar Capital Partners takes into consideration a variety of factors in managing our portfolio and imposes portfolio-based risk constraints promoting a more diverse portfolio of investments and limiting cross-correlation exposure and issuer and industry concentration. Our value-oriented investment philosophy focuses on preserving capital and ensuring that our investments have an appropriate return profile in relation to risk. When market conditions make it difficult for us to invest according to our criteria, we are highly selective in deploying our capital. We do not pursue short-term origination targets. We believe this approach enables us to build an attractive investment portfolio that meets our return and value criteria over the long term.
 
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We believe it is critical to conduct extensive due diligence on investment targets. In evaluating new investments we, through Solar Capital Partners, conduct a rigorous due diligence process that draws upon investment experience, industry expertise and network of contacts of our senior investment professionals, as well as the other members of our investment team. Among other things, our due diligence is designed to ensure that a prospective portfolio company will be able to meet its debt service obligations.
We have the ability to invest across an issuer’s capital structure, which we believe enables us to provide comprehensive financing solutions for our portfolio companies, as well as access the best risk-adjusted opportunities. The overall transaction size and product mix is based upon the needs of the customer, as well as our risk-return hurdles. We also focus on downside protection and preservation of capital throughout the structuring process.
Deep Industry Focus with Substantial Information Flow
We concentrate our investing activities in industries characterized by strong cash flow and in which Solar Capital Partners’ investment professionals have deep investment experience. During his time with the Apollo entities, Mr. Gross oversaw investments in over 200 companies in 20 industries. As a result of their investment experience, Messrs. Gross and Spohler, together with Solar Capital Partners’ other investment professionals, have long-term relationships with management consultants and management teams in the industries we target, as well as substantial information concerning those industries. Solar Capital Partners’ investment team also has significant experience in evaluating and making investments in the industries we target. We believe that the in-depth experience of Solar Capital Partners’ investment team in investing throughout various stages of the economic cycle provides our investment adviser with access to ongoing market insights in addition to a powerful asset for investment sourcing. See “Business — Investments.”
Longer Investment Horizon
Unlike private equity and venture capital funds, we will not be subject to standard periodic capital return requirements. Such requirements typically stipulate that the capital of these funds, together with any capital gains on such invested funds, can only be invested once and must be returned to investors after a pre-agreed time period. We believe that our flexibility to make investments with a long-term view and without the capital return requirements of traditional private investment vehicles provides us with the opportunity to generate favorable returns on invested capital and enables us to be a better long-term partner for our portfolio companies.
Investments
Solar Capital seeks to create a diverse portfolio that includes senior secured loans, mezzanine loans and equity securities by investing approximately $20 to $100 million of capital, on average, in the securities of leveraged companies, including middle-market companies. Our portfolio includes both senior secured loans and mezzanine loans. Structurally, mezzanine loans usually rank subordinate in priority of payment to senior debt, such as senior bank debt, and are often unsecured. As such, other creditors may rank senior to us in the event of an insolvency. However, mezzanine loans rank senior to common and preferred equity in a borrowers’ capital structure. Typically, mezzanine loans have elements of both debt and equity instruments, offering the fixed returns in the form of interest payments associated with senior debt, while providing lenders an opportunity to participate in the capital appreciation of a borrower, if any, through an equity interest. This equity interest typically takes the form of warrants. Due to its higher risk profile and often less restrictive covenants as compared to senior loans, mezzanine loans generally earn a higher return than senior secured loans. The warrants associated with mezzanine loans are typically detachable, which allows lenders to receive repayment of their principal on an agreed amortization schedule while retaining their equity interest in the borrower. Mezzanine loans also may include a “put” feature, which permits the holder to sell its equity interest back to the borrower at a price determined through an agreed formula. We believe that mezzanine loans offer an attractive investment opportunity based upon their historic returns and resilience during economic downturns.
 
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In addition to senior secured loans and mezzanine loans, we may invest a portion of our portfolio in opportunistic investments, which are not our primary focus, but are intended to enhance our returns to LLC Holders. These investments may include similar direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States.
Additionally, we may in the future seek to securitize our loans to generate cash for funding new investments. To securitize loans, we may create a wholly owned subsidiary and contribute a pool of loans to the subsidiary. This could include the sale of interests in the subsidiary on a non-recourse basis to purchasers who we would expect to be willing to accept a lower interest rate to invest in investment grade loan pools, and we would retain a portion of the equity in the securitized pool of loans.
Moreover, we may acquire investments in the secondary market and, in analyzing such investments, we will employ the same analytical process as we use for our primary investments.
Our principal focus is to provide senior secured loans and mezzanine loans to leveraged companies in a variety of industries. We generally seek to target companies that generate positive cash flows. We generally seek to invest in companies from the broad variety of industries in which our investment adviser has direct expertise. The following is a representative list of the industries in which we may invest.

•  Aerospace and defense
•  Automotive
•  Beverage, food and tobacco
•  Broadcasting and entertainment
•  Business services
•  Cable television
•  Cargo transport
•  Chemicals, plastics and rubber
•  Consumer finance
•  Consumer services
•  Containers, packaging and glass
•  Direct marketing
•  Distribution
•  Diversified/conglomerate manufacturing
•  Diversified/conglomerate services
•  Education
•  Electronics
•  Energy/utilities
•  Equipment rental
•  Farming and agriculture	  	•  Finance
•  Healthcare, education and childcare
•  Home and office furnishing, consumer products
•  Hotels, motels, inns and gaming
•  Industrial
•  Infrastructure
•  Insurance
•  Leisure, motion pictures and entertainment
•  Logistics
•  Machinery
•  Media
•  Mining, steel and nonprecious metals
•  Oil and gas
•  Printing, publishing and broadcasting
•  Real estate
•  Retail
•  Specialty finance
•  Technology
•  Telecommunications
•  Utilities	
We may invest in other industries if we are presented with attractive opportunities.
 
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Set forth below is a list of our ten largest portfolio company investments as of September 30, 2009, as well as the top ten industries in which we were invested as of September 30, 2009, in each case calculated as a percentage of our total assets as of such date.

Portfolio Company	 	% of Total Assets	 	
DS Waters	 	10.61	% 	
National Interests Security Corporation	 	8.46	% 	
Adams Outdoor Advertising	 	6.34	% 	
Asurion Corporation	 	5.84	% 	
Booz Allen Hamilton, Inc.	 	5.02	% 	
Earthbound Farm	 	4.63	% 	
Fleetpride Corporation	 	4.54	% 	
Wire Rope Corporation	 	4.19	% 	
Weetabix Group	 	3.26	% 	
Direct Buy Inc.	 	3.23	% 	

Industry	 	% of Total Assets	 	
Beverage, food and tobacco	 	20.33	% 	
Aerospace and defense	 	17.11	% 	
Diversified / conglomerate services	 	6.34	% 	
Insurance	 	5.84	% 	
Healthcare, education and childcare	 	4.81	% 	
Leisure, motion pictures and entertainment	 	4.58	% 	
Cargo transport	 	4.54	% 	
Diversified / conglomerate manufacturing	 	4.19	% 	
Finance	 	3.82	% 	
Home and office furnishing, consumer products	 	3.23	% 	

Investment Selection
Solar Capital Partners utilizes the same value oriented investment philosophy used by the professionals of our investment adviser in their work with previous funds they have managed and commits resources to managing downside exposure.
Portfolio Company Characteristics
We have identified several criteria that we believe are important in identifying and investing in prospective portfolio companies. These criteria provide general guidelines for our investment decisions; however, not all of these criteria will be met by each prospective portfolio company in which we choose to invest. Generally, Solar Capital Partners seeks to utilize its access to information generated by our investment professionals to identify investment candidates and to structure investments quickly and effectively.
Value Orientation/Positive Cash Flow.    Our investment philosophy places a premium on fundamental analysis from an investor’s perspective and has a distinct value orientation. We focus on companies in which we can invest at relatively low multiples of operating cash flow and that are profitable at the time of investment on an operating cash flow basis. Additionally, we look for companies with a demonstrated ability to de-lever. Typically, we would not invest in start-up companies or companies having speculative business plans.
Growth.    We invest primarily in companies with strong prospects for growth. These companies are usually in high-growth industries or have a competitive advantage that creates the potential to increase market share.
Strong Competitive Position in Industry.    We seek to invest in target companies that have developed leading market positions within their respective markets and are well positioned to capitalize on growth opportunities. We seek companies that demonstrate significant competitive advantages versus their competitors, which we believe should help to protect their market position and profitability.
Diversified Customer and Supplier Base.    We seek to acquire businesses that have a diversified customer and supplier base. We believe that companies with a diversified customer and supplier base are generally better able to endure economic downturns, industry consolidation, changing business preferences and other factors that may negatively impact their customers, suppliers and competitors.
 
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Exit Strategy.    We predominantly invest in companies which provide multiple alternatives for an eventual exit. We look for opportunities that provide an exit typically within three years of the initial capital commitment.
We seek companies that we believe will provide a steady stream of cash flow to repay our loans and reinvest in their respective businesses. We believe that such internally generated cash flow, leading to the payment of interest on, and the repayment of the principal of, our investments in portfolio companies represents a key means by which we will be able to exit from our investments over time.
In addition, we also seek to invest in companies whose business models and expected future cash flows offer attractive exit possibilities. These companies include candidates for strategic acquisition by other industry participants and companies that may repay our investments through an initial public offering of common stock or another capital market transaction.
Liquidation Value of Assets.    The prospective liquidation value of the assets, if any, collateralizing loans in which we invest is an important factor in our credit analysis. Our analysis emphasizes both tangible assets, such as accounts receivable, inventory, equipment and real estate, and intangible assets, such as intellectual property, customer lists, networks and databases.
Experienced and Committed Management.    We generally require that portfolio companies have an experienced management team. We also require portfolio companies have in place proper incentives to induce management to succeed and to act in concert with our interests as investors, including having significant equity interests.
Strong Sponsorship.    We aim to invest alongside other sophisticated investors. We seek to partner with successful financial sponsors who have historically generated high returns. We believe that investing in these sponsors’ portfolio companies enables us to benefit from their direct involvement and due diligence.
Due Diligence
Solar Capital Partners conducts diligence on prospective portfolio companies consistent with the approach adopted by the investment professionals of Solar Capital Partners in their work with other funds they have managed. We believe that these investment professionals have a reputation for conducting extensive due diligence investigations in their investment activities. In conducting due diligence, Solar Capital Partners uses publicly available information as well as information from its relationships with former and current management teams, consultants, competitors and investment bankers.
Our due diligence typically includes:
 
 	•	 	review of historical and prospective financial information;	
 
 	•	 	research relating to the company’s management, industry, markets, products and services and competitors;	
 
 	•	 	on-site visits;	
 
 	•	 	interviews with management, employees, customers and vendors of the potential portfolio company;	
 
 	•	 	review of senior loan documents; and	
 
 	•	 	background checks.	
Upon the completion of due diligence and a decision to proceed with an investment in a company, the investment professionals leading the investment present the investment opportunity to Solar Capital Partners’ investment committee, which then determines whether to pursue the potential investment. Additional due diligence with respect to any investment may be conducted on our behalf by attorneys and independent accountants prior to the closing of the investment, as well as other outside advisers, as appropriate.
 
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The Investment Committee
All new investments are required to be approved by a consensus of the investment committee of Solar Capital Partners, which is led by Messrs. Gross and Spohler. The members of Solar Capital Partners’ investment committee receive no compensation from us. Such members may be employees or partners of Solar Capital Partners and may receive compensation or profit distributions from Solar Capital Partners. See “Portfolio Management.”
Investment Structure
Once we determine that a prospective portfolio company is suitable for investment, we work with the management of that company and its other capital providers, including senior, junior and equity capital providers, to structure an investment. We negotiate among these parties to agree on how our investment is expected to perform relative to the other capital in the portfolio company’s capital structure.
We structure our mezzanine investments primarily as unsecured, subordinated loans that provide for relatively high, fixed interest rates that provide us with significant current interest income. These loans typically have interest-only payments in the early years, with amortization of principal deferred to the later years of the mezzanine loans. In some cases, we may enter into loans that, by their terms, convert into equity or additional debt securities or defer payments of interest for the first few years after our investment. Also, in some cases our mezzanine loans may be collateralized by a subordinated lien on some or all of the assets of the borrower. Typically, our mezzanine loans have maturities of five to ten years.
We also invest in portfolio companies in the form of senior secured loans. These senior secured loans typically provide for deferred interest payments in the first few years of the term of the loan. We generally obtain security interests in the assets of our portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first or second priority liens on the assets of a portfolio company.
Typically, our mezzanine and senior secured loans have final maturities of five to ten years. However, we expect that our portfolio companies often may repay these loans early, generally within three years from the date of initial investment. To preserve an acceptable return on investment, we seek to structure these loans with prepayment premiums.
In the case of our mezzanine loan and senior secured loan investments, we tailor the terms of the investment to the facts and circumstances of the transaction and the prospective portfolio company, negotiating a structure that protects our rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its profitability. For example, in addition to seeking a senior position in the capital structure of our portfolio companies, we will seek to limit the downside potential of our investments by:
 
 	•	 	requiring a total return on our investments (including both interest and potential capital appreciation) that compensates us for credit risk;	
 
 	•	 	incorporating “put” rights and call protection into the investment structure; and	
 
 	•	 	negotiating covenants in connection with our investments that afford our portfolio companies as much flexibility in managing their businesses as possible, consistent with preservation of our capital. Such restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control provisions and board rights, including either observation or participation rights.	
Our investments may include equity features, such as warrants or options to buy a minority interest in the portfolio company. Any warrants we receive with our debt securities generally require only a nominal cost to exercise, and thus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We may structure the warrants to provide provisions protecting our rights as a minority-
 
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interest holder, as well as puts, or rights to sell such securities back to the company, upon the occurrence of specified events. In many cases, we also obtain registration rights in connection with these equity securities, which may include demand and “piggyback” registration rights. In addition, we may from time to time make direct equity investments in portfolio companies.
We seek to hold most of our investments to maturity or repayment, but will sell our investments earlier if a liquidity event takes place, such as the sale or recapitalization of a portfolio company.
Managerial Assistance
As a business development company, we offer, and must provide upon request, managerial assistance to our portfolio companies. This assistance could involve, among other things, monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. We may also receive fees for these services. Solar Capital Management will provide such managerial assistance on our behalf to portfolio companies that request this assistance.
Ongoing Relationships with Portfolio Companies
Monitoring.    Solar Capital Partners monitors our portfolio companies on an ongoing basis. Solar Capital Partners monitors the financial trends of each portfolio company to determine if it is meeting its business plan and to assess the appropriate course of action for each company.
Solar Capital Partners has several methods of evaluating and monitoring the performance and fair value of our investments, which include the following:
 
 	•	 	Assessment of success in adhering to each portfolio company’s business plan and compliance with covenants;	
 
 	•	 	Periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial position, requirements and accomplishments;	
 
 	•	 	Comparisons to other Solar Capital portfolio companies in the industry, if any;	
 
 	•	 	Attendance at and participation in board meetings; and	
 
 	•	 	Review of monthly and quarterly financial statements and financial projections for portfolio companies.	
In addition to various risk management and monitoring tools, Solar Capital Partners also uses an investment rating system to characterize and monitor our expected level of returns on each investment in our portfolio.
We use an investment rating scale of 1 to 4. The following is a description of the conditions associated with each investment rating:

Investment
Rating	  	Summary Description	
1	  	Involves the least amount of risk in our portfolio, the portfolio company is performing above expectations, and the trends and risk factors are generally favorable (including a potential exit)	
2	  	Risk that is similar to the risk at the time of origination, the portfolio company is performing as expected, and the risk factors are neutral to favorable; all new investments are initially assessed a grade of 2	
3	  	The portfolio company is performing below expectations, may be out of compliance with debt covenants, and requires procedures for closer monitoring	
4	  	The investment is performing well below expectations and is not anticipated to be repaid in full	
 
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Solar Capital Partners monitors and, when appropriate, changes the investment ratings assigned to each investment in our portfolio. In connection with our valuation process, Solar Capital Partners reviews these investment ratings on a quarterly basis, and our board of directors affirms such ratings.
Valuation Procedures
We will conduct the valuation of our assets, pursuant to which our net asset value shall be determined, at all times consistent with GAAP and the 1940 Act. Our valuation procedures are set forth in more detail below:
Securities for which market quotations are readily available on an exchange shall be valued at such price as of the closing price on the day of valuation. 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 sufficient according to GAAP to determine the fair value of the security. If determined adequate, we use the quote obtained.
Securities for which reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of our investment adviser or board of directors, does not represent fair value, shall each be valued as follows: (i) each portfolio company or investment is initially valued by the investment professionals responsible for the portfolio investment; (ii) preliminary valuation conclusions are documented and discussed with our senior management; (iii) independent third-party valuation firms engaged by, or on behalf of, the board of directors will conduct independent appraisals and review management’s preliminary valuations and make their own assessment for all material assets; (iv) the board of directors will discuss valuations and determine the fair value of each investment in our portfolio in good faith based on the input of the investment adviser and, where appropriate, the respective third-party valuation firms.
The recommendation of fair value will generally be based on the following factors, as relevant:
 
 	•	 	the nature and realizable value of any collateral;	
 
 	•	 	the portfolio company’s ability to make payments;	
 
 	•	 	the portfolio company’s earnings and discounted cash flow;	
 
 	•	 	the markets in which the issuer does business; and	
 
 	•	 	comparisons to publicly traded securities.	
Securities for which market quotations are not readily available or for which a pricing source is not sufficient may include, but are not limited to, the following:
 
 	•	 	private placements and restricted securities that do not have an active trading market;	
 
 	•	 	securities whose trading has been suspended or for which market quotes are no longer available;	
 
 	•	 	debt securities that have recently gone into default and for which there is no current market;	
 
 	•	 	securities whose prices are stale;	
 
 	•	 	securities affected by significant events; and	
 
 	•	 	securities that the investment adviser believes were priced incorrectly.	
Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements.
Competition
Our primary competitors to provide financing to leveraged companies include public and private funds, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative
 
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form of financing, private equity funds. Additionally, because competition for investment opportunities generally has increased among alternative investment vehicles, such as hedge funds, those entities have begun to invest in areas they have not traditionally invested in, including making investments in leveraged companies. As a result of these new entrants, competition for investment opportunities at leveraged companies has intensified, and we expect the trend to continue. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act will impose on us as a business development company. We use the industry information available to Mr. Gross and the other investment professionals of Solar Capital Partners to assess investment risks and determine appropriate pricing for our investments in portfolio companies. In addition, we believe that the relationships of Mr. Gross and the other investment professionals of our investment adviser enable us to learn about, and compete effectively for, financing opportunities with attractive leveraged companies in the industries in which we seek to invest. For additional information concerning the competitive risks we face, see “Risk Factors — Risks Related to Our Investments — We operate in a highly competitive market for investment opportunities.”
Staffing
We do not currently have any employees. Mr. Gross, our chief executive officer, and Mr. Spohler, our chief operating officer, currently serve as the managing member and a partner, respectively, of our investment adviser, Solar Capital Partners. Nicholas Radesca, our chief financial officer and secretary, is an employee of Solar Capital Management, and performs his functions as chief financial officer under the terms of our Administration Agreement. Guy Talarico, our chief compliance officer, is the chief executive officer of Alaric Compliance Services, LLC, and performs his functions as our chief compliance officer under the terms of an agreement between Solar Capital Management and Alaric Compliance Services, LLC. Solar Capital Management has retained Mr. Talarico and Alaric Compliance Services, LLC pursuant to its obligations under our Administration Agreement.
Our day-to-day investment operations will be managed by Solar Capital Partners. See “Investment Advisory and Management Agreement.” Solar Capital Partners’ investment personnel currently consists of its senior investment professionals, Messrs. Gross, Spohler, Gerson, Henley and Mait, and a team of 9 additional experienced investment professionals. Solar Capital Partners may hire additional investment professionals, based upon its needs, subsequent to the completion of this offering. In addition, we will reimburse Solar Capital Management for the allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and the compensation of our chief financial officer and any administrative support staff. See “Administration Agreement.”
Properties
Our executive offices are located at 500 Park Avenue, 5th Floor, New York, New York 10022, and are provided by Solar Capital Management in accordance with the terms of the Administration Agreement. We believe that our office facilities are suitable and adequate for our business as it is contemplated to be conducted.
Legal Proceedings
None of us, our investment adviser or administrator, is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against our investment adviser or administrator. From time to time, we, our investment adviser or administrator, may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.
 
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PORTFOLIO COMPANIES
The following table sets forth certain information as of September 30, 2009 for each portfolio company in which we had a debt or equity investment. The general terms of our debt and equity investments are described in “Business–Investments.” Other than these investments, our only formal relationships with our portfolio companies are the managerial assistance we may provide upon request and the board observer or participation rights we may receive in connection with our investment. Other than Ark Real Estate Partners, National Interest Security Corporation, and National Specialty Alloys, LLC, we do not “control” and are not an “affiliate” of any of our portfolio companies, each as defined in the 1940 Act. In general, under the 1940 Act, we would “control” a portfolio company if we owned more than 25% of its voting securities and would be an “affiliate” of a portfolio company if we owned more than 5% of its voting securities.

Name and Address of
Portfolio Company	 	Industry	 	Type of Investment	 	Interest(1)	 	Maturity	 	% of
Class
Held	 	 	Fair Value
(in
thousands)	 	
AOA Top Tier Holding Co., L.P. (“Adams Outdoor Advertising”)
2808 Ferry Road
Atlanta, GA 30339	 	Diversified/conglomerate services	 	 
 
Subordinated notes
Subordinated notes
Subordinated notes	 	 
 
13.50%
20.00%
10.88%	 	 
 
6/20/2011
12/31/2009
6/20/2011	 	 	 	 	 
 
35,800
2,036
16,427	 

  

Affinity Group Holding, Inc.
2575 Vista Del Mar
Ventura, CA 93001	 	Printing, publishing and broadcasting	 	Senior secured loan	 	12.75%	 	3/31/2010	 	—  	  	 	14,142	  	
 	 	 	 	 	 	 	
Allied Capital Corporation
1919 Pennsylvania Avenue, N.W.
Washington, DC 20006	 	Finance	 	Subordinated notes
Subordinated notes	 	6.00%

6.63%	 	4/01/2012

7/15/2011	 	—  	  	 	11,083

11,600	  

 	 	 	 	 	 	 	
AMC Entertainment Holdings, Inc.
920 Main Street
Kansas City, MO 64105	 	Leisure, motion pictures and entertainment	 	Subordinated notes	 	5.30% (L+500/Q)	 	6/13/2012	 	—  	  	 	19,730	(3) 	
 	 	 	 	 	 	 	
Ark Real Estate Partners
LP 505 Park Ave.,
21st Floor
New York, NY 10022	 	Real estate	 	Partnership interests	 	 	 	 	 	24.80	% 	 	20,010	  	
 	 	 	 	 	 	 	
Asurion Corporation
648 Grassmere Park,
Suite 300
Nashville, TN 37211	 	Insurance	 	Senior secured loan	 	6.75% (L+650/Q or M)	 	7/03/2015	 	—  	  	 	50,050	(3) 	
 	 	 	 	 	 	 	
Booz Allen Hamilton, Inc.
8283 Greensboro Drive
McLean, VA 22102	 	Aerospace and defense	 	Subordinated notes	 	13.00%	 	7/31/2016	 	—  	  	 	43,000	(3) 	
 	 	 	 	 	 	 	
Casema Holding B.V.
Spaarneplein 2
Postbus 16192
2500 BD Den Haag
The Netherlands	 	Telecommunications	 	Subordinated notes Subordinated notes	 	9.71% (E+925/S)

9.69% (E+925/S)	 	11/17/2016
11/17/2016	 	—  

—  	  

  	 	7,725

8,280	(3) 

(3) 	
 	 	 	 	 	 	 	
Classic Cruises Holdings S.DER.L.
1000 Corporate Drive,
Suite 500
Fort Lauderdale, Florida 33334	 	Leisure, motion pictures and entertainment	 	Senior secured loan	 	10.18% (L+975/Q)	 	1/31/2015	 	—  	  	 	19,500	  	
 	 	 	 	 	 	 	
Direct Buy Inc.
8450 Broadway
Merrillville, IN 46410	 	Home and Office Furnishing, Consumer products	 	Subordinated notes Common stock	 	16.00%	 	5/30/2013	 	—  

3.00%	  

  	 	27,167

500	(3) 

 	 	 	 	 	 	 	
DSW Group, Inc. (“DS Waters”)
4170 Tanners Creek Drive
Flowery Branch,
GA 30542	 	Beverage, food and tobacco	 	Subordinated notes	 	13.50%	 	4/24/2012	 	—  	  	 	90,868
	(3) 

Earthbound Farm
1721 San Juan Highway
San Juan Bautista,
CA 95045	 	Beverage, food and tobacco	 	Subordinated notes	 	15.25%	 	7/20/2016	 	—  	  	 	39,617
	(3) 

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Name and Address of
Portfolio Company	 	Industry	 	Type of Investment	 	Interest(1)	 	Maturity	 	% of
Class
Held	 	 	Fair Value
(in
thousands)	 	
Emdeon Business Services LLC
26 Century Blvd.
Nashville, TN 37214	 	Healthcare, education and childcare	 	Senior secured loan	 	5.27% (L+500/Q)	 	5/16/2014	 	—  	  	 	14,100	  	
 	 	 	 	 	 	 	
Fleetpride Corporation
8709 Technology Forest Place
Suite 125
The Woodlands, TX 77381	 	Cargo transport	 	Subordinated notes	 	11.50%	 	10/01/2014	 	—  	  	 	38,915	  	
 	 	 	 	 	 	 	
Freedom Roads, LLC
2 Marriott Drive
Lincolnshire, Illinois 60069	 	Automotive	 	Subordinated notes	 	12.00%	 	6/20/2011	 	—  	  	 	24,791	  	
 	 	 	 	 	 	 	
Global Garden Products
Via del lavoro, 6
I-31033 Castelfranco Veneto
(Treviso)–Italy	 	Farming and agriculture	 	Subordinated notes	 	12.77% (E+1200/Q)	 	10/31/2016	 	—  	  	 	—  	(3) 	
 	 	 	 	 	 	 	
Grakon, LLC
1911 S. 218th St.
P.O. Box 98984
Seattle, WA 98198	 	Machinery	 	Subordinated notes
LLC interests	 	12.00%	 	6/19/2013	 	—  
2.48	  
% 	 	5,101

—  	(3) 

 	 	 	 	 	 	 	
Great American Group Inc.
21860 Burbank Blvd.
Suite 300 South
Woodland Hills, CA 91367	 	Business Services	 	Common stock Warrants to purchase common stock	 	 	 	 	 	2.54

1.55	% 

% 	 	2,758

346	  

(2) 	
 	 	 	 	 	 	 	
Iglo Birds Eye Group Limited
No. 5, New Square
Bedfont Lakes Business Park
Feltham, Middlesex
TW 14 8HA
United Kingdom	 	Beverage, food and tobacco	 	Subordinated notes Subordinated notes	 	9.33% (E+800 /S)
8.51% (L(UK)+800 /S)	 	12/08/2016
12/08/2016	 	—  
—  	  
  	 	4,728

10,977	(3) 

(3) 	
 	 	 	 	 	 	 	
Jonathan Engineered Solutions
Corp
410 Exchange, Suite 200
Irvine, CA 92602	 	Diversified/ conglomerate manufacturing	 	Subordinated notes Subordinated notes	 	16.50%

13.00%	 	6/29/2014
6/29/2014	 	—  
—  	  
  	 	—  

—  	(3) 

(3) 	
 	 	 	 	 	 	 	
Learning Care Group
21333 Haggerty Rd.,
Suite 300
Novi, MI 48375	 	Healthcare, education and childcare	 	Subordinated notes	 	13.50%	 	12/28/2015	 	 	 	 	27,103	(3) 	
 	 	 	 	 	 	 	
Magnolia River, LLC
601 9th Street Greeley
Colorado 80631	 	Hotels, motels, inns and gaming	 	Subordinated notes	 	14.00%	 	4/28/2014	 	—  
	  
	 	14,350	  	
 	 	 	 	 	 	 	
National Interest Security Corporation
18757 North Frederick Rd.
Gaithersburg, MD 20879	 	Aerospace and defense	 	Subordinated notes
Senior secured loan
Common stock	 	15.00%

15.00%	 	6/11/2013
6/11/2013	 	—  
—  
11.85	  
  
% 	 	30,233

25,938
16,293	  

  	
 	 	 	 	 	 	 	
National Specialty Alloys, LLC
18250 Kieth Harrow Blvd.
Houston, TX 77084	 	Mining, steel and nonprecious metals	 	LLC interests	 	 	 	 	 	40.02	% 	 	9,000	  	
 	 	 	 	 	 	 	
Nuveen Investments, Inc.
333 W. Wacker Dr.
Chicago, IL 60606	 	Finance	 	Senior secured loan Common stock	 	3.50% (L+300/S)	 	11/14/2014	 	—  
1.08	  
% 	 	4,014

6,000	  

 	 	 	 	 	 	 	
NXP Semiconductors
Netherlands B.V.
High Tech Campus 60
5656 AG Eindhoven
The Netherlands	 	Electronics	 	Common stock	 	 	 	 	 	<1	% 	 	1,733	  	
 	 	 	 	 	 	 	
Pacific Crane Maintenance
Company, L.P.
225 N.E. Mizner Blvd.
Suite 700
Boca Raton, FL 33432	 	Machinery	 	Subordinated notes Partnership interests	 	13.00%	 	2/15/2014	 	—  
1.10	  
% 	 	2,261

—  	(3) 

 
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Name and Address of
Portfolio Company	 	Industry	 	Type of Investment	 	Interest(1)	 	Maturity	 	% of
Class
Held	 	 	Fair Value
(in
thousands)	 	
ProSieben Sat.1 Media AG
Medienallee 7
85774 Unterfoöhring
Germany	 	Broadcasting and entertainment	 	Subordinated notes	 	8.15% (E+350+3.50%/Q)	 	3/06/2017	 	—  	  	 	 	4,173	(3) 	
 	 	 	 	 	 	 	
Questex Media Group.
275 Grove St., Suite 2-130
Newton, MA 02466	 	Diversified/ conglomerate services	 	Senior secured loan	 	6.79% (L+650/Q)	 	11/04/2014
	 	—  

	—  

 	 	 	 	 	 	 	
Ram Energy Resources, Inc.
5100 E Skelly Drive
Meridian Tower,
Suite 650
Tulsa, OK 74135	 	Oil and Gas	 	Senior secured loan	 	12.75% (L+850/S)	 	11/29/2012	 	—  	  	 	 	12,371	(3) 	
 	 	 	 	 	 	 	
Seven Media Group Pty
Limited
38-42 Pirrama Road
Pyrmont, New South Wales 2009 Australia	 	Broadcasting and entertainment	 	Subordinated notes Subordinated notes Common stock	 	10.49%

12.00%	 	12/29/2013
12/29/2013	 	—  
—  
<1	  
  
% 	 	 

 	15,185

5,019
1,398	  

(3) 

Tri-Star Electronics
International, Inc.
2201 Rosencrans Ave.
El Segundo, CA 90245	 	Aerospace and defense	 	Subordinated notes	 	14.00%	 	8/02/2013	 	—  	  	 	 	11,250	(3) 	
 	 	 	 	 	 	 	
Wastequip, Inc.
25800 Science Park Dr.,
Suite 140
Beachwood, OH 44122	 	Containers, packaging and glass	 	Subordinated notes	 	12.00%	 	2/05/2015	 	—  	  	 	 	3,149	(3) 	
 	 	 	 	 	 	 	
Weetabix Group
Burton Latimer
Kettering
Northants NN 15 5JR
United Kingdom	 	Beverage, food and tobacco	 	Subordinated notes Subordinated notes	 	10.62% (L+900/S)

8.74% (L(UK)+800/S)	 	5/07/2017
9/14/2016	 	—  

—  	  

 	18,470

9,484	(3) 

(3) 	
 	 	 	 	 	 	 	
Wire Rope Corporation
12200 NW Ambassador Drive
Kansas City, MO 64163	 	Diversified/ conglomerate manufacturing	 	Subordinated notes	 	11.00%	 	2/08/2015	 	—  	  	 	 	35,880	  	
 	 	 	 	 	 	 	
Wyle Laboratories Inc.
1960 East Grand Ave.
El Segundo, CA 90245-5023	 	Aerospace and defense	 	Senior secured loan
Preferred stock	 	15.00%

8.00%	 	1/17/2015	 	—  

—  	  

 	19,800

39	(3) 

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	
Total	 	 	 	 	 	 	 	 	 	 	 	 	$	792,394	  	

(1)	All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to LIBOR or EURIBOR, and which reset daily quarterly (Q), monthly (M), or semi-annually (S). For each debt investment we have provided the current interest rate in effect as of September 30, 2009.	
 
(2)	Percentages shown for warrants or convertible preferred stock represent the percentages of outstanding common stock, assuming we exercise our warrants or convert our preferred stock into common stock.	
 
(3)	All or a portion of interest may be deferred through a payment-in-kind interest option.	
Set forth below is a brief description of each portfolio company in which we have made an investment that represents greater than 5% of our total assets as of September 30, 2009.
DS Waters
DS Waters produces and distributes bottled water products in the U.S. DS Waters commands a leading market presence in the HOD (home and office delivery) space, particularly in the 3 gallon, 5 gallon and ½ liter bottled water segments. Water is bottled at DS Waters’ manufacturing facilities and then delivered by its fleet of delivery trucks to homes and offices across the country. DS Waters operates in most major markets in the U.S. based on population, and the company maintains a significant market share position in most of the markets in which it operates.
 
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National Interest Security Corporation
National Interest Security Corporation is a government services platform focused on management technology consulting and information technology services. The company maintains domain expertise within high priority Federal sectors, including energy, homeland defense, and information technology. The company has a diverse customer base including the Department of Energy, Department of Homeland Security and key national intelligence agencies.
Adams Outdoor Advertising
Adams Outdoor Advertising provides outdoor advertising services to over 15 markets and surrounding areas in the Midwest, Southeast and mid-Atlantic states. Adams Outdoor Advertising utilizes bulletins, poster panels, and transit displays.
Asurion Corporation
Asurion is the leading provider of value-added subscriber services to the wireless industry through its handset protection and wireless roadside assistance services. Additionally, Asurion provides service contract administration for residential telecommunications equipment and consumer electronics and appliances.
Booz Allen Hamilton
Booz Allen Hamilton is a leading provider of mission-critical strategy, program support, organization and change, systems integration and technical services to the U.S. Government. Booz Allen Hamilton serves all branches of the U.S. military, agencies of the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security, state and local governments and other federal civilian agencies.
 
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MANAGEMENT
Our board of directors oversees our management. The board of directors currently consists of five members, three of whom are not “interested persons” of Solar Capital Ltd. as defined in Section 2(a)(19) of the 1940 Act. We refer to these individuals as our independent directors. Our board of directors elects our officers, who serve at the discretion of the board of directors. The responsibilities of each director will include, among other things, the oversight of our investment activity, the quarterly valuation of our assets, and oversight of our financing arrangements. The board of directors has also established an audit committee and a nominating and corporate governance committee and may establish additional committees in the future.
Board of Directors and Executive Officers
Directors
Information regarding the board of directors is as follows:

Name	  	Age	  	Position	 	Director
Since	 	Expiration
of Term	
Interested Director	  	 	  	 	 	 	 	 	
Michael S. Gross	  	48	  	Chief Executive Officer, President and Chairman of the Board of Directors	 	2007	 	2012	
Bruce Spohler	  	49	  	Chief Operating Officer and Director	 	2009	 	2011	
 	 	 	 	 	
Independent Directors	  	 	  	 	 	 	 	 	
Steven Hochberg	  	48	  	Director	 	2007	 	2011	
David S. Wachter	  	46	  	Director	 	2007	 	2010	
Leonard A. Potter	  	48	  	Director	 	2009	 	2012	
The address for each of our directors is 500 Park Avenue, 5th Floor, New York, New York 10022.
Executive Officers Who Are Not Directors

Name	  	Age	  	Position	
Nicholas Radesca	  	44	  	Chief Financial Officer and Secretary	
Guy Talarico	  	54	  	Chief Compliance Officer	
The address for each of our executive officers is 500 Park Avenue, 5th Floor, New York, New York 10022.
Biographical Information
Directors
Our directors have been divided into two groups — interested directors and independent directors. An interested director is an “interested person” as defined in Section 2(a)(19) of the 1940 Act.
Interested Director
Michael S. Gross has been the managing member, the chairman of the board of directors and the chief executive officer of Solar Capital LLC since its inception in February 2007, and has been the chairman of the board of directors since December 2007, and chief executive officer and president since November 2007, of Solar Capital Ltd. Mr. Gross also currently serves as the managing member of our investment adviser, Solar Capital Partners. Since July 2006, Mr. Gross has been a partner in Magnetar Capital Partners LP, an SEC-registered investment adviser. Between February 2004 and February 2006, Mr. Gross was the president and chief executive officer of Apollo Investment Corporation, a publicly traded business development company that
 
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he founded and on whose board of directors and investment committee he served as chairman from February 2004 to July 2006, and was the managing partner of Apollo Investment Management, L.P., the investment adviser to Apollo Investment Corporation. Apollo Investment Corporation invests primarily in middle-market companies in the form of senior secured and mezzanine loans as well as by making direct equity investments in such companies. Under his management, Apollo Investment Corporation raised approximately $930 million in gross proceeds in an initial public offering in April 2004 and invested approximately $2.3 billion in over 65 companies in conjunction with 50 different private equity sponsors. From 1990 to February 2006, Mr. Gross was a senior partner at Apollo Management, L.P., a leading private equity firm which he founded in 1990 with five other persons. Since its inception, Apollo Management, L.P. has invested more than $13 billion in over 150 companies in the United States and Western Europe. During his tenure at Apollo Management, L.P., Mr. Gross was a member of an investment committee that was responsible for overseeing such investments. In addition, from 2003 to February 2006, Mr. Gross was the managing partner of Apollo Distressed Investment Fund, an investment fund he founded to invest principally in non-control oriented distressed debt and other investment securities of leveraged companies. Prior to his time at Apollo Management, L.P., Mr. Gross was employed by Drexel Burnham Lambert Incorporated. From June 2006 to August 2008, Mr. Gross served as the chief executive officer, chairman of the board of directors and secretary of Marathon Acquisition Corp., a publicly-traded special purpose acquisition company. Mr. Gross currently serves on the boards of directors of Saks, Inc., Global Ship Lease Inc. and Jarden Corporation, and in the past has served on the boards of directors, including in certain cases, in the capacity as a lead director, of more than 20 public and private companies. He is a founding member, and serves on the executive committee, of the Youth Renewal Fund, is the chairman of the board of Mt. Sinai Children’s Center Foundation, and serves on the Board of Trustees of The Trinity School. Mr. Gross holds a B.B.A. in accounting from the University of Michigan and an M.M. from the J.L. Kellogg Graduate School of Management at Northwestern University.
Bruce Spohler has been a senior vice president of Solar Capital LLC from its inception in February 2007, and has been a director since September 2009, and the chief operating officer since December 2007, of Solar Capital Ltd. Mr. Spohler also currently serves as a partner of our investment adviser, Solar Capital Partners. Previously, Mr. Spohler was a managing director and a former co-head of U.S. Leveraged Finance for CIBC World Markets. He held numerous senior roles at CIBC World Markets, including serving on the U.S. Management Committee, Global Executive Committee and the Deals Committee, which approves all of CIBC World Markets’ U.S. corporate finance debt capital decisions. During his tenure, he was responsible for senior loan, high yield and mezzanine origination and execution, as well as CIBC World Markets’ below investment grade loan portfolio in the U.S. As a co-head of U.S. Leveraged Finance, he oversaw over 300 capital raising and merger and acquisition transactions, comprising over $40 billion in market capitalization. He joined CIBC World Markets in 1995 when the firm acquired The Argosy Group, of which Mr. Spohler was a founding member and managing director. Founded in 1990, The Argosy Group was a middle-market financing business, in which Mr. Spohler and other principals of The Argosy Group raised third party capital as well as invested alongside their financial sponsor clients. Prior to The Argosy Group, Mr. Spohler was employed by Drexel Burnham Lambert Incorporated. Mr. Spohler earned a B.S. from Syracuse University and an M.M. from the J.L. Kellogg Graduate School of Management at Northwestern University.
Independent Directors
Steven Hochberg has been a director of Solar Capital LLC and Solar Capital Ltd. since February 2007 and November 2007, respectively. Mr. Hochberg is the founder of Ascent Biomedical Ventures, a New York based venture investor in biomedical technology companies including medical devices and drugs. Since 1992, Mr. Hochberg has also been an active founder of early-stage medical technology companies, including Biomerix Corporation, Eminent Research Systems Inc., Clinsights, Inc., Med-E-Systems/AHT Corporation, and Physicians’ Online. Mr. Hochberg is the chairman of the board of directors of Biomerix Corporation, Crosstrees Medical, Inc. and Ouroboros, Inc., and serves on the board of directors of Synecor, LLC. Previously, Mr. Hochberg was an investment banker with Alex. Brown & Sons and a strategy consultant with Bain & Company in the technology and healthcare areas. Currently, Mr. Hochberg is a member of the Board of
 
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Trustees and Vice Chairman of Continuum Health Partners, one of the largest non-profit hospital systems in New York City. Mr. Hochberg is also a member of the Board of Governors of the New York Academy of Sciences. Mr. Hochberg holds a B.B.A. from the University of Michigan and an M.B.A. from Harvard Business School.
Leonard A. Potter has been a director of Solar Capital Ltd. since September 2009. Mr. Potter is currently the Chief Investment Officer of Salt Creek Hospitality, a private acquirer and owner of hospitality related assets. From December 2002 through July 2009, Mr. Potter was a Managing Director — Soros Private Equity at Soros Fund Management LLC (“SFM”) where, from May 2005 through July 2009, Mr. Potter served as co-head of the Private Equity group and a member of the Private Equity Investment Committee. From September 1998 until joining SFM in 2002, Mr. Potter was a Managing Director of Alpine Consolidated LLC, a private merchant bank, and from April 1996 through September 1998, Mr. Potter founded and served as a Managing Director of Capstone Partners LLC, a private merchant bank. Prior to founding Capstone Partners, Mr. Potter was an attorney specializing in mergers, acquisitions and corporate finance at Morgan, Lewis & Bockius and Willkie Farr & Gallagher. Mr. Potter has previously served as a board member of several public companies and currently serves on the boards of several private companies. Mr. Potter has a B.A. from Brandeis University and a J.D. from the Fordham University School of Law.
David S. Wachter has been a director of Solar Capital LLC and Solar Capital Ltd. since February 2007 and November 2007, respectively. Mr. Wachter is a founding partner, managing director and president of W Capital Partners. W Capital Partners is a private equity fund manager that acquires direct private equity portfolios in the secondary market. W Capital Partners manages over $1 billion of capital and is a leading participant in providing private equity firms, financial institutions and corporations with a liquidity alternative for their private equity investments. Prior to founding W Capital Partners, Mr. Wachter was a managing director at Jefferies & Co. from 1999 to 2001, a founding partner and managing director at C.E. Unterberg, Towbin from 1990 to 1999 and an investment banker at Lehman Brothers from 1986 to 1990. Mr. Wachter has a B.S. in Engineering, with a major in Computer Science and Applied Mathematics, from Tufts University and an M.B.A. from New York University Graduate School of Business.
Executive Officers Who Are Not Directors
Nicholas Radesca CPA has been the Chief Financial Officer of Solar Capital LLC and Solar Capital Ltd. since March 2008 and Secretary of Solar Capital Ltd. since October 2009. Mr. Radesca joined Solar Capital from iStar Financial Inc. where he served from 2006 to 2008 as the Chief Accounting Officer. His responsibilities at iStar Financial Inc., a publicly traded, diversified commercial real estate company, encompassed all aspects of accounting, tax and SEC reporting. Prior to iStar Financial Inc., Mr. Radesca was the Vice President of Financial Reporting at Fannie Mae from 2005 to 2006 where he oversaw SEC, regulatory and internal reporting. From 2002 to 2005, he served as Director of External Reporting at Del Monte Foods Company, where he managed both the corporate accounting policy and the SEC reporting functions. Mr. Radesca also previously served as the Vice President of Financial Reporting at Providian Financial from 1999 to 2002, where he was responsible for SEC reporting and accounting for securitizations and derivatives. He began his financial services career at Bank of America working in the mortgage and capital markets accounting groups. Mr. Radesca has more than 15 years of experience in accounting, tax and SEC reporting and is a licensed Certified Public Accountant. Mr. Radesca has a B.S. in Accounting from New York Institute of Technology and an M.B.A. from The California State University, East Bay.
Guy Talarico has been the Chief Compliance Officer of Solar Capital since July 2008. Mr. Talarico founded and has served as chief executive officer of Alaric Compliance Services, LLC, (successor to EOS Compliance Services LLC) since June 2004. Mr. Talarico currently serves as chief compliance officer for a number of funds and investment advisers, including Keeley Funds Inc., The FBR Funds and PennantPark Investment Corporation. Prior to founding EOS Compliance Services LLC, Mr. Talarico served as the Senior Director of the Institutional Custody Division at Investors Bank & Trust Company from 2001 to 2004. Immediately prior to that, Mr. Talarico worked at JPMorgan Chase Bank where he was a Division Executive for Commercial Investment
 
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and Retirement Services in its Investment Services Group from 1995 to 2001. Mr. Talarico holds a B.S. ChE from Lehigh University, an M.B.A. from Fairleigh Dickinson University and a J.D. from New York Law School.
Committees of the Board of Directors
An audit committee and a nominating and corporate governance committee have been established by our board of directors. All directors are expected to attend at least 75% of the aggregate number of meetings of the board of directors and of the respective committees on which they serve. We require each director to make a diligent effort to attend all board and committee meetings as well as each annual meeting of our stockholders.
Audit Committee
The audit committee operates pursuant to a charter approved by our board of directors. The charter sets forth the responsibilities of the audit committee. The audit committee’s responsibilities include selecting the independent registered public accounting firm for Solar Capital, reviewing with such independent registered public accounting firm the planning, scope and results of their audit of Solar Capital’s financial statements, pre-approving the fees for services performed, reviewing with the independent registered public accounting firm the adequacy of internal control systems, reviewing Solar Capital’s annual financial statements and periodic filings and receiving Solar Capital’s audit reports and financial statements. The audit committee also establishes guidelines and makes recommendations to our board of directors regarding the valuation of our investments. The audit committee is responsible for aiding our board of directors in determining the fair value of debt and equity securities that are not publicly traded or for which current market values are not readily available. The board of directors and audit committee utilize the services of nationally recognized third-party valuation firms to help determine the fair value of these securities. The audit committee is currently composed of Messrs. Hochberg, Wachter and Potter, all of whom are considered independent under the rules of the NASDAQ Global Select Market and are not “interested persons” of Solar Capital as that term is defined in Section 2(a)(19) of the 1940 Act. Mr. Hochberg serves as chairman of the audit committee. Our board of directors has determined that Mr. Hochberg is an “audit committee financial expert” as that term is defined under Item 407 of Regulation S-K, as promulgated under the Exchange Act. Mr. Hochberg meets the current independence and experience requirements of Rule 10A-3 of the Exchange Act.
Nominating and Corporate Governance Committee
The nominating and corporate governance committee operates pursuant to a charter approved by our board of directors. The members of the nominating and corporate governance committee are Messrs. Hochberg, Wachter and Potter, all of whom are considered independent under the rules of the NASDAQ Global Select Market and are not “interested persons” of Solar Capital as that term is defined in Section 2(a)(19) of the 1940 Act. Mr. Wachter serves as chairman of the nominating and corporate governance committee. The nominating and corporate governance committee is responsible for selecting, researching and nominating directors for election by our stockholders, selecting nominees to fill vacancies on the board of directors or a committee thereof, developing and recommending to the board of directors a set of corporate governance principles and overseeing the evaluation of the board of directors and our management. The nominating and corporate governance committee currently does not consider nominees recommended by our stockholders.
Compensation of Directors
Our independent directors receive an annual fee of $100,000. They also receive $2,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting attended in person and $1,000 for each telephonic meeting and receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each committee meeting. In addition, the chairman of the audit committee receives an annual fee of $7,500 and each chairman of any other committee receives an annual fee of $2,500 for their additional services, if any, in these capacities. No compensation is expected to be paid to directors who are “interested persons” of Solar Capital, as such term is defined in Section 2(a)(19) of the 1940 Act.
 
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Compensation of Executive Officers
None of our officers receives direct compensation from Solar Capital. Mr. Radesca, our chief financial officer and secretary and, through Alaric Compliance Services, LLC, Guy Talarico, our chief compliance officer, are paid by Solar Capital Management, subject to reimbursement by us of an allocable portion of such compensation for services rendered by such persons to Solar Capital. To the extent that Solar Capital Management outsources any of its functions we will pay the fees associated with such functions on a direct basis without profit to Solar Capital Management.
Indemnification Agreements
We have entered into indemnification agreements with our directors. The indemnification agreements are intended to provide our directors the maximum indemnification permitted under Maryland law and the 1940 Act. Each indemnification agreement provides that Solar Capital shall indemnify the director who is a party to the agreement (an “Indemnitee”), including the advancement of legal expenses, if, by reason of his or her corporate status, the Indemnitee is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed proceeding, to the maximum extent permitted by Maryland law and the 1940 Act.
 
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PORTFOLIO MANAGEMENT
The management of our investment portfolio is the responsibility of our investment adviser, Solar Capital Partners, and its investment committee, which is led by Messrs. Gross and Spohler. For more information regarding the business experience of Messrs. Gross and Spohler, see “Management — Board of Directors and Executive Officers — Interested Directors.” Solar Capital Partners’ investment committee must approve each new investment that we make. The members of Solar Capital Partners’ investment committee are not employed by us, and receive no compensation from us in connection with their portfolio management activities. However, Messrs. Gross and Spohler, through their financial interests in Solar Capital Partners, will be entitled to a portion of any investment advisory fees paid by Solar Capital to Solar Capital Partners.
Since July 2006, Mr. Gross has been a partner in Magnetar Capital Partners LP, a multi-strategy investment manager. Mr. Spohler and the other members of Solar Capital Partners’ investment team also currently advise Magnetar on certain investments which coincide with those of Solar Capital. As a result, Messrs. Gross and Spohler, and the other members of Solar Capital Partners’ investment team, may be subject to certain conflicts of interest with respect to their management of our portfolio on the one hand, and their respective obligations to Magnetar and the entities it manages on the other hand.
In addition, Solar Capital Partners and its affiliates manage other funds that may have investment mandates that are similar, in whole and in part, with ours, including certain of the Magnetar entities. Solar Capital Partners and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, Solar Capital Partners or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with Solar Capital Partners’ allocation procedures.
Investment Personnel
Solar Capital Partners’ investment team currently consists of its senior investment professionals, Messrs. Gross, Spohler, Gerson, Henley and Mait, and team of 9 additional experienced investment professionals. We consider Messrs. Gross and Spohler, who lead Solar Capital Partners’ investment committee, to be our portfolio managers.
The table below shows the dollar range of shares of common stock to be beneficially owned by each of our portfolio managers.

Name of Portfolio Manager	  	Dollar Range of Equity
Securities in Solar Capital(1)	
Michael S. Gross	  	Over $1 million	
Bruce Spohler	  	Over $1 million	
 
(1)	The dollar range of equity securities beneficially owned in us is based on the assumed initial offering price per share of our common stock of $[    ] (the mid-point of the estimated initial public offering price range set forth on the cover page of this prospectus).	
Compensation
None of Solar Capital Partners’ investment professionals receive any direct compensation from us in connection with the management of our portfolio. Messrs. Gross and Spohler, through their financial interests in Solar Capital Partners, are entitled to a portion of any profits earned by Solar Capital Partners, which includes any fees payable to Solar Capital Partners under the terms of our Investment Advisory and Management Agreement, less expenses incurred by Solar Capital Partners in performing its services under our Investment Advisory and Management Agreement.
 
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INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
Management Services
Solar Capital Partners serves as our investment adviser. Solar Capital Partners is an investment adviser that is registered as an investment adviser under the Advisers Act. Subject to the overall supervision of our board of directors, our investment adviser manages the day-to-day operations of, and provides investment advisory and management services to, Solar Capital. Under the terms of our Investment Advisory and Management Agreement, Solar Capital Partners:
 
 	•	 	determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;	
 
 	•	 	identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies);	
 
 	•	 	closes and monitors the investments we make; and	
 
 	•	 	provides us with other investment advisory, research and related services as we may from time to time require.	
Solar Capital Partners’ services under the Investment Advisory and Management Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to us are not impaired.
Management Fee
Pursuant to the Investment Advisory and Management Agreement, we have agreed to pay Solar Capital Partners a fee for investment advisory and management services consisting of two components — a base management fee and an incentive fee.
The base management fee is calculated at an annual rate of 2.00% of our gross assets. For services rendered under the Investment Advisory and Management Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of our gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. Base management fees for any partial month or quarter will be appropriately pro-rated.
The incentive fee has two parts, as follows: one is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, 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 we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement to Solar Capital Management, 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 pay in kind interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, computed net of all realized capital losses or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to a hurdle of 1.75% per quarter (7.00% annualized). Our net investment income used to calculate this part of the incentive fee is also included in the amount of our gross assets used to calculate the 2.00% base management fee. We pay Solar Capital Partners an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:
 
 	•	 	no incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the hurdle of 1.75%;	
 
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 	•	 	100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle but is less than 2.1875% in any calendar quarter (8.75% annualized). We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle but is less than 2.1875%) as the “catch-up.” The “catch-up” is meant to provide our investment adviser with 20% of our pre-incentive fee net investment income as if a hurdle did not apply if this net investment income exceeds 2.1875% in any calendar quarter; and	
 
 	•	 	20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to Solar Capital Partners (once the hurdle is reached and the catch-up is achieved, 20% of all pre-incentive fee investment income thereafter is allocated to Solar Capital Partners).	
The following is a graphical representation of the calculation of the income-related portion of the incentive fee:
Quarterly Incentive Fee Based on Net Investment Income
Pre-incentive fee net investment income
(expressed as a percentage of the value of net assets)

Percentage of pre-incentive fee net investment income
allocated to Solar Capital Partners
These calculations are appropriately pro-rated for any period of less than three months and adjusted for any share issuances or repurchases during the relevant quarter. You should be aware that a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments. Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee hurdle rate and may result in a substantial increase of the amount of incentive fees payable to our investment adviser with respect to pre-incentive fee net investment income.
The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory and Management Agreement, as of the termination date), commencing on December 31, 2007, and will equal 20% of our realized capital gains, if any, on a cumulative basis from inception through 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 with respect to each of the investments in our portfolio, provided that, the incentive fee determined as of December 31, 2007 will be calculated for a period of shorter than twelve calendar months to take into account any realized capital gains computed net of all realized capital losses and unrealized capital depreciation from the inception of Solar Capital.
 
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Examples of Quarterly Incentive Fee Calculation
Example 1: Income Related Portion of Incentive Fee (*):
Alternative 1:
Assumptions
Investment income (including interest, dividends, fees, etc.) = 1.25%
Hurdle rate (1) = 1.75%
Management fee (2) = 0.50%
Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20%
Pre-incentive fee net investment income
(investment income – (management fee + other expenses)) = 0.55%
Pre-incentive net investment income does not exceed hurdle rate, therefore there is no incentive fee.
Alternative 2:
Assumptions
Investment income (including interest, dividends, fees, etc.) = 2.70%
Hurdle rate (1) = 1.75%
Management fee (2) = 0.50%
Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20%
Pre-incentive fee net investment income
(investment income – (management fee + other expenses)) = 2.00%
Incentive fee = 100% × pre-incentive fee net investment income, subject to the “catch-up” (4)
= 100% × (2.00% – 1.75%)
= 0.25%
Alternative 3:
Assumptions
Investment income (including interest, dividends, fees, etc.) = 3.00%
Hurdle rate (1) = 1.75%
Management fee (2) = 0.50%
Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20%
Pre-incentive fee net investment income
(investment income – (management fee + other expenses)) = 2.30%
Incentive fee = 20% × pre-incentive fee net investment income, subject to “catch-up” (4)
Incentive fee = 100% × “catch-up” + (20% × (pre-incentive fee net investment income – 2.1875%))
Catch-up = 2.1875% – 1.75%
= 0.4375%
Incentive fee = (100% × 0.4375%) + (20% × (2.3% – 2.1875%))
= 0.4375% + (20% × 0.1125%)
= 0.4375% + 0.0225%
= 0.46%
 
(*)	 	The hypothetical amount of pre-incentive fee net investment income shown is based on a percentage of total net assets.	
(1)	Represents 7% annualized hurdle rate.	
(2)	Represents 2% annualized management fee.	
(3)	Excludes organizational and offering expenses.	
(4)	The “catch-up” provision is intended to provide our investment adviser with an incentive fee of 20% on all of our pre-incentive fee net investment income as if a hurdle rate did not apply when our net investment income exceeds 2.1875% in any calendar quarter.	
 
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Example 2: Capital Gains Portion of Incentive Fee:
Alternative 1:
Assumptions
 
 	•	 	Year 1: $20 million investment made in Company A (“Investment A”), and $30 million investment made in Company B (“Investment B”)	
 
 	•	 	Year 2: Investment A sold for $50 million and fair market value (“FMV”) of Investment B determined to be $32 million	
 
 	•	 	Year 3: FMV of Investment B determined to be $25 million	
 
 	•	 	Year 4: Investment B sold for $31 million	
The capital gains portion of the incentive fee would be:
 
 	•	 	Year 1: None	
 
 	•	 	Year 2: Capital gains incentive fee of $6 million ($30 million realized capital gains on sale of Investment A multiplied by 20%)	
 
 	•	 	Year 3: None	
$5 million (20% multiplied by ($30 million cumulative capital gains less $5 million cumulative capital depreciation)) less $6 million (previous capital gains fee paid in Year 2)
 
 	•	 	Year 4: Capital gains incentive fee of $200,000	
$6.2 million ($31 million cumulative realized capital gains multiplied by 20%) less $6 million (capital gains fee taken in Year 2)
Alternative 2:
Assumptions
 
 	•	 	Year 1: $20 million investment made in Company A (“Investment A”), $30 million investment made in Company B (“Investment B”) and $25 million investment made in Company C (“Investment C”)	
 
 	•	 	Year 2: Investment A sold for $50 million, FMV of Investment B determined to be $25 million and FMV of Investment C determined to be $25 million	
 
 	•	 	Year 3: FMV of Investment B determined to be $27 million and Investment C sold for $30 million	
 
 	•	 	Year 4: FMV of Investment B determined to be $35 million	
 
 	•	 	Year 5: Investment B sold for $20 million	
The capital gains incentive fee, if any, would be:
 
 	•	 	Year 1: None	
 
 	•	 	Year 2: $5 million capital gains incentive fee	
20% multiplied by $25 million ($30 million realized capital gains on Investment A less unrealized capital depreciation on Investment B)
 
 	•	 	Year 3: $1.4 million capital gains incentive fee(1)	
$6.4 million (20% multiplied by $32 million ($35 million cumulative realized capital gains less $3 million unrealized capital depreciation)) less $5 million capital gains fee received in Year 2
 
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(1)	As illustrated in Year 3 of Alternative 1 above, if Solar Capital were to be wound up on a date other than December 31 of any year, Solar Capital may have paid aggregate capital gain incentive fees that are more than the amount of such fees that would be payable if Solar Capital had been wound up on December 31 of such year.	
 
 	•	 	Year 4: None	
 
 	•	 	Year 5: None	
$5 million (20% multiplied by $25 million (cumulative realized capital gains of $35 million less realized capital losses of $10 million)) less $6.4 million cumulative capital gains fee paid in Year 2 and Year 3
Payment of Our Expenses
All investment professionals of the investment adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by Solar Capital Partners. We bear all other costs and expenses of our operations and transactions, including (without limitation):
 
 	•	 	the cost of our organization and this offering;	
 
 	•	 	the cost of calculating our net asset value, including the cost of any third-party valuation services;	
 
 	•	 	the cost of effecting sales and repurchases of our shares and other securities;	
 
 	•	 	interest payable on debt, if any, to finance our investments;	
 
 	•	 	fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and advisory fees;	
 
 	•	 	transfer agent and custodial fees;	
 
 	•	 	fees and expenses associated with marketing efforts;	
 
 	•	 	federal and state registration fees, any stock exchange listing fees;	
 
 	•	 	federal, state and local taxes;	
 
 	•	 	independent directors’ fees and expenses;	
 
 	•	 	brokerage commissions;	
 
 	•	 	fidelity bond, directors and officers errors and omissions liability insurance and other insurance premiums;	
 
 	•	 	direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;	
 
 	•	 	fees and expenses associated with independent audits and outside legal costs;	
 
 	•	 	costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws; and	
 
 	•	 	all other expenses incurred by either Solar Capital Management or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable portion of overhead and other expenses incurred by Solar Capital Management in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and any administrative support staff.	
 
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Duration and Termination
The Investment Advisory and Management Agreement was initially approved by the board of directors of Solar Capital LLC on March 6, 2007 and subsequently approved in its current form by our board of directors and sole initial stockholder on September 29, 2009. Unless earlier terminated as described below, the Investment Advisory and Management Agreement will remain in effect for a period of two years from the date it was approved by our board of directors and will remain in effect from year to year thereafter if approved annually by our board of directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not parties to such agreement or who are not “interested persons” of Solar Capital, as such term is defined in Section 2(a)(19) of the 1940 Act. The Investment Advisory and Management Agreement will automatically terminate in the event of its assignment. The Investment Advisory and Management Agreement may also be terminated by either party without penalty upon not more than 60 days’ written notice to the other. See “Risk Factors — Risks Relating to Our Business and Structure — Our investment adviser can resign on 60 days’ notice.”
Indemnification
The Investment Advisory and Management Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, Solar Capital Partners and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from Solar Capital for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of Solar Capital Partners’ services under the Investment Advisory and Management Agreement or otherwise as an investment adviser of Solar Capital.
Organization of the Investment Adviser
Solar Capital Partners is a Delaware limited liability company. The principal executive offices of Solar Capital Partners are located at 500 Park Avenue, 5 th  Floor, New York, New York 10022.
Board Approval of the Investment Advisory and Management Agreement
A discussion regarding the basis for our board of director’s approval of our Investment Advisory and Management Agreement will be included in our first annual report on Form 10-K filed subsequent to completion of this offering, or incorporated by reference therein.
 
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ADMINISTRATION AGREEMENT
Solar Capital Management, a Delaware limited liability company, serves as our administrator. The principal executive offices of Solar Capital Management are located at 500 Park Avenue, 5 th  Floor, New York, New York 10022. Pursuant to an Administration Agreement, Solar Capital Management furnishes us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities. Under the Administration Agreement, Solar Capital Management also performs, or oversees the performance of, our required administrative services, which include, among other things, being responsible for the financial records which we are required to maintain and preparing reports to our stockholders. In addition, Solar Capital Management assists us in determining and publishing our net asset value, oversees the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholder, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others. Payments under the Administration Agreement are equal to an amount based upon our allocable portion of Solar Capital Management’s overhead in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions and our allocable portion of the compensation of our chief financial officer and any administrative support staff. Under the Administration Agreement, Solar Capital Management will also provide on our behalf managerial assistance to those portfolio companies that request such assistance. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.
The Administration Agreement provides that, absent willful misfeasance, bad faith or negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, Solar Capital Management and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from Solar Capital for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of Solar Capital Management’s services under the Administration Agreement or otherwise as administrator for Solar Capital.
LICENSE AGREEMENT
We have entered into a license agreement with Solar Capital Partners pursuant to which Solar Capital Partners has agreed to grant us a non-exclusive, royalty-free license to use the name “Solar Capital.” Under this agreement, we have a right to use the Solar Capital name for so long as the Investment Advisory and Management Agreement with Solar Capital Partners is in effect. Other than with respect to this limited license, we will have no legal right to the “Solar Capital” name.
 
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
We have entered into the Investment Advisory and Management Agreement with Solar Capital Partners. Mr. Gross, our chairman, chief executive officer and president, is the managing member and a senior investment professional of, and has financial and controlling interests in, Solar Capital Partners. In addition, Mr. Spohler, our chief operating officer and board member and Mr. Radesca, our chief financial officer and secretary, serve as a partner and chief financial officer, respectively, for Solar Capital Partners. Mr. Spohler also has financial interests in Solar Capital Partners.
In addition, since July 2006, Mr. Gross has been a partner in Magnetar Capital Partners LP, a multi-strategy investment manager. Mr. Spohler and the other members of Solar Capital Partners’ investment team also currently advise Magnetar on certain investments that coincide with those of Solar Capital. Magnetar has had and may continue to have a financial interest in Solar Capital Partners. As a result of transactions in connection with our initial private placement, the Magnetar entities own as of September 30, 2009, either directly or indirectly, approximately 42.84% of our outstanding equity, and are expected to own, either directly or indirectly, between     % and     % of our outstanding shares of common stock upon the completion of this offering. Magnetar also provides certain services to Solar Capital Partners and Solar Capital Management, and is reimbursed by Solar Capital Partners and Solar Capital Management for the expenses it incurs in connection with providing such services. In addition, the Magnetar entities may make investments similar to those targeted by Solar Capital.
Solar Capital Partners and it affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole and in part, with ours. Solar Capital Partners and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, Solar Capital Partners or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with Solar Capital Partners’ allocation procedures.
We have entered into a license agreement with Solar Capital Partners, pursuant to which Solar Capital Partners has agreed to grant us a non-exclusive, royalty-free license to use the name “Solar Capital.” In addition, pursuant to the terms of the Administration Agreement, Solar Capital Management provides us with the office facilities and administrative services necessary to conduct our day-to-day operations. Solar Capital Partners is the sole member of and controls Solar Capital Management.
 
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CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS
Immediately prior to the completion of the Pre-IPO Distribution, the Solar Capital Merger and this offering, Solar Capital Ltd. will have 100 shares of common stock outstanding and one stockholder of record, and Solar Capital LLC will have 81,702,847 units outstanding and 142 LLC Holders of record. At that time, neither Solar Capital Ltd. nor Solar Capital LLC will have any other shares of stock or units of common equity, respectively, outstanding. The following table sets forth certain ownership information with respect to Solar Capital Ltd.’s common stock and Solar Capital LLC’s units for those persons who, directly or indirectly, own, control or hold with the power to vote, 5% or more of Solar Capital Ltd.’s common stock or Solar Capital LLC’s units, as applicable, and all officers and directors as a group.

 	  	  	  	Solar Capital LLC	 	 	Solar Capital Ltd.	 	
 	  	  	  	Immediately Prior
to This Offering(1)	 	 	Immediately After
This Offering(2)(3)	 	
Name	  	Type of
Ownership	  	Units Owned	  	Percentage	 	 	Shares
Owned	  	Percentage	 	
Magnetar Financial LLC(4)	  	Indirect	  	35,000,000	  	42.84%	  	 	 	  	        %	  	
Silvercreek Capital Management LLC(5)	  	Indirect	  	6,666,667	  	  8.16%	  	 	 	  	        %	  	
Baupost Group, LLC(6)	  	Indirect	  	5,000,000	  	  6.12%	  	 	 	  	        %	  	
 	 	 	 	 	 	
All officers and directors as a group (7 persons)(7)	  	Direct and Indirect	  	 	  	        	% 	 	 	  	        	% 	
 
(1)	Reflects units outstanding prior to completion of the Pre-IPO Distribution, the Solar Capital Merger and this offering.	
(2)	Assumes the issuance of (i)              shares of common stock offered hereby, and (ii) approximately 26.65 million shares of common stock to the LLC Holders in connection with the Solar Capital Merger.	
(3)	The above figures assume that each of the LLC Holders elects to receive and is allocated a pro rata share of the Distribution Units. The number of shares owned by each LLC Holder will necessarily vary depending upon the amount of Distribution Notes, if any, each LLC Holder requests. An LLC Holder who does not elect to receive the Distribution Notes will have a proportionately greater equity interest in Solar Capital Ltd. after completion of the Solar Capital Merger than if that LLC Holder had elected to receive the Distribution Notes. Set forth below are the minimum and maximum number of shares that may be held by each of the beneficial owners listed above, as well as our officers and directors together as a group, immediately after completion of this offering:	

 	  	Minimum	  	Maximum	
Name	  	Shares
Owned	  	Percentage	  	Shares
Owned	  	Percentage	
Magnetar Financial LLC	  	 	  	 	  	 	  	 	
Silvercreek Capital Management LLC	  	 	  	 	  	 	  	 	
Baupost Group, LLC	  	 	  	 	  	 	  	 	
All officers and directors as a group (7 persons)	  	 	  	 	  	 	  	 	
 
(4)	Such securities are held by certain funds and other entities controlled and/or managed by Magnetar Financial LLC or its affiliates. The address for Magnetar Financial LLC is 1301 Orrington Avenue, Evanston, IL 60201.	
(5)	Such securities are held by certain investment vehicles controlled by Silvercreek Capital Management LLC. The address for Silvercreek Capital Management LLC is 1301 Fifth Avenue, 40 th  Floor Seattle, WA 98101.	
(6)	Such securities are held by certain investment vehicles controlled by Baupost Group, LLC. The address for Baupost Group, LLC is 10 St. James Avenue Suite 2000 Boston, MA 02116.	
(7)	The address for all officers and directors is 500 Park Avenue, 5th Floor, New York, NY 10022.	
 
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The following table sets forth the dollar range of our equity securities beneficially owned by each of our directors immediately after this offering.

Name of Director	  	Dollar Range of Equity
Securities in Solar Capital (1)	
Interested Director	  	 	
Michael S. Gross	  	Over $100,000	
Bruce Spohler	  	Over $100,000	
 	 	
Independent Directors	  	 	
Steven Hochberg	  	None	
David S. Wachter	  	None	
Leonard A. Potter	  	None	
 
(1)	The dollar range of equity securities beneficially owned in us is based on the assumed initial offering price per share of our common stock of $[    ] (the mid-point of the estimated initial public offering price range set forth on the cover page of this prospectus).	
 
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REGULATION AS A BUSINESS DEVELOPMENT COMPANY
General
A business development company is regulated by the 1940 Act. A business development company must be organized in the United States for the purpose of investing in or lending to primarily private companies and making significant managerial assistance available to them. A business development company may use capital provided by public stockholders and from other sources to make long-term, private investments in businesses. A business development company provides stockholders the ability to retain the liquidity of a publicly-traded stock while sharing in the possible benefits, if any, of investing in primarily privately owned companies.
We may not change the nature of our business so as to cease to be, or withdraw our election as, a business development company unless authorized by vote of a majority of the outstanding voting securities, as required by the 1940 Act. A majority of the outstanding voting securities of a company is defined under the 1940 Act as the lesser of: (a) 67% or more of such company’s voting securities present at a meeting if more than 50% of the outstanding voting securities of such company are present or represented by proxy, or (b) more than 50% of the outstanding voting securities of such company. We do not anticipate any substantial change in the nature of our business.
As with other companies regulated by the 1940 Act, a business development company must adhere to certain substantive regulatory requirements. A majority of our directors must be persons who are not interested persons, as that term is defined in the 1940 Act. Additionally, we will be required to provide and maintain a bond issued by a reputable fidelity insurance company to protect the business development company. Furthermore, as a business development company, we will be prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.
As a business development company, we will be required to meet a coverage ratio of the value of total assets to total senior securities, which include all of our borrowings and any preferred stock we may issue in the future, of at least 200%. We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our directors who are not interested persons and, in some cases, prior approval by the SEC.
We will generally not be able to issue and sell our common stock at a price below net asset value per share. See “Risk factors — Risks Relating to Our Business and Structure — Regulations governing our operation as a business development company affect our ability to, and the way in which we, raise additional capital.” We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock if our board of directors determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale. In addition, we may generally issue new shares of our common stock at a price below net asset value in rights offerings to existing stockholders, in payment of dividends and in certain other limited circumstances.
As a business development company, we will generally be limited in our ability to invest in any portfolio company in which our investment adviser or any of its affiliates currently have an investment or to make any co-investments with our investment adviser or its affiliates without an exemptive order from the SEC, subject to certain exceptions.
We will be periodically examined by the SEC for compliance with the 1940 Act.
As a business development company, we will be subject to certain risks and uncertainties. See “Risk factors — Risks Relating to Our Business and Structure.”
 
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Qualifying Assets
Under the 1940 Act, a business development company may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the business development company’s total assets. The principal categories of qualifying assets relevant to our proposed business are the following:
(1) Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:
(a) is organized under the laws of, and has its principal place of business in, the United States;
(b) is not an investment company (other than a small business investment company wholly owned by the business development company) or a company that would be an investment company but for certain exclusions under the 1940 Act; and
(c) satisfies any of the following:
i. does not have any class of securities that is traded on a national securities exchange;
ii. has a class of securities listed on a national securities exchange, but has an aggregate market value of outstanding voting and non-voting common equity of less then $250 million;
iii. is controlled by a business development company or a group of companies including a business development company and the business development company has an affiliated person who is a director of the eligible portfolio company; or
iv. is a small and solvent company having total assets of not more than $4.0 million and capital and surplus of not less than $2.0 million.
(2) Securities of any eligible portfolio company which we control.
(3) Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities, was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.
(4) Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.
(5) Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities.
(6) Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment.
Managerial Assistance to Portfolio Companies
In addition, a business development company must have been organized and have its principal place of business in the United States and must be operated for the purpose of making investments in the types of securities described in (1), (2) or (3) above. However, in order to count portfolio securities as qualifying assets for the purpose of the 70% test, the business development company must either control the issuer of the securities or must offer to make available to the issuer of the securities (other than small and solvent companies described above) significant managerial assistance; except that, where the business development company purchases such securities in conjunction with one or more other persons acting together, one of the other persons in the group
 
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may make available such managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby the business development company, through its directors, officers or employees, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.
Temporary Investments
Pending investment in other types of “qualifying assets,” as described above, our investments may consist of cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to, collectively, as temporary investments, so that 70% of our assets are qualifying assets. Typically, we will invest in U.S. Treasury bills or in repurchase agreements, provided that such agreements are fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchase agreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price which is greater than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our total assets constitute repurchase agreements from a single counterparty, we would not meet the diversification tests in order to qualify as a RIC for federal income tax purposes. Thus, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit. Our investment adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.
Senior Securities
We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 200% immediately after each such issuance. In addition, while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage. For a discussion of the risks associated with leverage, see “Risk Factors — Risks Relating to Our Business and Structure — We may borrow money, which would magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us.”
Code of Ethics
We and Solar Capital Partners have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, that establishes procedures for personal investments and restricts certain transactions by our personnel. Our codes of ethics generally do not permit investments by our employees in securities that may be purchased or held by us. You may read and copy these codes of ethics at the SEC’s Public Reference Room in Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at (202) 551-8090. In addition, each code of ethics is attached as an exhibit to the registration statement of which this prospectus is a part, and is available on the EDGAR Database on the SEC’s Internet site at  http://www.sec.gov.  You may also obtain copies of the codes of ethics, after paying a duplicating fee, by electronic request at the following Email address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.
Compliance Policies and Procedures
We and our investment adviser have adopted and implemented written policies and procedures reasonably designed to detect and prevent violation of the federal securities laws and are required to review these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation and designate a chief compliance officer to be responsible for administering the policies and procedures. Guy Talarico currently serves as our chief compliance officer.
 
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Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 imposes a wide variety of new regulatory requirements on publicly-held companies and their insiders. Many of these requirements affect us. For example:
 
 	•	 	pursuant to Rule 13a-14 of the Exchange Act, our chief executive officer and chief financial officer must certify the accuracy of the financial statements contained in our periodic reports;	
 
 	•	 	pursuant to Item 307 of Regulation S-K, our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures;	
 
 	•	 	pursuant to Rule 13a-15 of the Exchange Act, our management must prepare an annual report regarding its assessment of our internal control over financial reporting and must obtain an audit of the effectiveness of internal control over financial reporting performed by our independent registered public accounting firm; and	
 
 	•	 	pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the 1934 Act, our periodic reports must disclose whether there were significant changes in our internal controls over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.	
The Sarbanes-Oxley Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations promulgated thereunder. We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.
Proxy Voting Policies and Procedures
We have delegated our proxy voting responsibility to Solar Capital Partners. The Proxy Voting Policies and Procedures of Solar Capital Partners are set forth below. The guidelines will be reviewed periodically by Solar Capital Partners and our non-interested directors, and, accordingly, are subject to change. For purposes of these Proxy Voting Policies and Procedures described below, “we,” “our” and “us” refers to Solar Capital Partners.
Introduction
An investment adviser registered under the Advisers Act has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, we recognize that we must vote client securities in a timely manner free of conflicts of interest and in the best interests of our clients.
These policies and procedures for voting proxies for our investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.
Proxy Policies
We will vote proxies relating to our portfolio securities in what we perceive to be the best interest of our clients’ stockholders. We will review on a case-by-case basis each proposal submitted to a stockholder vote to determine its impact on the portfolio securities held by our clients. Although we will generally vote against proposals that may have a negative impact on our clients’ portfolio securities, we may vote for such a proposal if there exist compelling long-term reasons to do so.
Our proxy voting decisions will be made by the senior officers who are responsible for monitoring each of our clients’ investments. To ensure that our vote is not the product of a conflict of interest, we will require that: (1) anyone involved in the decision making process disclose to our managing member any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote; and
 
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(2) employees involved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties.
Proxy Voting Records
You may obtain information about how we voted proxies by making a written request for proxy voting information to: Solar Capital Partners, LLC at 500 Park Avenue, 5 th  Floor, New York, New York 10022.
Privacy Principles
We are committed to maintaining the privacy of our stockholders and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with select other parties.
Generally, we do not receive any non-public personal information relating to our stockholders, although certain non-public personal information of our stockholders may become available to us. We do not disclose any non-public personal information about our stockholders or former stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts (for example, to a transfer agent or third party administrator).
We restrict access to non-public personal information about our stockholders to employees of our investment adviser and its affiliates with a legitimate business need for the information. We will maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of our stockholders.
 
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DETERMINATION OF NET ASSET VALUE
We determine the net asset value of our investment portfolio each quarter by subtracting our total liabilities from the fair value of our total assets.
We will conduct the valuation of our assets, pursuant to which our net asset value shall be determined, at all times consistent with GAAP and the 1940 Act. Our valuation procedures are set forth in more detail below:
Securities for which market quotations are readily available on an exchange shall be valued at such price as of the closing price on the day of valuation. 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 sufficient according to GAAP to determine the fair value of the security. If determined adequate, we use the quote obtained.
Securities for which reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of our investment adviser or board of directors, does not represent fair value, shall each be valued as follows: (i) each portfolio company or investment is initially valued by the investment professionals responsible for the portfolio investment; (ii) preliminary valuation conclusions are documented and discussed with our senior management; (iii) independent third-party valuation firms engaged by, or on behalf of, the board of directors will conduct independent appraisals and review management’s preliminary valuations and make their own assessment for all material assets; (iv) the board of directors will discuss valuations and determine the fair value of each investment in our portfolio in good faith based on the input of the investment adviser and, where appropriate, the respective third-party valuation firms.
The recommendation of fair value will generally be based on the following factors, as relevant:
 
 	•	 	the nature and realizable value of any collateral;	
 
 	•	 	the portfolio company’s ability to make payments;	
 
 	•	 	the portfolio company’s earnings and discounted cash flow;	
 
 	•	 	the markets in which the issuer does business; and	
 
 	•	 	comparisons to publicly traded securities.	
Securities for which market quotations are not readily available or for which a pricing source is not sufficient may include, but are not limited to, the following:
 
 	•	 	private placements and restricted securities that do not have an active trading market;	
 
 	•	 	securities whose trading has been suspended or for which market quotes are no longer available;	
 
 	•	 	debt securities that have recently gone into default and for which there is no current market;	
 
 	•	 	securities whose prices are stale;	
 
 	•	 	securities affected by significant events; and	
 
 	•	 	securities that the investment adviser believes were priced incorrectly.	
Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements.
 
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Determinations in Connection with Offerings
In connection with future offering of shares of our common stock, our board of directors or a committee thereof will be required to make the determination that we are not selling shares of our common stock at a price below the then current net asset value of our common stock at the time at which the sale is made. Our board of directors will consider the following factors, among others, in making such determination:
 
 	•	 	the net asset value of our common stock disclosed in the most recent periodic report that we filed with the SEC;	
 
 	•	 	our management’s assessment of whether any material change in the net asset value of our common stock has occurred (including through the realization of gains on the sale of our portfolio securities) during the period beginning on the date of the most recently disclosed net asset value of our common stock and ending two days prior to the date of the sale of our common stock; and	
 
 	•	 	the magnitude of the difference between (i) the net asset value of our common stock disclosed in the most recent periodic report that we filed with the SEC and our management’s assessment of any material change in the net asset value of our common stock since the date of the most recently disclosed net asset value of our common stock, and (ii) the offering price of the shares of our common stock in the proposed offering.	
Importantly, this determination will not require that we calculate the net asset value of our common stock in connection with each offering of shares of our common stock, but instead it will involve the determination by our board of directors or a committee thereof that we are not selling shares of our common stock at a price below the then current net asset value of our common stock at the time at which the sale is made.
Moreover, to the extent that there is even a remote possibility that we may (i) issue shares of our common stock at a price below the then current net asset value of our common stock at the time at which the sale is made or (ii) trigger the undertaking (which we provide in certain registration statements we file with the SEC) to suspend the offering of shares of our common stock pursuant to this prospectus if the net asset value of our common stock fluctuates by certain amounts in certain circumstances until the prospectus is amended, our board of directors will elect, in the case of clause (i) above, either to postpone the offering until such time that there is no longer the possibility of the occurrence of such event or to undertake to determine the net asset value of our common stock within two days prior to any such sale to ensure that such sale will not be below our then current net asset value, and, in the case of clause (ii) above, to comply with such undertaking or to undertake to determine the net asset value of our common stock to ensure that such undertaking has not been triggered.
These processes and procedures are part of our compliance policies and procedures. Records will be made contemporaneously with all determinations described in this section and these records will be maintained with other records that we are required to maintain under the 1940 Act.
 
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DIVIDEND REINVESTMENT PLAN
We have adopted a dividend reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our stockholders, unless a stockholder elects to receive cash as provided below. As a result, if our board of directors authorizes, and we declare, a cash distribution, then our stockholders who have not opted out of our dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of our common stock, rather than receiving the cash distributions.
No action will be required on the part of a registered stockholder to have his cash distribution reinvested in shares of our common stock. A registered stockholder may elect to receive an entire distribution in cash by notifying American Stock Transfer & Trust Company, the plan administrator and our transfer agent and registrar, in writing so that such notice is received by the plan administrator no later than the record date for distributions to stockholders. The plan administrator will set up an account for shares acquired through the plan for each stockholder who has not elected to receive distributions in cash and hold such shares in non-certificated form. Upon request by a stockholder participating in the plan, received in writing not less than 10 days prior to the record date, the plan administrator will, instead of crediting shares to the participant’s account, issue a certificate registered in the participant’s name for the number of whole shares of our common stock and a check for any fractional share.
Those stockholders whose shares are held by a broker or other financial intermediary may receive distributions in cash by notifying their broker or other financial intermediary of their election.
We intend to use primarily newly issued shares to implement the plan, whether our shares are trading at a premium or at a discount to net asset value. However, we reserve the right to purchase shares in the open market in connection with our implementation of the plan. If we declare a distribution to stockholders, the plan administrator may be instructed not to credit accounts with newly-issued shares and instead to buy shares in the market if (i) the price at which newly-issued shares are to be credited does not exceed 110% of the last determined net asset value of the shares; or (ii) we have advised the plan administrator that since such net asset value was last determined, we have become aware of events that indicate the possibility of a material change in per share net asset value as a result of which the net asset value of the shares on the payment date might be higher than the price at which the plan administrator would credit newly-issued shares to stockholders. The number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the distribution payable to such stockholder by the market price per share of our common stock at the close of regular trading on the valuation date for such distribution. Market price per share on that date will be the closing price for such shares on the national securities exchange on which our shares are then listed or, if no sale is reported for such day, at the average of their reported bid and asked prices. The number of shares of our common stock to be outstanding after giving effect to payment of the distribution cannot be established until the value per share at which additional shares will be issued has been determined and elections of our stockholders have been tabulated.
There will be no brokerage charges or other charges to stockholders who participate in the plan. The plan administrator’s fees under the plan will be paid by us. If a participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a transaction fee of $15 plus a per share brokerage commissions from the proceeds.
Stockholders who receive distributions in the form of stock are subject to the same federal, state and local tax consequences as are stockholders who elect to receive their distributions in cash. A stockholder’s basis for determining gain or loss upon the sale of stock received in a distribution from us will be equal to the total dollar amount of the distribution payable to the stockholder. Any stock received in a distribution will have a new holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S. stockholder’s account.
The plan may be terminated by us upon notice in writing mailed to each participant at least 30 days prior to any record date for the payment of any distribution by us. All correspondence concerning the plan should be directed to the plan administrator by mail at 59 Maiden Lane, New York, New York 10038 or by phone at (800) 937-5449).
 
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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a general summary of the material U.S. federal income tax considerations applicable to us and to an investment in our common stock. This summary does not purport to be a complete description of the income tax considerations applicable to such an investment. For example, we have not described tax consequences that we assume to be generally known by investors or certain considerations that may be relevant to certain types of holders subject to special treatment under U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies, dealers in securities, pension plans and trusts, and financial institutions. This summary assumes that investors hold our common stock as capital assets (within the meaning of the Code). The discussion is based upon the Code, Treasury regulations, and administrative and judicial interpretations, each as in effect as of the date of this registration statement and all of which are subject to change, possibly retroactively, which could affect the continuing validity of this discussion. We have not sought and will not seek any ruling from the Internal Revenue Service regarding this offering. This summary does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. It does not discuss the special treatment under U.S. federal income tax laws that could result if we invested in tax-exempt securities or certain other investment assets in which we do not currently intend to invest.
A “U.S. stockholder” generally is a beneficial owner of shares of our common stock who is for U.S. federal income tax purposes:
 
 	•	 	a citizen or individual resident of the United States including an alien individual who is a lawful permanent resident of the United States or meets the “substantial presence” test under Section 7701(b) of the Code;	
 
 	•	 	a corporation or other entity taxable as a corporation, for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any political subdivision thereof;	
 
 	•	 	a trust, if a court in the United States has primary supervision over its administration and one or more U.S. persons have the authority to control all decisions of the trust, or the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or	
 
 	•	 	an estate, the income of which is subject to U.S. federal income taxation regardless of its source.	
A “non-U.S. stockholder” is a beneficial owner of shares of our common stock that is an individual, corporation, trust or estate and is not a U.S. stockholder.
If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A prospective stockholder who is a partner of a partnership holding shares of our common stock should consult its tax advisors with respect to the purchase, ownership and disposition of shares of our common stock.
Tax matters are very complicated and the tax consequences to an investor of an investment in our shares will depend on the facts of its particular situation. We encourage investors to consult their own tax advisors regarding the specific consequences of such an investment, including tax reporting requirements, the applicability of federal, state, local and foreign tax laws, eligibility for the benefits of any applicable tax treaty and the effect of any possible changes in the tax laws.
As a business development company, we intend to elect to be treated, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code, beginning with our 2009 taxable year. As a RIC, we generally will not have to pay corporate-level federal income taxes on any ordinary income or capital gains that we distribute to our stockholders as dividends. To continue to qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, to qualify
 
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for RIC tax treatment we must distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses (the “Annual Distribution Requirement”).
Taxation as a Regulated Investment Company
If we:
 
 	•	 	qualify as a RIC; and	
 
 	•	 	satisfy the Annual Distribution Requirement;	
then we will not be subject to federal income tax on the portion of our investment company taxable income and net capital gain (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) we distribute to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gain not distributed (or deemed distributed) to our stockholders.
We will be subject to a 4% nondeductible federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, and on which we paid no federal income tax, in preceding years (the “Excise Tax Avoidance Requirement”). We currently intend to make sufficient distributions each taxable year to satisfy the Excise Tax Avoidance Requirement.
In order to qualify as a RIC for federal income tax purposes, we must, among other things:
 
 	•	 	at all times during each taxable year, have in effect an election to be treated as a business development company under the 1940 Act;	
 
 	•	 	derive in each taxable year at least 90% of our gross income from (a) dividends, interest, payments with respect to certain securities loans, gains from the sale of stock or other securities or currencies, or other income derived with respect to our business of investing in such stock, securities or currencies and (b) net income derived from an interest in a “qualified publicly traded partnership;” and	
 
 	•	 	diversify our holdings so that at the end of each quarter of the taxable year:	
 
 	•	 	at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and	
 
 	•	 	no more than 25% of the value of our assets is invested in (i) the securities, other than U.S. government securities or securities of other RICs, of one issuer, (ii) the securities of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) the securities of one or more “qualified publicly traded partnerships.”	
We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with PIK interest or, in certain cases, increasing interest rates or debt instruments issued with warrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. Because any original issue discount accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount.
 
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Certain of our investment practices may be subject to special and complex U.S. federal income tax provisions that may, among other things: (i) disallow, suspend or otherwise limit the allowance of certain losses or deductions; (ii) convert lower taxed long-term capital gain into higher taxed short-term capital gain or ordinary income; (iii) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited); (iv) cause us to recognize income or gain without a corresponding receipt of cash; (v) adversely affect the time as to when a purchase or sale of securities is deemed to occur; (vi) adversely alter the characterization of certain complex financial transactions; and (vii) produce income that will not be qualifying income for purposes of the 90% gross income test described above. We will monitor our transactions and may make certain tax elections in order to mitigate the potential adverse effect of these provisions.
Gain or loss realized by us from the sale or exchange of warrants acquired by us as well as any loss attributable to the lapse of such warrants generally will be treated as capital gain or loss. The treatment of such gain or loss as long-term or short-term will depend on how long we held a particular warrant. Upon the exercise of a warrant acquired by us, our tax basis in the stock purchased under the warrant will equal the sum of the amount paid for the warrant plus the strike price paid on the exercise of the warrant. Except as set forth in “Failure to Qualify as a Regulated Investment Company,” the remainder of this discussion assumes we will qualify as a RIC for each taxable year.
Taxation of U.S. Stockholders
Distributions by us generally will be taxable to U.S. stockholders as ordinary income or capital gains. Distributions of our investment company taxable income will be taxable as ordinary income to U.S. stockholders to the extent of our current or accumulated earnings and profits, whether paid in cash or reinvested in additional common stock. Distributions of our net capital gains (that is, the excess of our realized net long-term capital gains in excess of realized net short-term capital losses) properly designated by us as “capital gain dividends” will be taxable to a U.S. stockholder as long-term capital gains, regardless of the U.S. stockholder’s holding period for its common stock and regardless of whether paid in cash or reinvested in additional common stock. For taxable years beginning on or before December 31, 2010, distributions of investment company taxable income that are designated by us as being derived from “qualified dividend income” will be taxed in the hands of non-corporate stockholders at the rates applicable to long-term capital gain, provided that holding period and other requirements are met by both the stockholders and us. Dividends distributed by us will generally not be attributable to qualified dividend income. Distributions in excess of our current and accumulated earnings and profits first will reduce a U.S. stockholder’s adjusted tax basis in such U.S. stockholder’s common stock and, after the adjusted basis is reduced to zero, will constitute capital gains to such U.S. stockholder. For a summary of the tax rates applicable to capital gains, including capital gain dividends, see the discussion below.
Under the dividend reinvestment plan, if a U.S. stockholder owns shares of common stock registered in its own name, the U.S. stockholder will have all cash distributions automatically reinvested in additional shares of common stock unless the U.S. stockholder opts out of our dividend reinvestment plan by delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution. See “Dividend Reinvestment Plan.” Any distributions reinvested under the plan will nevertheless remain taxable to the U.S. stockholder. The U.S. stockholder will have an adjusted basis in the additional common shares purchased through the plan equal to the amount of the reinvested distribution. The additional shares will have a new holding period commencing on the day following the day on which the shares are credited to the U.S. stockholder’s account.
Although we currently intend to distribute realized net capital gains (i.e., net realized long-term capital gains in excess of net realized short-term capital losses), if any, at least annually, we may in the future decide to retain some or all of our net capital gains, but to designate the retained amount as a “deemed distribution.” In that case, among other consequences, we will pay corporate-level tax on the retained amount, each U.S. stockholder will be required to include its share of the deemed distribution in income as if it had been actually distributed to the U.S. stockholder, and the U.S. stockholder will be entitled to claim a credit or refund equal to its allocable share
 
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of the corporate-level tax we pay on the retained capital gain. The amount of the deemed distribution net of such tax will be added to the U.S. stockholder’s cost basis for its common stock. Since we expect to pay tax on any retained capital gains at our regular corporate capital gain tax rate, and since that rate is in excess of the maximum rate currently payable by non-corporate U.S. stockholders on long-term capital gains, the amount of tax that non-corporate U.S. stockholders will be treated as having paid will exceed the tax they owe on the capital gain dividend. Such excess generally may be claimed as a credit or refund against the U.S. stockholder’s other U.S. federal income tax obligations. A U.S. stockholder that is not subject to U.S. federal income tax or otherwise required to file a U.S. federal income tax return would be required to file a U.S. federal income tax return on the appropriate form in order to claim a refund for the taxes we paid. In order to utilize the deemed distribution approach, we must provide written notice to our stockholders prior to the expiration of 60 days after the close of the relevant tax year.
As a RIC, we will be subject to the alternative minimum tax (“AMT”), but any items that are treated differently for AMT purposes must be apportioned between us and our stockholders and this may affect the stockholders’ AMT liabilities. Although regulations explaining the precise method of apportionment have not yet been issued by the Internal Revenue Service, we intend in general to apportion these items in the same proportion that dividends paid to each stockholder bear to our taxable income (determined without regard to the dividends paid deduction), unless we determine that a different method for a particular item is warranted under the circumstances.
For purposes of determining (i) whether the Annual Distribution Requirement is satisfied for any year and (ii) the amount of dividends paid for that year, we may, under certain circumstances, elect to treat a dividend that is paid during the following taxable year as if it had been paid during the taxable year in question. If we make such an election, the U.S. stockholder generally will still be treated as receiving the dividend in the taxable year in which the distribution is made. However, any dividend declared by us in October, November, or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following year, will be treated as if it had been received by our U.S. stockholders on December 31 of the year in which the dividend was declared.
You should consider the tax implications of buying common stock just prior to a distribution. Even if the price of the common stock includes the amount of the forthcoming distribution, and the distribution economically represents a return of your investment, you will be taxed upon receipt of the distribution and will not be entitled to offset the distribution against the tax basis in your common stock.
You may recognize taxable gain or loss if you sell or exchange your common stock. The amount of the gain or loss will be measured by the difference between your adjusted tax basis in your common stock and the amount of the proceeds you receive in exchange for such stock. Any gain or loss arising from the sale or exchange of our common stock (or, in the case of distributions in excess of the sum of our current and accumulated earnings and profits and your tax basis in the stock, treated as arising from the sale or exchange of our common stock) generally will be a capital gain or loss if the common stock is held as a capital asset. This capital gain or loss normally will be treated as a long-term capital gain or loss if you have held your common stock for more than one year. Otherwise, it will be classified as short-term capital gain or loss. However, any capital loss arising from the sale or exchange of common stock held for six months or less generally will be treated as a long-term capital loss to the extent of the amount of capital gain dividends received, or treated as deemed distributed, with respect to such stock. For this purpose, certain special rules, including rules relating to periods when your risk of loss with respect to your common stock has been diminished, generally apply in determining the holding period of such stock. The ability to deduct capital losses may be subject to other limitations under the Code.
In addition, all or a portion of any loss recognized upon a disposition of shares of our common stock may be disallowed if other shares of our common stock are purchased (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss. In general, individual U.S. stockholders currently are subject to a maximum U.S. federal income tax rate of 15% (with lower rates applying to taxpayers in the 10% and 15% tax
 
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rate brackets) for years beginning on or before December 31, 2010 on their net capital gain, i.e., the excess of net long-term capital gain over net short-term capital loss for a taxable year, including a long-term capital gain derived from an investment in our common stock. Corporate U.S. stockholders currently are subject to U.S. federal income tax on net capital gain at the maximum 35% rate also applied to ordinary income. Dividends distributed by us to corporate stockholders generally will not be eligible for the dividends-received deduction. Tax rates imposed by states and local jurisdictions on capital gain and ordinary income may differ.
We will send to each of our U.S. stockholders, as promptly as possible after the end of each calendar year, a notice detailing, on a per share and per distribution basis, the amounts includible in such U.S. stockholder’s taxable income for such year as ordinary income, long-term capital gain and “qualified dividend income,” if any. In addition, the U.S. federal tax status of each year’s distributions generally will be reported to the Internal Revenue Service. Distributions may also be subject to additional state, local, and foreign taxes depending on a U.S. stockholder’s particular situation.
Backup withholding may apply to distributions on the common stock with respect to certain non-corporate U.S. stockholders. Such U.S. stockholders generally will be subject to backup withholding unless the U.S. stockholder provides its correct taxpayer identification number and certain other information, certified under penalties of perjury, to the dividend paying agent, or otherwise establishes an exemption from backup withholding. Any amount withheld under backup withholding is allowed as a credit against the U.S. stockholder’s U.S. federal income tax liability, provided the proper information is provided to the Internal Revenue Service.
Taxation of Non-U.S. Stockholders
Whether an investment in our common stock is appropriate for a non-U.S. stockholder will depend upon that stockholder’s particular circumstances. Non-U.S. stockholders should consult their tax advisors before investing in our common stock.
Distributions of our investment company taxable income to stockholders that are non-U.S. stockholders will currently be subject to withholding of U.S. federal income tax at a 30% rate (or lower rate provided by an applicable treaty) to the extent of our current and accumulated earnings and profits unless the distributions are effectively connected with a U.S. trade or business of the non-U.S. stockholders, and, if an income tax treaty applies, attributable to a permanent establishment in the United States. In that case, the distributions will be subject to U.S. federal income tax at the ordinary income rates applicable to U.S. stockholders and we will not have to withhold U.S. federal withholding tax if the non-U.S. stockholder complies with applicable certification and disclosure requirements. Special certification requirements apply to a non-U.S. stockholder that is a foreign partnership or a foreign trust and such entities are urged to consult their own tax advisors. In addition, under current law U.S. source withholding taxes are not imposed on dividends paid by RICs to the extent the dividends are designated as “interest-related dividends” or “short-term capital gain dividends.” Under this exemption, interest-related dividends and short-term capital gain dividends generally represent distributions of interest or short-term capital gains that would not have been subject to U.S. withholding tax at the source if they had been received directly by a foreign person, and that satisfy certain other requirements. The exemption applies to dividends with respect to taxable years of RICs beginning before January 1, 2010. No assurance can be given as to whether this exemption will be extended for tax years beginning on or after January 1, 2010 or whether any of our distributions will be designated as eligible for this exemption from withholding tax.
Actual or deemed distributions of our net capital gains to a stockholder that is a non-U.S. stockholder, and gains realized by a non-U.S. stockholder upon the sale or redemption of our common stock, will not be subject to U.S. federal income tax unless the distributions or gains, as the case may be, are effectively connected with a U.S. trade or business of the non-U.S. stockholder and, if an income tax treaty applies, are attributable to a permanent establishment maintained by the non-U.S. stockholder in the United States, or, in the case of an individual, the non-U.S. stockholder was present in the United States for 183 days or more during the taxable year and certain other conditions are met.
 
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If we distribute our net capital gains in the form of deemed rather than actual distributions, a stockholder that is a non-U.S. stockholder will be entitled to a U.S. federal income tax credit or tax refund equal to the stockholder’s allocable share of the corporate-level tax we pay on the capital gains deemed to have been distributed; however, in order to obtain the refund, the non-U.S. stockholder must obtain a U.S. taxpayer identification number and file a U.S. federal income tax return even if the non-U.S. stockholder would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. federal income tax return. For a corporate non-U.S. stockholder, distributions (both actual and deemed), and gains realized upon the sale or redemption of our common stock that are effectively connected to a U.S. trade or business may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate (or at a lower rate if provided for by an applicable treaty). Accordingly, investment in our stock may not be appropriate for a non-U.S. stockholder.
Under our dividend reinvestment plan, if a non-U.S. stockholder owns shares of common stock registered in its own name, the non-U.S. stockholder will have all cash distributions automatically reinvested in additional shares of common stock unless it opts out of our dividend reinvestment plan by delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution. See “Dividend Reinvestment Plan.” If the distribution is a distribution of our investment company taxable income, is not designated by us as a short-term capital gains dividend or interest-related dividend and it is not effectively connected with a U.S. trade or business of the non-U.S. stockholder (or, if a treaty applies, is not attributable to a permanent establishment), the amount distributed (to the extent of our current and accumulated earnings and profits) will be subject to withholding of U.S. federal income tax at a 30% rate (or lower rate provided by an applicable treaty) and only the net after-tax amount will be reinvested in common shares. If the distribution is effectively connected with a U.S. trade or business of the non-U.S. stockholder, generally the full amount of the distribution will be reinvested in the plan and will nevertheless be subject to U.S. federal income tax at the ordinary income rates applicable to U.S. persons. The non-U.S. stockholder will have an adjusted basis in the additional common shares purchased through the plan equal to the amount reinvested. The additional shares will have a new holding period commencing on the day following the day on which the shares are credited to the non-U.S. stockholder’s account.
A non-U.S. stockholder who is a nonresident alien individual, and who is otherwise subject to withholding of U.S. federal income tax, may be subject to information reporting and backup withholding of U.S. federal income tax on dividends unless the non-U.S. stockholder provides us or the dividend paying agent with an Internal Revenue Service Form W-8BEN (or an acceptable substitute form) or otherwise meets documentary evidence requirements for establishing that it is a non-U.S. stockholder or the non-U.S. stockholder otherwise establishes an exemption from backup withholding.
Non-U.S. stockholders should consult their own tax advisors with respect to the U.S. federal income tax and withholding tax, and state, local, and foreign tax, consequences of an investment in our common stock.
Failure to Qualify as a Regulated Investment Company
If we were unable to qualify for treatment as a RIC, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders, nor would they be required to be made. Such distributions would be taxable to our stockholders as dividends and, if made in a taxable year beginning on or before December 31, 2010 and provided certain holding period and other requirements were met, could qualify for treatment as “qualified dividend income” in the hands of non-corporate stockholders (and thus, eligible for the 15% maximum rate) to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate distributees would be eligible for the dividends received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in
 
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which we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the non-qualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent 10 years, unless we made a special election to pay corporate-level tax on such built-in gain at the time of our requalification as a RIC.
 
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DESCRIPTION OF SECURITIES
The following description is based on relevant portions of the Maryland General Corporation Law and on our charter and bylaws. This summary is not necessarily complete, and we refer you to the Maryland General Corporation Law and charter and bylaws for a more detailed description of the provisions summarized below.
Stock
The authorized stock of Solar Capital Ltd. consists of 200,000,000 shares of stock, par value $0.01 per share, all of which are initially designated as common stock. We have applied to list our common stock on the NASDAQ Global Select Market under the ticker symbol “SLRC.” There are no outstanding options or warrants to purchase our stock. No stock has been authorized for issuance under any equity compensation plans. Under Maryland law, our stockholders generally are not personally liable for our debts or obligations.
The following are our outstanding classes of securities as of January 6, 2010:

        (1)
Title of Class	  	(2)
Amount
Authorized	  	(3)
Amount Held by
Us or for Our
Account	  	(4)
Amount
Outstanding
Exclusive of
Amounts Shown
Under(3)	
Common stock	  	200,000,000	  	—  	  	100	
Under our charter our board of directors is authorized to classify and reclassify any unissued shares of stock into other classes or series of stock without obtaining stockholder approval. As permitted by the Maryland General Corporation Law, our charter provides that the board of directors, without any action by our stockholders, may amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue.
Common Stock
All shares of our common stock have equal rights as to earnings, assets, voting, and dividends and, when they are issued, will be duly authorized, validly issued, fully paid and nonassessable. Distributions may be paid to the holders of our common stock if, as and when authorized by our board of directors and declared by us out of assets legally available therefor. Shares of our common stock have no preemptive, conversion or redemption rights and are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract. In the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time. Each share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as provided with respect to any other class or series of stock, the holders of our common stock will possess exclusive voting power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock can elect all of our directors, and holders of less than a majority of such shares will be unable to elect any director.
Preferred Stock
Our charter authorizes our board of directors to classify and reclassify any unissued shares of stock into other classes or series of stock, including preferred stock. The cost of any such reclassification would be borne by our existing common stockholders. Prior to issuance of shares of each class or series, the board of directors is required by Maryland law and by our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of
 
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redemption for each class or series. Thus, the board of directors could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest. You should note, however, that any issuance of preferred stock must comply with the requirements of the 1940 Act. The 1940 Act requires, among other things, that (1) immediately after issuance and before any dividend or other distribution is made with respect to our common stock and before any purchase of common stock is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50% of our total assets after deducting the amount of such dividend, distribution or purchase price, as the case may be, and (2) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if dividends on such preferred stock are in arrears by two full years or more. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of common stock on a proposal to cease operations as a business development company. We believe that the availability for issuance of preferred stock will provide us with increased flexibility in structuring future financings and acquisitions. However, we do not currently have any plans to issue preferred stock.
Debt
Distribution Notes
The Distribution Notes consist of $125 million in senior unsecured notes, which will bear interest at a rate of [ ]% per annum, payable quarterly in cash, and will mature in [ ]. The Distribution Notes are redeemable at any time, in whole or in part, at a price of 100% of their principal amount, plus accrued and unpaid interest to the date of redemption. Further, Solar Capital Ltd. must use the net cash proceeds from the issuance of any other senior unsecured notes either to redeem or make an offer to purchase the outstanding Distribution Notes at a price of 100% of their principal amount, plus accrued and unpaid interest to the date of redemption. The Distribution Notes subject Solar Capital Ltd. to customary covenants, including, among other things, (i) a requirement to maintain an “asset coverage ratio” of 2.00 to 1.00; (ii) a requirement that in the event of a “change of control” (as defined in the agreement governing the Distribution Notes) Solar Capital Ltd. will be required to offer to repurchase the Distribution Notes at a price of 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase; and (iii) a restriction on incurring any debt on a junior lien basis, or any debt that is contractually subordinated in right of payment to any other debt unless it is also subordinated to the Distribution Notes on substantially identical terms. The agreement under which the Distribution Notes will be issued will contain customary events of default.
Limitation on Liability of Directors and Officers; Indemnification and Advance of Expenses
Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our charter contains such a provision which eliminates directors’ and officers’ liability to the maximum extent permitted by Maryland law, subject to the requirements of the 1940 Act.
Our charter authorizes us, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while serving as our director or officer and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee, from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in any such capacity and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. Our bylaws obligate us, to the maximum extent
 
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permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while serving as our director or officer and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in that capacity from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in any such capacity and to pay or reimburse his or her reasonable expenses in advance of final disposition of a proceeding. The charter and bylaws also permit us to indemnify and advance expenses to any person who served a predecessor of us in any of the capacities described above and any of our employees or agents or any employees or agents of our predecessor. In accordance with the 1940 Act, we will not indemnify any person for any liability to which such person would be subject by reason of such person’s willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.
Maryland law requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or threatened to be made, a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received unless, in either, case a court orders indemnification, and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer in advance of final disposition of a proceeding upon the corporation’s receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.
We have entered into indemnification agreements with our directors. The indemnification agreements provide our directors the maximum indemnification permitted under Maryland law and the 1940 Act.
Our insurance policy does not currently provide coverage for claims, liabilities and expenses that may arise out of activities that our present or former directors or officers have performed for another entity at our request. There is no assurance that such entities will in fact carry such insurance. However, we note that we do not expect to request our present or former directors or officers to serve another entity as a director, officer, partner or trustee unless we can obtain insurance providing coverage for such persons for any claims, liabilities or expenses that may arise out of their activities while serving in such capacities.
Certain Provisions of the Maryland General Corporation Law and Our Charter and Bylaws
The Maryland General Corporation Law and our charter and bylaws contain provisions that could make it more difficult for a potential acquiror to acquire us by means of a tender offer, proxy contest or otherwise. These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms.
 
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Classified Board of Directors
Our board of directors will be divided into three classes of directors serving staggered three-year terms. The initial terms of the first, second and third classes will expire in 2010, 2011 and 2012, respectively, and in each case, those directors will serve until their successors are elected and qualify. Beginning in 2010, upon expiration of their current terms, directors of each class will be elected to serve for three-year terms and until their successors are duly elected and qualify and each year one class of directors will be elected by the stockholders. A classified board may render a change in control of us or removal of our incumbent management more difficult. We believe, however, that the longer time required to elect a majority of a classified board of directors will help to ensure the continuity and stability of our management and policies.
Election of Directors
Our charter and bylaws provide that the affirmative vote of the holders of a plurality of the outstanding shares of stock entitled to vote in the election of directors cast at a meeting of stockholders duly called and at which a quorum is present will be required to elect a director. Pursuant to our charter our board of directors may amend the bylaws to alter the vote required to elect directors.
Number of Directors; Vacancies; Removal
Our charter provides that the number of directors will be set only by the board of directors in accordance with our bylaws. Our bylaws provide that a majority of our entire board of directors may at any time increase or decrease the number of directors. However, unless our bylaws are amended, the number of directors may never be less than one nor more than twelve. Our charter provides that, at such time as we have at least three independent directors and our common stock is registered under the Securities Exchange Act of 1934, as amended, we elect to be subject to the provision of Subtitle 8 of Title 3 of the Maryland General Corporation Law regarding the filling of vacancies on the board of directors. Accordingly, at such time, except as may be provided by the board of directors in setting the terms of any class or series of preferred stock, any and all vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies, subject to any applicable requirements of the 1940 Act.
Our charter provides that a director may be removed only for cause, as defined in our charter, and then only by the affirmative vote of at least two-thirds of the votes entitled to be cast in the election of directors.
Action by Stockholders
Under the Maryland General Corporation Law, stockholder action can be taken only at an annual or special meeting of stockholders or (unless the charter provides for stockholder action by less than unanimous written consent, which our charter does not) by unanimous written consent in lieu of a meeting. These provisions, combined with the requirements of our bylaws regarding the calling of a stockholder-requested special meeting of stockholders discussed below, may have the effect of delaying consideration of a stockholder proposal until the next annual meeting.
Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals
Our bylaws provide that with respect to an annual meeting of stockholders, nominations of persons for election to the board of directors and the proposal of business to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by the board of directors or (3) by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures of our bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought before the meeting. Nominations of persons for election to the board of directors at a special meeting may be made only
 
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(1) pursuant to our notice of the meeting, (2) by the board of directors or (3) provided that the board of directors has determined that directors will be elected at the meeting, by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the bylaws.
The purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our board of directors a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed necessary or desirable by our board of directors, to inform stockholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our bylaws do not give our board of directors any power to disapprove stockholder nominations for the election of directors or proposals recommending certain action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders.
Calling of Special Meetings of Stockholders
Our bylaws provide that special meetings of stockholders may be called by our board of directors and certain of our officers. Additionally, our bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting, a special meeting of stockholders will be called by the secretary of the corporation upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast at such meeting.
Approval of Extraordinary Corporate Action; Amendment of Charter and Bylaws
Under Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business, unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, a Maryland corporation may provide in its charter for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter. Our charter generally provides for approval of charter amendments and extraordinary transactions by the stockholders entitled to cast at least a majority of the votes entitled to be cast on the matter. Our charter also provides that certain charter amendments, any proposal for our conversion, whether by charter amendment, merger or otherwise, from a closed-end company to an open-end company and any proposal for our liquidation or dissolution requires the approval of the stockholders entitled to cast at least 80% of the votes entitled to be cast on such matter. However, if such amendment or proposal is approved by a majority of our continuing directors (in addition to approval by our board of directors), such amendment or proposal may be approved by a majority of the votes entitled to be cast on such a matter. The “continuing directors” are defined in our charter as (1) our current directors, (2) those directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of our current directors then on the board of directors or (3) any successor directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of continuing directors or the successor continuing directors then in office.
Our charter and bylaws provide that the board of directors will have the exclusive power to make, alter, amend or repeal any provision of our bylaws.
No Appraisal Rights
Except with respect to appraisal rights arising in connection with the Control Share Act discussed below, as permitted by the Maryland General Corporation Law, our charter provides that stockholders will not be entitled to exercise appraisal rights unless a majority of the board of directors shall determine such rights apply.
 
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Control Share Acquisitions
The Maryland General Corporation Law provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter (the “Control Share Act”). Shares owned by the acquiror, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power:
 
 	•	 	one-tenth or more but less than one-third;	
 
 	•	 	one-third or more but less than a majority; or	
 
 	•	 	a majority or more of all voting power.	
The requisite stockholder approval must be obtained each time an acquiror crosses one of the thresholds of voting power set forth above. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A control share acquisition means the acquisition of control shares, subject to certain exceptions.
A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and limitations, including, as provided in our bylaws compliance with the 1940 Act. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of stockholders at which the voting rights of the shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.
The Control Share Act does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation. Our bylaws contain a provision exempting from the Control Share Act any and all acquisitions by any person of our shares of stock. There can be no assurance that such provision will not be amended or eliminated at any time in the future. However, we will amend our bylaws to be subject to the Control Share Act only if the board of directors determines that it would be in our best interests and if the SEC staff does not object to our determination that our being subject to the Control Share Act does not conflict with the 1940 Act.
Business Combinations
Under Maryland law, “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder (the “Business Combination Act”). These
 
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business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:
 
 	•	 	any person who beneficially owns 10% or more of the voting power of the corporation’s outstanding voting stock; or	
 
 	•	 	an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation.	
A person is not an interested stockholder under this statute if the board of directors approved in advance the transaction by which the stockholder otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.
After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:
 
 	•	 	80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and	
 
 	•	 	two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.	
These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.
The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors before the time that the interested stockholder becomes an interested stockholder. Our board of directors has adopted a resolution that any business combination between us and any other person is exempted from the provisions of the Business Combination Act, provided that the business combination is first approved by the board of directors, including a majority of the directors who are not interested persons as defined in the 1940 Act. This resolution may be altered or repealed in whole or in part at any time; however, our board of directors will adopt resolutions so as to make us subject to the provisions of the Business Combination Act only if the board of directors determines that it would be in our best interests and if the SEC staff does not object to our determination that our being subject to the Business Combination Act does not conflict with the 1940 Act. If this resolution is repealed, or the board of directors does not otherwise approve a business combination, the statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.
Conflict with 1940 Act
Our bylaws provide that, if and to the extent that any provision of the Maryland General Corporation Law, including the Control Share Act (if we amend our bylaws to be subject to such Act) and the Business Combination Act, or any provision of our charter or bylaws conflicts with any provision of the 1940 Act, the applicable provision of the 1940 Act will control.
 
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SHARES ELIGIBLE FOR FUTURE SALE
Upon the completion of the Pre-IPO Distribution, this offering, and the issuance of shares of our common stock to the LLC Holders in connection with the Solar Capital Merger, we will have approximately 26.65 shares of common stock outstanding. All of these shares of our common stock will be “restricted” securities under the meaning of Rule 144 promulgated under the Securities Act and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including exemptions contained in Rule 144.
In addition, each of the LLC Holders, other than Magnetar, has agreed that for a period of 120 days from the date of this offering, they will not, without the prior written consent of Citi and J.P. Morgan, dispose of or hedge any shares of our common stock or securities convertible or exchangeable for shares of our common stock. Each of our officers and directors, including Messrs. Gross and Spohler, has agreed to similar lock-up restrictions for a period of 180 days from the date of this offering. Messrs. Gross and Spohler, through Solar Capital Investors, LLC (an entity controlled by Mr. Gross), have also agreed to extend such lock-up period until 365 days from the date of this offering with respect to 50% of the shares of common stock they hold immediately prior to completion of this offering. In connection with our issuance of the Distribution Notes in the Solar Capital Merger, certain of the LLC Holders, including Magnetar, that elect to receive such Distribution Notes will be required to agree to lock-up restrictions and periods that are the same as those applicable to Messrs. Gross and Spohler.
We have also filed a registration statement to register the resale of the shares of common stock held by the LLC Holders. We have committed to use our commercially reasonable efforts to obtain effectiveness of such registration statement within 120 days from the date of this offering. Assuming effectiveness of such registration statement, the LLC Holders will generally be able to resell their shares of common stock without restriction upon expiration of their 120 day lock-up period, unless they have elected to receive Distribution Notes in the Solar Capital Merger.
In general, under Rule 144, if six months has elapsed since the date of acquisition of restricted securities from us or any of our affiliates, and we have made certain information about us available publicly, the holder of such restricted securities can sell such securities. However, in the case of a holder that has been our affiliate at any time during the three months preceding the proposed sale, the number of securities sold by such affiliate holder within any three-month period cannot exceed the greater of:
 
 	•	 	1% of the total number of securities then outstanding; or	
 
 	•	 	the average weekly trading volume of our securities during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.	
Sales under Rule 144 by holders that have been our affiliates at any time during the three months preceding the proposed sale also are subject to certain manner of sale provisions and notice requirements. If one year has elapsed since the date of acquisition of restricted securities from us or any of our affiliates, and the holder is not one of our affiliates at any time during the three months preceding the proposed sale, such person can sell such securities in the public market under Rule 144 without regard to the public information requirements, manner of sale provisions and notice requirements.
No assurance can be given as to (1) the likelihood that an active market for our shares will develop; (2) the liquidity of any such market; (3) the ability of our stockholders to sell our securities; or (4) the prices that stockholders may obtain for any of our securities. No prediction can be made as to the effect, if any, that future sales of securities, or the availability of securities for future sale, will have on the market price prevailing from time to time. Sales of substantial amounts of our securities, or the perception that such sales could occur, may affect adversely prevailing market prices for our shares.
 
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UNDERWRITING
Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and Morgan Stanley & Co. Incorporated are acting as joint bookrunning managers of the offering and as representatives of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus, each underwriter named below has agreed to purchase, and we have agreed to sell to that underwriter, the number of shares set forth opposite the underwriter’s name.

Underwriter	  	Number
of Shares	
Citigroup Global Markets Inc.	  	 	
J.P. Morgan Securities Inc.	  	 	
Morgan Stanley & Co. Incorporated	  	 	

Total	  	 	
 	  	 	
The underwriting agreement provides that the obligations of the underwriters to purchase the shares included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the shares (other than those covered by the over-allotment option described below) if they purchase any of the shares.
The underwriters propose to offer some of the shares directly to the public at the public offering price set forth on the cover page of this prospectus and some of the shares to dealers at the public offering price less a concession not to exceed $             per share. If all of the shares are not sold at the initial offering price, the representatives may change the public offering price and the other selling terms. The representatives have advised us that the underwriters do not intend to confirm sales to discretionary accounts.
We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to              additional shares of common stock at the public offering price less the underwriting discount. The underwriters may exercise the option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must purchase a number of additional shares approximately proportionate to that underwriter’s initial purchase commitment.
Each of the LLC Holders, other than Magnetar Capital Fund, LP, has agreed that for a period of 120 days from the date of this offering, they will not, without the prior written consent of Citi and J.P. Morgan, dispose of or hedge any shares of our common stock or securities convertible or exchangeable for shares of our common stock. Each of our officers and directors, including Messrs. Gross and Spohler, has agreed to similar lock-up restrictions for a period of 180 days from the date of this offering. Messrs. Gross and Spohler, through Solar Capital Investors, LLC (an entity controlled by Mr. Gross), have also agreed to extend such lock-up period until 365 days from the date of this offering with respect to 50% of the shares of common stock they hold immediately prior to completion of this offering. In connection with our issuance of the Distribution Notes, certain of the LLC Holders, including Magnetar Capital Fund, LP, that elect to receive such Distribution Notes will be required to agree to lock-up restrictions and periods that are the same as those applicable to Messrs. Gross and Spohler. Citi and J.P. Morgan in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.
Prior to this offering, there has been no public market for our common stock. Consequently, the initial public offering price for the shares was determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price were our record of operations, our current financial condition, our future prospects, our markets, the economic conditions in and future prospects for the industry in which we compete, our management, and currently prevailing general conditions in the equity
 
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securities markets, including current market valuations of publicly traded companies comparable to our company. We cannot assure you, however, that the prices at which the shares will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our common stock will develop and continue after this offering.
We have applied to have our common stock listed on the NASDAQ Global Select Market under the symbol “SLRC”.
The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares of common stock.

 	  	Paid by Solar Capital	
 	  	No Exercise	  	Full Exercise	
Per share	  	$	            	  	$	            	
Total	  	$	            	  	$	            	
In connection with the offering, one or more of the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, syndicate covering transactions and stabilizing transactions. Short sales involve syndicate sales of common stock in excess of the number of shares to be purchased by the underwriters in the offering, which creates a syndicate short position. “Covered” short sales are sales of shares made in an amount up to the number of shares represented by the underwriters’ over-allotment option. In determining the source of shares to close out the covered syndicate short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. Transactions to close out the covered syndicate short involve either purchases of the common stock in the open market after the distribution has been completed or the exercise of the over-allotment option. The underwriters may also make “naked” short sales of shares in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares of common stock in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of bids for or purchases of shares in the open market while the offering is in progress.
The underwriters may also impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when Citi or J.P. Morgan repurchases shares originally sold by that syndicate member in order to cover syndicate short positions or make stabilizing purchases.
Any of these activities may have the effect of preventing or retarding a decline in the market price of the common stock. They may also cause the price of the common stock to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions on the NASDAQ Global Select Market or in the over-the-counter market, or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.
We estimate that our portion of the total expenses of this offering will be $                .
The underwriters have performed investment banking and advisory services for us and our affiliates from time to time for which they have received customary fees and expenses. The underwriters may, from time to time, engage in transactions with and perform services for us and our affiliates in the ordinary course of their business.
 
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Citi and J.P. Morgan acted as initial purchasers/placement agents in connection with the March 2007 initial private placement of units in Solar Capital LLC. In connection with that transaction, we agreed to reimburse the initial purchasers/placement agents for reasonable out-of-pocket expenses incurred by the initial purchasers/placement agents and to pay the fees and expenses of counsel to the initial purchasers/placement agents.
An affiliate of Citi purchased 1,100,000 units for its own account at the offering price for approximately $16.5 million in our initial private placement. In addition, an affiliate of J.P. Morgan purchased 1,100,000 units for its own account at the offering price for approximately $16.5 million in our initial private placement. As a result of the Solar Capital Merger an affiliate of Citi and an affiliate of J.P. Morgan will hold $[            ] and $[            ] of the Distribution Notes, respectively.
A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters. Other than the prospectus in electronic format, the information on any such underwriter’s website is not part of this prospectus. The representatives may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. The representatives will allocate shares to underwriters that may make Internet distributions on the same basis as other allocations. In addition, shares may be sold by the underwriters to securities dealers who resell shares to online brokerage account holders.
We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of those liabilities.
The principal business address of Citi is 388 Greenwich Street, New York, NY 10013. The principal business address of J.P. Morgan is 277 Park Avenue, New York, NY 10172.
 
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CONFLICTS OF INTEREST
On January 11, 2008, we entered into the Credit Facility with Citi, JPMorgan Chase Bank, N.A. and various other lenders and Citibank, N.A., as administrative agent for the Lenders. Citi acted as the sole lead bookrunner and the sole lead arranger for the Credit Facility. On September 23, 2009, we amended the Credit Facility, and on January     , 2010 we received commitments to amend and restate the Credit Facility.
We intend to use at least 5% of the net proceeds of this offering to repay indebtedness owed by us to certain affiliates of the underwriters who are lenders under our credit facility. See “Use of Proceeds.” Accordingly, this offering is being made in compliance with the requirements of NASD Conduct Rule 2720 of the Financial Industry Regulatory Authority. This rule provides that if at least 5% of the net proceeds from the securities, not including underwriting compensation, are used to reduce or retire the balance of a loan or credit facility extended by the underwriters or their affiliates, a “qualified independent underwriter” meeting certain standards must participate in the preparation of the registration statement and the prospectus and exercise the usual standards of due diligence with respect thereto.                      is assuming the responsibilities of acting as the qualified independent underwriter in connection with this offering. Affiliates of Citi and J.P. Morgan will not confirm sales of the Securities to any account over which they exercise discretional authority without the prior written approval of the customer.
 
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CUSTODIAN, TRANSFER AND DISTRIBUTION PAYING AGENT AND REGISTRAR
Our securities are held under a custody agreement by The Bank of New York Mellon Corporation. The address of the custodian is One Wall Street, New York, New York 10286. American Stock Transfer & Trust Company will act as our transfer agent, distribution paying agent and registrar. The principal business address of our transfer agent is 59 Maiden Lane, New York, New York 10038, telephone number: (800) 937-5449.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Since we will generally acquire and dispose of our investments in privately negotiated transactions, we will infrequently use brokers in the normal course of our business. Subject to policies established by our board of directors, our investment adviser will be primarily responsible for the execution of the publicly traded securities portion of our portfolio transactions and the allocation of brokerage commissions. Our investment adviser does not expect to execute transactions through any particular broker or dealer, but will seek to obtain the best net results for Solar Capital, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities of the firm and the firm’s risk and skill in positioning blocks of securities. While our investment adviser generally will seek reasonably competitive trade execution costs, Solar Capital will not necessarily pay the lowest spread or commission available. Subject to applicable legal requirements, our investment adviser may select a broker based partly upon brokerage or research services provided to the investment adviser and Solar Capital and any other clients. In return for such services, we may pay a higher commission than other brokers would charge if the investment adviser determines in good faith that such commission is reasonable in relation to the services provided.
LEGAL MATTERS
Certain legal matters in connection with the securities offered hereby will be passed upon for us by Sutherland Asbill & Brennan LLP, Washington, DC. Certain legal matters in connection with the offering will be passed upon for the underwriters by Simpson Thacher & Bartlett LLP, New York, New York.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP, our independent registered public accounting firm located at 345 Park Avenue, New York, New York 10154, has audited our financial statements as of December 31, 2008 and 2007 and for the year ended December 31, 2008 and the period March 13, 2007 (inception) through December 31, 2007, as set forth in their report. We have included our financial statements in this prospectus and elsewhere in the registration statement in reliance on such report, given on their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods ended September 30, 2009 and 2008, included herein, KPMG LLP has reported that it applied limited procedures in accordance with professional standards for a review of such information. However, its separate report included herein, states that it did not audit and it does not express an opinion on that interim financial information. Accordingly, the degree of reliance on its report on such information should be restricted in light of the limited nature of the review procedures applied. KPMG LLP is not subject to the liability provisions of Section 11 of the Securities Act for its report on the unaudited interim financial information because that report is not a “report” or a “part” of the registration statement prepared or certified by KPMG LLP within the meaning of Sections 7 and 11 of the Securities Act.
 
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AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form N-2, together with all amendments and related exhibits, under the Securities Act, with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information about us and our shares of common stock being offered by this prospectus.
Upon the completion of this offering, we will file with or submit to the SEC annual, quarterly and current periodic reports, proxy statements and other information meeting the informational requirements of the Exchange Act. You may inspect and copy these reports, proxy statements and other information, as well as the registration statement and related exhibits and schedules, at the Public Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information filed electronically by us with the SEC which are available on the SEC’s website at  http://www.sec.gov.  Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing to the SEC’s Public Reference Section, Washington, D.C. 20549. This information will also be available free of charge by contacting us at Solar Capital Ltd., 500 Park Avenue, 5 th  Floor, New York, NY 10022, by telephone at (212) 993-1670, or on our website at  http://www.solarcapltd.com .
 
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INDEX TO FINANCIAL STATEMENTS
 	 	 	
 	  	Page	
Report of Independent Registered Public Accounting Firm	  	F-2  	
Consolidated Statements of Assets and Liabilities as of December 31, 2008 and December 31, 2007	  	F-3  	
Consolidated Statements of Operations for the year ended December 31, 2008 and the period from March  13, 2007 (date of inception) through December 31, 2007	  	F-4  	
Consolidated Statements of Changes in Net Assets for the year ended December 31, 2008 and the period from March 13, 2007 (date of inception) through December 31, 2007	  	F-5  	
Consolidated Statements of Cash Flows for the year ended December 31, 2008 and the period from
March 13, 2007 (date of inception) through December 31, 2007	  	F-6  	
Consolidated Schedules of Investments as of December 31, 2008 and December 31, 2007	  	F-7  	
Notes to Consolidated Financial Statements	  	F-14	
Report of Independent Registered Public Accounting Firm	  	F-27	
Consolidated Statements of Assets and Liabilities as of September 30, 2009 (unaudited) and December  31, 2008	  	F-28	
Consolidated Statements of Operations for the three and nine months ended September 30, 2009 (unaudited) and September 30, 2008 (unaudited)	  	F-29	
Consolidated Statements of Changes in Net Assets for the nine months ended September 30, 2009 (unaudited) and September 30, 2008 (unaudited)	  	F-30	
Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 (unaudited) and September 30, 2008 (unaudited)	  	F-31	
Consolidated Schedules of Investments as of September 30, 2009 (unaudited) and December 31, 2008	  	F-32	
Notes to Consolidated Financial Statements (unaudited)	  	F-38	
Schedules of Investments in and Advances to Affiliates (unaudited)	  	F-52	
 
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Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Solar Capital LLC:
We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Solar Capital LLC as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in net assets and cash flows for the year ended December 31, 2008 and for the period March 13, 2007 (inception date) through December 31, 2007. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Solar Capital LLC as of December 31, 2008 and 2007, and the results of its operations, the changes in its net assets and cash flows for the year ended December 31, 2008 and for the period March 13, 2007 through December 31, 2007, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
February 13, 2009
 
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SOLAR CAPITAL LLC
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share amounts)

 	  	December 31,
2008	  	December 31,
2007	
Assets	  	 	 	  	 	 	
Investments at value:	  	 	 	  	 	 	
Companies more than 25% owned (cost: $10,030 and $10,000, respectively)	  	$	12,930	  	$	13,200	
Companies 5% to 25% owned (cost: $84,931 and $66,372, respectively)	  	 	89,429	  	 	68,752	
Companies less than 5% owned (cost: $1,161,773 and $1,094,543, respectively)	  	 	665,856	  	 	1,096,784	
 	  	 	 	  	 	 	
Total investments (cost: $1,256,734 and $1,170,915, respectively)	  	 	768,215	  	 	1,178,736	
Cash and cash equivalents	  	 	65,841	  	 	169,692	
Receivable for investments sold	  	 	—  	  	 	31,985	
Withholding tax receivable	  	 	16,505	  	 	—  	
Interest and dividends receivable	  	 	10,741	  	 	12,320	
Deferred credit facility costs	  	 	1,463	  	 	—  	
Fee revenue receivable	  	 	4,995	  	 	2,867	
Derivative assets	  	 	4,218	  	 	838	
Deferred offering costs	  	 	706	  	 	—  	
Foreign tax receivable	  	 	101	  	 	105	
Prepaid expenses and other receivables	  	 	241	  	 	2	
 	  	 	 	  	 	 	
Total Assets	  	 	873,026	  	 	1,396,545	

Liabilities	  	 	 	  	 	 	
Payable for investments purchased	  	 	—  	  	 	125,000	
Due to Solar Capital Partners LLC:	  	 	 	  	 	 	
Performance-based incentive fee payable	  	 	5,505	  	 	—  	
Investment advisory and management fee payable	  	 	5,294	  	 	6,247	
Deferred fee revenue	  	 	3,992	  	 	2,686	
Income taxes payable	  	 	1,735	  	 	508	
Derivative liabilities	  	 	1,366	  	 	2,073	
Due to Solar Capital Management LLC	  	 	1,085	  	 	567	
Other accrued expenses	  	 	1,376	  	 	963	
 	  	 	 	  	 	 	
Total liabilities	  	$	20,353	  	$	138,044	
 	  	 	 	  	 	 	
Net Assets	  	$	852,673	  	$	1,258,501	
 	  	 	 	  	 	 	
Number of shares outstanding	  	 	81,702,847	  	 	81,702,847	
Net Asset Value Per Share	  	$	10.44	  	$	15.40	
See notes to consolidated financial statements.
 
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SOLAR CAPITAL LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

 	  	Year ended
December 31, 2008	 	 	March 13, 2007
(inception) through
December 31, 2007	 	
INVESTMENT INCOME:	  	 	 	 	 	 	 	 	
Interest and dividends:	  	 	 	 	 	 	 	 	
Companies more than 25% owned	  	$	2,652	  	 	$	295	  	
Companies 5% to 25% owned	  	 	7,175	  	 	 	1,471	  	
Other interest and dividend income	  	 	124,132	  	 	 	76,689	  	
 	  	 	 	 	 	 	 	 	
Total interest and dividends	  	 	133,959	  	 	 	78,455	  	
 	  	 	 	 	 	 	 	 	
Total investment income	  	 	133,959	  	 	 	78,455	  	
 	  	 	 	 	 	 	 	 	
EXPENSES:	  	 	 	 	 	 	 	 	
Investment advisory and management fees	  	 	24,297	  	 	 	19,719	  	
Performance-based incentive fee	  	 	9,008	  	 	 	—  	  	
Administrative service fee	  	 	3,430	  	 	 	1,474	  	
Interest and other credit facility expenses	  	 	3,343	  	 	 	—  	  	
Other general and administrative expenses	  	 	4,300	  	 	 	3,579	  	
 	  	 	 	 	 	 	 	 	
Total operating expenses	  	 	44,378	  	 	 	24,772	  	
 	  	 	 	 	 	 	 	 	
Net investment income before income tax expense	  	 	89,581	  	 	 	53,683	  	
 	  	 	 	 	 	 	 	 	
Income tax expense on net investment income	  	 	2,182	  	 	 	689	  	
 	  	 	 	 	 	 	 	 	
Net investment income	  	 	87,399	  	 	 	52,994	  	
 	  	 	 	 	 	 	 	 	
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FORWARD CONTRACTS AND FOREIGN CURRENCIES:	  	 	 	 	 	 	 	 	
Net realized gain (loss):	  	 	 	 	 	 	 	 	
Investments:	  	 	 	 	 	 	 	 	
Companies more than 25% owned	  	 	—  	  	 	 	—  	  	
Companies 5% to 25% owned	  	 	—  	  	 	 	15	  	
Companies less than 5% owned	  	 	(16,878	) 	 	 	(3,572	) 	
 	  	 	 	 	 	 	 	 	
Total net realized gain (loss) on investments	  	 	(16,878	) 	 	 	(3,557	) 	
Forward contracts	  	 	13,086	  	 	 	(7,125	) 	
Foreign currency exchange	  	 	2,915	  	 	 	12	  	
 	  	 	 	 	 	 	 	 	
Net realized gain (loss) before income taxes	  	 	(877	) 	 	 	(10,670	) 	
 	  	 	 	 	 	 	 	 	
Income tax expense (benefit) on realized gain (loss)	  	 	60	  	 	 	(181	) 	
 	  	 	 	 	 	 	 	 	
Net realized gain (loss) after income taxes	  	 	(937	) 	 	 	(10,489	) 	
 	  	 	 	 	 	 	 	 	
Net change in unrealized gain (loss):	  	 	 	 	 	 	 	 	
Investments:	  	 	 	 	 	 	 	 	
Companies more than 25% owned	  	 	(300	) 	 	 	3,201	  	
Companies 5% to 25% owned	  	 	2,117	  	 	 	2,380	  	
Companies less than 5% owned	  	 	(498,157	) 	 	 	2,240	  	
 	  	 	 	 	 	 	 	 	
Total net unrealized gains (loss) on investments	  	 	(496,340	) 	 	 	7,821	  	
Forward contracts	  	 	4,087	  	 	 	(1,235	) 	
Foreign currency exchange	  	 	(37	) 	 	 	9	  	
 	  	 	 	 	 	 	 	 	
Net change in unrealized gain (loss)	  	 	(492,290	) 	 	 	6,595	  	
 	  	 	 	 	 	 	 	 	
Net realized and unrealized gain (loss) from investments, forward contracts and foreign currencies	  	 	(493,227	) 	 	 	(3,894	) 	
 	  	 	 	 	 	 	 	 	
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	  	$	(405,828	) 	 	$	49,100	  	
 	  	 	 	 	 	 	 	 	
Earnings (loss) per share (see note 9)	  	$	(4.96	) 	 	$	0.60	  	
See notes to consolidated financial statements.
 
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SOLAR CAPITAL LLC
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(in thousands)

 	  	Year ended
December 31, 2008	 	 	March 13, 2007
(inception) through
December 31, 2007	 	
Increase (Decrease) in net assets resulting from operations:	  	 	 	 	 	 	 	 	
Net investment income	  	$	87,399	  	 	$	52,994	  	
Net realized gain (loss) after income taxes	  	 	(937	) 	 	 	(10,489	) 	
Net change in unrealized gain (loss)	  	 	(492,290	) 	 	 	6,595	  	
 	  	 	 	 	 	 	 	 	
Net increase (decrease) in net assets resulting from operations	  	 	(405,828	) 	 	 	49,100	  	
 	  	 	 	 	 	 	 	 	
Capital share transactions:	  	 	 	 	 	 	 	 	
Net proceeds from shares sold	  	 	—  	  	 	 	1,209,401	  	
 	  	 	 	 	 	 	 	 	
Net increase in net assets resulting from capital share transactions	  	 	—  	  	 	 	1,209,401	  	
 	  	 	 	 	 	 	 	 	
Net increase (decrease) in net assets	  	 	(405,828	) 	 	 	1,258,501	  	
Net assets at beginning of period	  	 	1,258,501	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	
Net assets at end of period	  	$	852,673	  	 	$	1,258,501	  	

See notes to consolidated financial statements
 
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SOLAR CAPITAL LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 	  	Year ended
December 31, 2008	 	 	March 13, 2007
(inception) through
December 31, 2007	 	
Cash Flows from Operating Activities:	  	 	 	 	 	 	 	 	
Net increase (decrease) in net assets from operations	  	$	(405,828	) 	 	$	49,100	  	
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash used by operating activities:	  	 	 	 	 	 	 	 	
Net realized (gain) loss from investments	  	 	16,878	  	 	 	3,557	  	
Net realized (gain) loss from foreign currency exchange	  	 	(2,915	) 	 	 	—	  	
Net change in unrealized (gain) loss on investments	  	 	496,340	  	 	 	(7,821	) 	
Net change in (appreciation) depreciation of forward contracts	  	 	(4,087	) 	 	 	1,235	  	
(Increase) decrease in operating assets:	  	 	 	 	 	 	 	 	
Purchase of investment securities	  	 	(231,137	) 	 	 	(960,767	) 	
Proceeds from disposition of investment securities	  	 	128,440	  	 	 	150,750	  	
Receivable for investments sold	  	 	31,985	  	 	 	(31,985	) 	
Interest and dividends receivable	  	 	1,579	  	 	 	(12,320	) 	
Deferred credit facility costs	  	 	(1,463	) 	 	 	—	  	
Fee revenue receivable	  	 	(2,128	) 	 	 	(2,867	) 	
Deferred offering costs	  	 	(706	) 	 	 	—	  	
Withholding tax receivable	  	 	(16,505	) 	 	 	—	  	
Foreign tax receivable	  	 	4	  	 	 	(105	) 	
Prepaid expenses and other receivables	  	 	(239	) 	 	 	(2	) 	
Increase (decrease) in operating liabilities:	  	 	 	 	 	 	 	 	
Payable for investments purchased	  	 	(125,000	) 	 	 	125,000	  	
Investment advisory and management fee payable	  	 	(953	) 	 	 	6,247	  	
Performance-based incentive fee payable	  	 	5,505	  	 	 	—	  	
Income taxes payable	  	 	1,227	  	 	 	508	  	
Due to Solar Capital Management LLC	  	 	518	  	 	 	567	  	
Deferred fee revenue	  	 	1,306	  	 	 	2,686	  	
Other accrued expenses	  	 	413	  	 	 	963	  	
 	  	 	 	 	 	 	 	 	
Net Cash Used by Operating Activities	  	 	(106,766	) 	 	 	(675,254	) 	
 	  	 	 	 	 	 	 	 	
Cash Flows from Financing Activities:	  	 	 	 	 	 	 	 	
Proceeds from borrowings on credit facility	  	 	61,320	  	 	 	—	  	
Repayments of borrowings on credit facility (1)	  	 	(58,405	) 	 	 	—	  	
Net proceeds from shares sold	  	 	—	  	 	 	844,946	  	
 	  	 	 	 	 	 	 	 	
Net Cash Provided by Financing Activities	  	 	2,915	  	 	 	844,946	  	
 	  	 	 	 	 	 	 	 	
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	  	 	(103,851	) 	 	 	169,692	  	
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	  	 	169,692	  	 	 	—	  	
 	  	 	 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS AT END OF PERIOD	  	$	65,841	  	 	$	169,692	  	
 	  	 	 	 	 	 	 	 	
Non-cash financing activity:	  	 	 	 	 	 	 	 	
Investments exchanged for capital shares	  	$	—	  	 	$	364,455	  	
 	  	 	 	 	 	 	 	 	
Supplemental disclosure of cash flow information:	  	 	 	 	 	 	 	 	
Cash paid for interest	  	$	530	  	 	$	—	  	
Cash paid for income taxes	  	$	1,015	  	 	$	—	  	
 
(1)	 	The repayments of borrowings on the credit facility was the total amount outstanding after currency revaluations.	
See notes to consolidated financial statements.
 
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SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2008
(in thousands, except shares)

Description(1)	 	Industry	 	Interest(2)	 	Maturity	 	Par Amount/
Shares	 	Cost	 	Fair
Value	
Bank Debt/Senior Secured Loans-19.1%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advanstar Communications Inc.	 	Diversified Services	 	8.76	 	12/1/2015	 	$	15,000	 	$	15,000	 	$	4,500	
Asurion Corporation	 	Insurance	 	8.01	 	7/3/2015	 	 	55,000	 	 	54,928	 	 	33,756	
Classic Cruises Holdings(5)	 	Leisure, Motion Pictures, Entertainment	 	9.88	 	1/31/2015	 	 	26,000	 	 	25,775	 	 	17,420	
Emdeon Business Services LLC	 	Healthcare, Education, and Childcare	 	8.76	 	5/19/2014	 	 	15,000	 	 	15,138	 	 	9,900	
Greatwide Logistics Services, Inc.(13)	 	Logistics Distribution	 	10.75	 	6/19/2014	 	 	26,000	 	 	25,870	 	 	—  	
National Interest Security Corporation(11)	 	Aerospace & Defense	 	15.00	 	6/7/2013	 	 	25,182	 	 	24,588	 	 	24,679	
Nuveen Investments, Inc.	 	Finance	 	4.44	 	11/14/2014	 	 	14,888	 	 	14,848	 	 	5,881	
Questex Media Group	 	Diversified Services	 	8.71	 	11/4/2014	 	 	10,000	 	 	10,000	 	 	6,000	
Ram Energy Resources, Inc.	 	Oil & Gas	 	9.38	 	11/15/2011	 	 	14,173	 	 	14,173	 	 	10,630	
Texas Competitive Electric Holdings Company LLC	 	Utilities	 	5.37	 	10/10/2014	 	 	13,805	 	 	13,928	 	 	9,606	
Univar Inc.	 	Chemicals, Plastics, & Rubber	 	6.76	 	10/15/2014	 	 	21,780	 	 	21,462	 	 	13,285	
Wyle Laboratories	 	Aerospace & Defense	 	11.26	 	1/17/2015	 	 	15,000	 	 	14,763	 	 	11,250	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Bank Debt/Senior Secured Loans	 	 	 	 	 	 	 	$	251,828	 	$	250,473	 	$	146,907	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Subordinated Debt/Corporate Notes-69.3%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adams Outdoor Advertising	 	Broadcasting & Entertainment	 	13.50	 	8/14/2011	 	$	40,000	 	$	39,145	 	$	34,800	
Advanstar Communications Inc.	 	Diversified Services	 	10.76	 	12/1/2015	 	 	21,492	 	 	21,492	 	 	2,149	
Affinity Group, Inc.	 	Printing, Publishing, Broadcasting	 	10.88	 	10/15/2012	 	 	18,979	 	 	19,117	 	 	8,540	
AMC Entertainment Holdings, Inc.	 	Leisure, Motion Pictures, Entertainment	 	7.00	 	6/13/2012	 	 	22,941	 	 	22,589	 	 	11,370	
Booz Allen	 	Aerospace & Defense	 	13.00	 	7/31/2016	 	 	43,000	 	 	42,592	 	 	36,550	
Casema B.V.(3)	 	Telecommunications	 	12.31	 	11/17/2016	 	 	7,264	 	 	7,187	 	 	5,988	
Casema B.V.(3)	 	Telecommunications	 	12.64	 	11/17/2016	 	 	7,837	 	 	7,760	 	 	6,415	
Direct Buy Inc.	 	Home and Office Furnishing, Consumer Products	 	14.50	 	5/30/2013	 	 	35,424	 	 	34,880	 	 	26,568	
DS Waters	 	Beverage, Food, and Tobacco	 	13.00	 	4/15/2012	 	 	87,082	 	 	85,928	 	 	77,503	
Fleetpride Corporation	 	Cargo Transport	 	11.50	 	10/1/2014	 	 	43,000	 	 	43,170	 	 	37,625	
FreedomRoads	 	Automotive	 	12.00	 	5/30/2013	 	 	27,500	 	 	27,079	 	 	23,650	
Global Garden Products(3)(6)	 	Farming & Agriculture	 	15.28	 	10/31/2016	 	 	32,913	 	 	34,187	 	 	18,760	
Grakon, LLC	 	Cargo Transport	 	12.00	 	6/19/2013	 	 	20,100	 	 	19,803	 	 	12,362	
Iglo Birds Eye Group Limited(3)(4)	 	Beverage, Food, and Tobacco	 	11.04	 	12/8/2016	 	 	4,871	 	 	4,702	 	 	2,953	
Iglo Birds Eye Group Limited(3)(4)	 	Beverage, Food, and Tobacco	 	11.27	 	12/8/2016	 	 	10,486	 	 	14,223	 	 	6,357	
Jonathan Engineering Solutions Corp.	 	Diversified/Conglomerate Manufacturing	 	16.50	 	6/29/2014	 	 	3,888	 	 	3,713	 	 	2,722	
Jonathan Engineering Solutions Corp.	 	Diversified/Conglomerate Manufacturing	 	13.00	 	6/29/2014	 	 	10,480	 	 	10,448	 	 	7,336	
Learning Care Group No.2, Inc	 	Healthcare, Education, and Childcare	 	13.50	 	12/31/2015	 	 	30,395	 	 	29,962	 	 	24,316	
Magnolia River, LLC	 	Hotels, Motels, Inns & Gaming	 	14.00	 	4/28/2014	 	 	20,500	 	 	19,487	 	 	17,425	
National Interest Security Corporation(11)	 	Aerospace & Defense	 	15.00	 	1/20/2013	 	 	30,539	 	 	30,072	 	 	27,180	
Pacific Crane Maintenance Company, L.P.	 	Machinery	 	13.00	 	2/15/2014	 	 	9,000	 	 	8,862	 	 	6,300	
ProSieben Sat.1 Media AG(3)(8)	 	Broadcasting & Entertainment	 	12.37	 	3/6/2017	 	 	20,420	 	 	20,517	 	 	819	
Questex Media Group	 	Diversified Services	 	14.50	 	11/4/2014	 	 	36,798	 	 	36,296	 	 	23,919	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	10.49	 	12/12/2013	 	 	14,118	 	 	15,599	 	 	10,518	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	12.00	 	12/12/2013	 	 	4,779	 	 	5,283	 	 	3,685	
Tri-Star Electronics International, Inc.	 	Aerospace & Defense	 	13.25	 	8/2/2013	 	 	22,500	 	 	22,500	 	 	18,450	
Valley National Gases LLC	 	Industrial Gas Distribution	 	13.50	 	2/28/2015	 	 	27,000	 	 	26,612	 	 	22,950	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2008
(in thousands, except shares)

Description(1)	 	Industry	 	Interest(2)	 	Maturity	 	Par Amount/
Shares	 	 	Cost	 	Fair
Value	 	
Wastequip, Inc.	 	Containers	 	12.00	 	2/5/2015	 	 	15,431	  	 	 	15,431	 	 	3,858	  	
Weetabix Group(3)(7)	 	Beverage, Food, and Tobacco	 	14.38	 	9/14/2016	 	 	10,835	  	 	 	14,898	 	 	6,230	  	
Weetabix Group(3)(7)	 	Beverage, Food, and Tobacco	 	13.52	 	5/7/2017	 	 	23,234	  	 	 	31,771	 	 	13,011	  	
Wire Rope Corporation (nka WireCo World Group)	 	Diversified/Conglomerate Manufacturing	 	11.00	 	2/8/2015	 	 	35,000	  	 	 	35,811	 	 	31,640	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Subordinated Debt/Corporate Notes	 	 	 	 	 	 	 	$	737,806	  	 	$	751,116	 	$	531,949	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Preferred Equity- .8%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Reader’s Digest Association, Inc.(13)	 	Printing, Publishing, Broadcasting	 	13.50	 	3/2/2019	 	$	61,450	  	 	$	61,101	 	$	6,145	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Preferred Equity	 	 	 	 	 	 	 	$	61,450	  	 	$	61,101	 	$	6,145	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Common Equity / Partnership Interests / Warrants- 9.9%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advanstar Communications Inc.	 	Media	 	 	 	 	 	 	3,400,000	  	 	 	3,400	 	 	68	  	
Ark Real Estate Partners LP(9)(11)	 	Real Estate	 	 	 	 	 	 	28,006,121	  	 	 	28,006	 	 	24,619	  	
Alternative Asset Management Acquisition Corp.	 	Finance	 	 	 	 	 	 	712,000	  	 	 	712	 	 	50	  	
Alternative Asset Management Acquisition Corp.	 	Finance	 	 	 	 	 	 	286,400	  	 	 	2,681	 	 	2,646	  	
Alternative Asset Management Acquisition Corp.	 	Finance	 	 	 	 	 	 	1,293,750	  	 	 	3	 	 	3	  	
505 Capital Partners GP (CIT JV)(10)	 	Finance	 	 	 	 	 	 	30,000	  	 	 	30	 	 	30	  	
505 Capital Partners LP (CIT JV)(10)(14)	 	Finance	 	 	 	 	 	 	—  	  	 	 	—  	 	 	—  	  	
Direct Buy Inc.	 	Home and Office Furnishing, Consumer Products	 	 	 	 	 	 	5,000,000	  	 	 	5,000	 	 	2,500	  	
Grakon, LLC	 	Cargo Transport	 	 	 	 	 	 	1,714,286	  	 	 	1,714	 	 	343	  	
Dufry	 	Retail Stores	 	 	 	 	 	 	39,056	  	 	 	2,842	 	 	1,013	  	
National Interest Security Corporation(11)	 	Aerospace & Defense	 	 	 	 	 	 	2,265,023	  	 	 	2,265	 	 	12,951	  	
National Specialty Alloys, LLC(10)	 	Industrial	 	 	 	 	 	 	1,000,000	  	 	 	10,000	 	 	12,900	  	
Nuveen Investments, Inc.	 	Finance	 	 	 	 	 	 	3,000,000	  	 	 	30,000	 	 	4,500	  	
NXP Semiconductors Netherlands B.V.(3)	 	Technology	 	 	 	 	 	 	944,628	  	 	 	31,057	 	 	4,936	  	
Pacific Crane Maintenance Company, L.P.	 	Machinery	 	 	 	 	 	 	10,000	  	 	 	1,000	 	 	359	  	
The Reader’s Digest Association, Inc	 	Printing, Publishing, Broadcasting	 	 	 	 	 	 	16,606,060	  	 	 	16,606	 	 	—  	  	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	 	 	 	 	 	4,285,714	  	 	 	3,301	 	 	1,494	  	
Sandridge Energy, Inc.(12)	 	Oil & Gas	 	 	 	 	 	 	740,556	  	 	 	13,891	 	 	4,554	  	
Station Casino, Inc.	 	Hotels, Motels, Inns & Gaming	 	 	 	 	 	 	40,000,000	  	 	 	40,486	 	 	2,000	  	
Wyle Laboratories	 	Aerospace & Defense	 	 	 	 	 	 	123,140	  	 	 	1,050	 	 	1,050	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Common Equity/Partnerships Interests / Warrants	 	 	 	 	 	 	 	 	 	 	 	$	194,044	 	$	76,016	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Put/Call Options Purchased or Written- 0.9%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sandridge Energy, Inc.(12)	 	Oil & Gas	 	 	 	 	 	 	(285,000	) 	 	$	—	 	$	(3	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sandridge Energy, Inc.(12)	 	Oil & Gas	 	 	 	 	 	 	285,000	  	 	 	—	 	 	7,201	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Put/Call Options Purchased or Written	 	 	 	 	 	 	 	 	 	 	 	$	—	 	$	7,198	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments	 	 	 	 	 	 	 	 	 	 	 	$	1,256,734	 	$	768,215	  	

(1)	 	We generally acquire our investments in private transactions exempt from registration under the Securities Act of 1933, as amended, or the Securities Act. Our investments are therefore generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.	
(2)	 	A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to LIBOR or EURIBOR, and which reset daily, quarterly or semi-annually. For each debt investment we have provided the current interest rate in effect as of December 31, 2008.	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
(3)	 	The following entities are domiciled outside the United States: Casema B.V. and NXP Semiconductors Netherlands B.V. in The Netherlands; Iglo Birds Eye Group Limited, Global Garden Products and Weetabix Group in the United Kingdom; ProSieben Sat.1 Media AG in Germany; and Seven Media Group Pty Limited in Australia. All other investments are domiciled in the United States.	
(4)	 	Solar Capital LLC’s investments in Iglo Birds Eye Group Limited are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(5)	 	Solar Capital LLC’s investments in Classic Cruises Holdings are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(6)	 	Solar Capital LLC’s investments in Global Garden Products are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(7)	 	Solar Capital LLC’s investments in Weetabix Group are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(8)	 	Solar Capital LLC’s investments in ProSieben Sat. 1 Media AG are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(9)	 	Solar Capital LLC is committed to fund capital of $48,845 of which $28,006 has already been funded.	
(10)	 	Denotes a Control Investment. “Control Investments” are defined in the Investment Company Act of 1940, or the 1940 Act, as investments in those companies that the Company is deemed to “Control.” Generally, under the 1940 Act, the Company is deemed to “Control” a company in which it has invested if it owns 25% or more of the voting securities of such company or has greater than 50% representation on its board.	
(11)	 	Denotes an Affiliate Investment. “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of the Company, as defined in the 1940 Act, which are not “Control Investments.” The Company is deemed to be an “Affiliate” of a company in which it has invested if it owns 5% or more but less than 25% of the voting securities of such company.	
(12)	 	In the third quarter of 2008 Solar Capital LLC entered into a costless collar transaction creating a partial economic hedge of the Sandridge Energy, Inc. equity investment.	
(13)	 	Investment is on non-accrual status.	
(14)	 	Investment had capital returned and has an unfunded commitment of $75 million at December 31, 2008.	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2008

Instrument Type	  	Percentage at
December 31,
2008	 	
Bank Debt / Senior Secured Loans	  	19.1	% 	
Subordinated Debt / Corporate Notes	  	69.3	% 	
Preferred Equity	  	.8	% 	
Common Equity / Partnership Interests / Warrants	  	9.9	% 	
Put/Call Options Purchased or Written	  	.9	% 	
 	  	 	 	
Total Investments	  	100.0	% 	
 	  	 	 	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2007
(in thousands, except shares)

Description(1)	 	Industry	 	Interest(2)	 	Maturity	 	Par Amount /
Shares	 	Cost	 	Fair
Value	
Bank Debt/Senior Secured Loans- 25.7%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advanstar Communications Inc.	 	Diversified Services	 	9.84	 	12/01/2015	 	$	15,000	 	$	15,000	 	$	13,875	
Asurion Corporation	 	Insurance	 	11.59	 	7/03/2015	 	 	55,000	 	 	54,913	 	 	53,488	
Emdeon Business Services LLC	 	Healthcare, Education, and Childcare	 	9.83	 	5/19/2014	 	 	15,000	 	 	15,188	 	 	14,475	
Greatwide Logistics Services, Inc.	 	Logistics Distribution	 	11.33	 	6/19/2014	 	 	26,000	 	 	25,870	 	 	19,890	
Hudson Group, Inc.	 	Retail Stores	 	13.00	 	2/15/2015	 	 	95,000	 	 	95,000	 	 	95,000	
National Interest Security Corporation(10)	 	Aerospace & Defense	 	12.00	 	6/07/2013	 	 	10,000	 	 	9,800	 	 	10,000	
Nuveen Investments, Inc.	 	Finance	 	7.85	 	11/14/2014	 	 	19,000	 	 	18,835	 	 	18,829	
Questex Media Group	 	Diversified Services	 	11.63	 	11/04/2014	 	 	10,000	 	 	10,000	 	 	9,850	
Ram Energy Resources, Inc.	 	Oil & Gas	 	12.75	 	11/15/2011	 	 	25,000	 	 	25,000	 	 	25,000	
Texas Competitive Electric Holdings Company LLC	 	Utilities	 	8.40	 	10/10/2014	 	 	17,955	 	 	17,910	 	 	17,628	
Univar Inc.	 	Chemicals, Plastics, & Rubber	 	7.89	 	10/15/2014	 	 	25,000	 	 	24,563	 	 	24,594	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Bank Debt/Senior Secured Loans	 	 	 	 	 	 	 	$	312,955	 	$	312,077	 	$	302,628	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Subordinated Debt/Corporate Notes- 52.4%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advanstar Communications Inc.	 	Diversified Services	 	11.84	 	12/01/2015	 	$	19,325	 	$	19,325	 	$	18,842	
Affinity Group, Inc.	 	Printing, Publishing, Broadcasting	 	10.87	 	10/15/2012	 	 	18,000	 	 	18,180	 	 	17,244	
AMC Entertainment Holdings, Inc.	 	Leisure, Motion Pictures, Entertainment	 	9.99	 	6/13/2012	 	 	21,103	 	 	20,603	 	 	19,832	
Casema B.V.(3)	 	Telecommunications	 	14.15	 	11/17/2016	 	 	7,269	 	 	6,829	 	 	7,210	
Casema B.V.(3)	 	Telecommunications	 	13.69	 	11/17/2016	 	 	7,842	 	 	7,366	 	 	7,732	
Direct Buy Inc.	 	Home and Office Furnishing, Consumer Products	 	14.50	 	5/30/2013	 	 	35,000	 	 	34,306	 	 	35,000	
DS Waters	 	Beverage, Food, and Tobacco	 	12.50	 	4/15/2012	 	 	76,771	 	 	75,292	 	 	76,771	
Fleetpride Corporation	 	Cargo Transport	 	11.50	 	10/01/2014	 	 	43,000	 	 	43,215	 	 	43,430	
FreedomRoads	 	Automotive	 	12.56	 	5/30/2013	 	 	27,500	 	 	26,887	 	 	27,500	
Global Garden Products(3)(6)	 	Farming & Agriculture	 	16.95	 	10/31/2016	 	 	29,176	 	 	28,687	 	 	29,176	
Grakon, LLC	 	Cargo Transport	 	12.00	 	6/19/2013	 	 	20,000	 	 	19,611	 	 	20,000	
Greatwide Logistics Services, Inc.	 	Logistics/Distribution	 	13.50	 	12/19/2014	 	 	16,057	 	 	15,988	 	 	10,036	
Iglo Birds Eye Group Limited (3)(4)	 	Beverage, Food, and Tobacco	 	12.77	 	12/08/2016	 	 	4,911	 	 	4,491	 	 	4,827	
Iglo Birds Eye Group Limited (3)(4)	 	Beverage, Food, and Tobacco	 	13.95	 	12/08/2016	 	 	13,912	 	 	13,674	 	 	13,884	
Jonathan Engineering Solutions Corp	 	Diversified/Conglomerate Manufacturing	 	13.00	 	6/29/2014	 	 	10,218	 	 	10,026	 	 	10,218	
Jonathan Engineering Solutions Corp	 	Diversified/Conglomerate Manufacturing	 	16.50	 	6/29/2014	 	 	3,299	 	 	3,238	 	 	3,299	
Magnolia River, LLC	 	Hotels, Motels, Inns & Gaming	 	14.00	 	4/28/2014	 	 	20,500	 	 	19,298	 	 	20,500	
National Interest Security Corporation(10)	 	Aerospace & Defense	 	14.50	 	1/20/2013	 	 	30,000	 	 	29,406	 	 	30,000	
Pacific Crane Maintenance Company, L.P.	 	Machinery	 	13.00	 	2/15/2014	 	 	9,000	 	 	8,827	 	 	9,000	
ProSieben Sat.1 Media AG (3)(5)	 	Broadcasting & Entertainment	 	11.68	 	3/06/2017	 	 	22,865	 	 	21,739	 	 	19,469	
Questex Media Group	 	Diversified Services	 	14.50	 	11/04/2014	 	 	31,838	 	 	31,272	 	 	31,838	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	10.49	 	12/12/2013	 	 	17,722	 	 	15,599	 	 	17,722	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	12.00	 	12/12/2013	 	 	4,782	 	 	4,209	 	 	4,782	
Tri-Star Electronics International, Inc.	 	Aerospace & Defense	 	13.50	 	8/02/2013	 	 	22,500	 	 	22,500	 	 	22,500	
Valley National Gases LLC	 	Industrial Gas Distribution	 	13.50	 	2/28/2015	 	 	27,000	 	 	26,531	 	 	27,000	
Wastequip, Inc.	 	Containers	 	12.00	 	2/05/2015	 	$	15,123	 	$	15,123	 	$	14,797	
Weetabix Group (7)	 	Beverage, Food, and Tobacco	 	14.32	 	9/14/2016	 	 	13,040	 	 	13,036	 	 	12,388	
Weetabix Group (7)	 	Beverage, Food, and Tobacco	 	15.20	 	5/7/2017	 	 	27,740	 	 	27,895	 	 	27,740	
Wire Rope Corporation (nka WireCo World Group)	 	Diversified/Conglomerate Manufacturing	 	11.00	 	2/08/2015	 	 	35,000	 	 	36,050	 	 	35,000	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Subordinated Debt / Corporate Notes	 	 	 	 	 	 	 	$	630,491	 	$	619,203	 	$	617,738	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Preferred Equity- 4.7%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Reader’s Digest Association, Inc.	 	Printing, Publishing, Broadcasting	 	13.50	 	3/2/2019	 	$	55,299	 	$	55,299	 	$	55,299	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Preferred Equity	 	 	 	 	 	 	 	$	55,299	 	$	55,299	 	$	55,299	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2007
(in thousands, except shares)

Description(1)	 	Industry	 	Interest(2)	 	Maturity	 	Par Amount /
Shares	 	Cost	 	Fair
Value	
Common Equity / Partnership Interests / Warrants – 17.2%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advanstar Communications Inc.	 	Media	 	 	 	 	 	3,400	 	$	3,400	 	$	3,592	
Ark Real Estate Partners LP (8)(10)	 	Real Estate	 	 	 	 	 	25,401	 	 	25,401	 	 	26,987	
Alternative Asset Management Acquisition Corp.	 	Finance	 	 	 	 	 	712	 	 	712	 	 	926	
Alternative Asset Management Acquisition Corp.	 	Finance	 	 	 	 	 	1,294	 	 	3	 	 	3	
Direct Buy Inc.	 	Home and Office Furnishing, Consumer Products	 	 	 	 	 	5,000	 	 	5,000	 	 	5,000	
Grakon, LLC	 	Cargo Transport	 	 	 	 	 	1,714	 	 	1,714	 	 	1,714	
National Interest Security Corporation(10)	 	Aerospace & Defense	 	 	 	 	 	1,765	 	 	1,765	 	 	1,765	
National Specialty Alloys, LLC(9)	 	Industrial	 	 	 	 	 	1,000	 	 	10,000	 	 	13,200	
Nuveen Investments, Inc.	 	Finance	 	 	 	 	 	300	 	 	30,000	 	 	30,000	
NXP Semiconductors Netherlands B.V.(3)	 	Technology	 	 	 	 	 	945	 	 	31,057	 	 	31,948	
Pacific Crane Maintenance Company, L.P.	 	Machinery	 	 	 	 	 	1,000	 	 	1,000	 	 	1,155	
The Reader’s Digest Association, Inc	 	Printing, Publishing, Broadcasting	 	 	 	 	 	1,661	 	 	16,606	 	 	16,606	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	 	 	 	 	4,286	 	 	3,301	 	 	4,270	
Sandridge Energy, Inc.	 	Oil & Gas	 	 	 	 	 	741	 	 	13,891	 	 	25,419	
Station Casino, Inc.	 	Hotels, Motels, Inns & Gaming	 	 	 	 	 	40,486	 	 	40,486	 	 	40,486	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Common Equity / Partnerships Interests / Warrants	 	 	 	 	 	 	 	 	 	$	184,336	 	$	203,071	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments	 	 	 	 	 	 	 	 	 	$	1,170,915	 	$	1,178,736	

(1)	 	We generally acquire our investments in private transactions exempt from registration under the Securities Act. Our investments are therefore generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.	
(2)	 	A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to LIBOR or EURIBOR, and which reset daily, quarterly or semi-annually. For each debt investment we have provided the current interest rate in effect as of December 31, 2007.	
(3)	 	The following entities are domiciled outside the United States: Casema B.V. and NXP Semiconductors Netherlands B.V. in The Netherlands; Iglo Birds Eye Group Limited, Global Garden Products and Weetabix Group in the United Kingdom; ProSieben Sat.1 Media AG in Germany; and Seven Media Group Pty Limited in Australia. All other investments are domiciled in the United States.	
(4)	 	Solar Capital LLC’s investments in Iglo Birds Eye Group Limited are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(5)	 	Solar Capital LLC’s investments in ProSieben Sat. 1 Media AG are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(6)	 	Solar Capital LLC’s investments in Global Garden Products are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(7)	 	Solar Capital LLC’s investments in Weetabix Group are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(8)	 	Solar Capital LLC is committed to fund capital of $48,845 of which $25,401 has already been funded.	
(9)	 	Denotes a Control Investment. “Control Investments” are defined in the 1940 Act as investments in those companies that the Company is deemed to “Control.” Generally, under the 1940 Act, the Company is deemed to “Control” a company in which it has invested if it owns 25% or more of the voting securities of such company or has greater than 50% representation on its board.	
(10)	 	Denotes an Affiliate Investment. “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of the Company, as defined in the 1940 Act, which are not “Control Investments.” The Company is deemed to be an “Affiliate” of a company in which it has invested if it owns 5% or more but less than 25% of the voting securities of such company.	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2007

Instrument Type	  	Percentage at
December 31,
2007	 	
Bank Debt / Senior Secured Loans	  	25.7	% 	
Subordinated Debt / Corporate Notes	  	52.4	% 	
Preferred Equity	  	4.7	% 	
Common Equity / Partnership Interests / Warrants	  	17.2	% 	
 	  	 	 	
Total Investments	  	100.0	% 	
 	  	 	 	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(in thousands, except shares)
 
Note 1. Organization
Solar Capital LLC (“Solar Capital” or the “Company”), a Maryland limited liability company organized on February 12, 2007, is a closed-end, management investment company. The Company commenced operations on March 13, 2007 with initial capital of $1.2 billion of which 47.04% was funded by affiliated parties.
The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. The Company invests primarily in middle-market companies in the form of mezzanine and senior secured loans, each of which may include an equity component, and, to a lesser extent, by making direct equity investments in such companies.
Note 2. Significant Accounting Policies
Basis of Presentation—The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”), and include the accounts of the Company and its wholly-owned subsidiaries, Solar Capital Luxembourg I S.a.r.l., which was incorporated under the laws of the Grand Duchy of Luxembourg on April 26, 2007, and Solar Funding I LLC, which was formed on March 12, 2008 to facilitate the Company’s $200 million warehouse credit facility (see Note 6). The consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition for the periods presented. All significant intercompany balances and transactions have been eliminated.
Certain prior period amounts have been reclassified to conform to current period presentation.
Investments—The Company applies fair value accounting in accordance with the principles of the Statement of Financial Accounting Standards No. 157,  Fair Value Measurements.  Security transactions are accounted for on the trade date; investments for which market quotations are readily available are valued at such market quotations; debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value as determined in good faith by or under the direction of the Company’s board of directors (the “Board”). Because the Company expects that there will not be a readily available market value for many of the investments in the Company’s portfolio, the Company expects to value such investments at fair value as determined in good faith by or under the direction of the Board using a documented valuation policy and a consistently applied valuation process. Subordinated debt, senior secured debt and other debt securities with maturities greater than 60 days are valued by an independent pricing service or at the mean between the bid and ask prices from at least two brokers or dealers (if available, otherwise by a principal market maker or a primary market dealer). With respect to certain private equity securities, each investment will be valued by independent third party valuation firms using methods that may, among other measures and as applicable, include comparisons of financial ratios of the portfolio companies that issued such private equity securities to peer companies that are public. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will consider the pricing indicated by the external event to corroborate its private equity valuation. 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 differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
With respect to investments for which market quotations are not readily available or for which the Company has not received indicative prices from pricing services or brokers or dealers, the Board undertakes a multi-step valuation process each quarter, as described below:
 
 	1)	The quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for the portfolio investments;	
 
 	2)	Preliminary valuation conclusions are then documented and discussed with senior management;	
 
 	3)	Third-party valuation firms engaged by, or on behalf of, the Board conduct independent appraisals and review management’s preliminary valuations and make their own independent assessment; and	
 
 	4)	The Board discusses valuations and determines the fair value of each investment in the portfolio in good faith based on the input of the Company’s investment adviser and the respective independent valuation firms.	
The types of factors that the Company may take into account in fair value pricing its investments include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors.
Investments of sufficient credit quality purchased within 60 days of maturity are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value.
Cash and Cash Equivalents—Cash and cash equivalents include investments in money market accounts or investments with maturities of three months or less.
Revenue Recognition—The Company’s revenue recognition policies are as follows:
Sales: Gains or losses on the sale of investments are calculated by using the specific identification method.
Interest Income: Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Origination, closing and/or commitment fees associated with investments in portfolio companies are accreted into interest income over the respective terms of the applicable loans. Upon the prepayment of a loan or debt security, any prepayment penalties and unamortized loan origination, closing and commitment fees are recorded as part of interest income. The Company has loans in its portfolio that contain a payment-in-kind (“PIK”) provision. PIK interest is accrued at the contractual rates and added to the loan principal on the reset dates.
Non-accrual: Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.
Income Taxes—The Company follows the guidance in Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes  (“FIN48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
Company’s financial statements to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions with respect to tax at the partnership level not deemed to meet the “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. The Company has concluded that the application of FIN 48 had no material impact on the operations of the Company, for the periods ended December 31, 2008 and December 31, 2007. However, the conclusions regarding FIN 48 will be subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. The Company recognizes Income tax expense on net investment income and Income tax expense on net realized gain (loss).
Foreign Currency Translation—The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. The Company’s investments in foreign securities may involve certain risks such as foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company.
Derivative Instruments and Hedging Activity—In accordance with the Statement of Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities , the Company recognizes any derivatives as either assets or liabilities at their fair value on its Consolidated Statements of Assets and Liabilities. At this time, the Company does not document formal hedge relationships because the hedged items are recorded at fair value with realized and unrealized gains and losses recognized in current earnings. Realized and unrealized gains and losses from derivatives are also recorded in current earnings. Realized gains or losses from derivatives are recognized when contracts are settled.
The Company primarily uses foreign exchange forward contracts in order to economically hedge its foreign currency risk. Foreign exchange forward contracts are marked-to-market by recognizing the difference between the contract exchange rate and the current market exchange rate. The fair values of foreign exchange forward contracts are recognized in either derivative assets or derivative liabilities in the Company’s Consolidated Statements of Assets and Liabilities.
The Company may also borrow in foreign currencies on its multicurrency credit lines to reduce foreign currency exposure. The changes in market values of assets and liabilities denominated in the same foreign currency offset in earnings providing a “natural” foreign currency hedge.
Use of Estimates in the Preparation of Financial Statements—The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
Note 3. Investments
Investments consisted of the following as of December 31, 2008 and December 31, 2007:

 	  	December 31, 2008	  	December 31, 2007	
 	  	Cost	  	Fair Value	  	Cost	  	Fair Value	
Bank Debt / Senior Secured Loans	  	$	250,473	  	$	146,907	  	$	312,077	  	$	302,628	
Subordinated Debt / Corporate Notes	  	 	751,116	  	 	531,949	  	 	619,203	  	 	617,738	
Preferred Equity	  	 	61,101	  	 	6,145	  	 	55,299	  	 	55,299	
Common Equity / Partnership Interests / Warrants	  	 	194,044	  	 	76,016	  	 	184,336	  	 	203,071	
Put/Call Options Purchased or Written(1)	  	 	—  	  	 	7,198	  	 	—  	  	 	—  	
 	  	 	 	  	 	 	  	 	 	  	 	 	
Total	  	$	1,256,734	  	$	768,215	  	$	1,170,915	  	$	1,178,736	

(1)	In the third quarter of 2008 Solar Capital entered into a costless collar transaction creating a partial economic hedge of the Sandridge Energy, Inc. equity investment.	
On October 20, 2008, Greatwide Logistics Services Inc. (“Greatwide”) filed for Chapter 11 bankruptcy. By the end of 2008, as a result of the bankruptcy proceedings, the Company’s investment in Greatwide’s subordinated debt was deemed worthless and resulted in a realized loss of $16,529. In January 2009, the federal bankruptcy court approved the sale of Greatwide at a price that also rendered the Company’s investment in Greatwide’s senior secured debt worthless. As a result of these subsequent events, the fair value of this senior secured debt was marked to zero on December 31, 2008.
Note 4. Agreements
Solar Capital has an Investment Advisory and Management Agreement with Solar Capital Partners LLC (the “Investment Adviser”), under which the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, Solar Capital. For providing these services, the Investment Adviser receives a fee from Solar Capital, consisting of two components—a base management fee and an incentive fee. The base management fee is determined by taking the average value of Solar Capital’s gross assets at the end of the two most recently completed calendar quarters calculated at an annual rate of 2.00%. The incentive fee has two parts, as follows: one part is calculated and payable quarterly in arrears based on Solar Capital’s pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, 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 we receive from portfolio companies) accrued during the calendar quarter, minus Solar Capital’s operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement with Solar Capital Management, LLC, 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 does not include any realized capital gains computed net of all realized capital losses and unrealized capital depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of Solar Capital’s net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of 1.75% per quarter (7% annualized). Our net investment income used to calculate this part of the incentive fee is also included in the amount of our gross assets used to calculate the 2% base management fee. Solar Capital pays the Investment Adviser an incentive fee with respect to Solar Capital’s pre-incentive fee net investment income in each calendar quarter as follows: (1) no incentive fee in any calendar quarter in which Solar Capital’s pre-incentive fee net investment income does not exceed the hurdle rate; (2)
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
100% of Solar Capital’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter; and (3) 20% of the amount of Solar Capital’s pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter. These calculations are appropriately pro rated for any period of less than three months and adjusted for any share issuances or repurchases during the relevant quarter. The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory and Management Agreement, as of the termination date), commencing on February 12, 2007, and will equal 20% of Solar Capital’s cumulative realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the Investment Adviser. Investment advisory and management fees for the year ended December 31, 2008 and the period from March 13, 2007 (inception) through December 31, 2007 were $24,297 and $19,719, respectively. Performance-based incentive fees for the year ended December 31, 2008 and the period from March 13, 2007 (inception) through December 31, 2007 were $9,008 and $0, respectively.
Solar Capital has also entered into an Administration Agreement with Solar Capital Management, LLC (the “Administrator”) under which the Administrator provides administrative services for Solar Capital. For providing these services, facilities and personnel, Solar Capital reimburses the Administrator for Solar Capital’s allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including rent. The Administrator will also provide, on Solar Capital’s behalf, managerial assistance to those portfolio companies to which Solar Capital is required to provide such assistance.
Administrative service fees for the year ended December 31, 2008 and the period from March 13, 2007 (inception) through December 31, 2007 were $3,430 and $1,474, respectively.
Note 5. Hedging Activity
As of December 31, 2008 and 2007 Solar Capital was a party to three open forward foreign currency contracts. The Australian dollar, Euro and British pound contracts terminate on January 15, 2009 and March 19, 2008 for open forward foreign currency contracts as of December 31, 2008 and 2007, respectively. The contract settlement details are as follows:

 	 	 	 	December 31, 2008	 	 	December 31, 2007	 	
Purchase:	 	Counterparty	 	Local
Currency	 	USD
Value	 	Unrealized
appreciation
(depreciation)	 	 	Local
Currency	 	USD
Value	 	Unrealized
appreciation
(depreciation)	 	
USD / EURO	 	Citibank N.A., NY	 	22,765	 	$	33,335	 	$	1,668	  	 	72,940	 	$	105,084	 	$	(1,365	) 	
USD / EURO	 	Citibank N.A., NY	 	25,000	 	 	33,410	 	 	(1,366	) 	 	 	 	 	 	 	 	 	 	
USD / AUD	 	Citibank N.A., NY	 	30,507	 	 	20,995	 	 	80	  	 	31,733	 	 	26,984	 	 	(708	) 	
USD / GBP	 	Citibank N.A., NY	 	31,830	 	 	48,957	 	 	2,470	  	 	28,978	 	 	58,177	 	 	838	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	 	 	 	 	$	136,697	 	$	2,852	  	 	 	 	$	190,245	 	$	(1,235	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
On August 13, 2008, the Company borrowed €25 million under its multicurrency revolver and repaid the entire balance on October 14, 2008. The strengthening of the dollar in relation to the Euro during the period the loan was outstanding resulted in a $2,915 realized gain. The Company had no outstanding borrowings in any currency at December 31, 2008 and 2007.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
Note 6. Borrowing Facilities
On January 11, 2008, Solar Capital entered into a $200 million Senior Secured Revolving Credit Facility (the “Credit Facility”) with Citigroup Global Markets, Inc. (“Citi”), JPMorgan Chase Bank, N.A., and various other lenders (collectively, the “Lenders”), and Citibank, N.A. (“Citibank”) as administrative agent for the Lenders. Citi acted as the sole lead bookrunner and the sole lead arranger for the Credit Facility. Under the terms of the Credit Facility, the Lenders agreed to extend credit to Solar Capital (the “Borrower”) in an aggregate principal or face amount not exceeding $200 million at any one time outstanding. The Credit Facility also allows the Borrower and the Lenders to provide for a commitment increase to an amount not greater than $600 million. The Credit Facility is a three-year revolving facility (with a stated maturity date of January 11, 2011) and is secured by substantially all of the assets of the Borrower’s investment portfolio. The loans constituting each Alternate Base Rate (“ABR”) borrowing shall bear interest at a rate per annum equal to the ABR plus for loans outstanding at anytime that the Borrower has elected to apply the Option I terms (based on certain portfolio limitations, advance rates and pricing terms applicable to Option I terms) 0.00% per annum in the case of ABR loans and 1.375% per annum in the case of Eurocurrency loans and for loans outstanding at anytime that the Borrower has elected to apply the Option II terms (based on certain portfolio limitations, advance rates and pricing terms applicable to Option II terms) 0.00% per annum in the case of ABR loans and 2.00% per annum in the case of Eurocurrency loans. Swingline loans denominated in foreign currencies shall bear interest at a rate per annum agreed between the Borrower and the swingline lender at the respective time the swingline loans are made. The Credit Facility contains affirmative and negative covenants, including: (a) periodic financial reporting requirements; (b) notices of material events; (c) the Borrower will not, nor will it permit any of its subsidiaries to, create, incur, assume or permit to exist any indebtedness, except (i) indebtedness created under the Credit Facility; (ii) secured longer-term indebtedness and unsecured longer-term indebtedness in an aggregate amount required to comply with the provisions of the Credit Facility; (iii) other permitted indebtedness, (iv) indebtedness of financing subsidiaries, (v) repurchase obligations arising in the normal course of business with respect to U.S. Government Securities, (vi) obligations payable to clearing agencies, brokers or dealers in connection with the purchase or sale of securities in the ordinary course of business, (vii) secured shorter-term indebtedness and unsecured shorter-term indebtedness in an aggregate amount not exceeding 5% of Shareholders’ Equity and (viii) obligations (including guarantees) in respect of standard securitization undertakings; (d) maintaining minimum shareholders’ equity at the last day of any fiscal quarter to be less than the greater of (A) 40% of the total assets of the Borrower and its subsidiaries as at the last day of such fiscal quarter and (B) $700 million plus 25% of the net proceeds of the sale of equity interests by the Borrower and its subsidiaries; (e) asset coverage ratio will not be less than 2.00 to 1 at any time; (f) maintaining minimum liquidity requirements; (g) the Borrower will not, and will not permit any of its subsidiaries to, enter into any material transactions with any of its affiliates or to engage in any material extent in any business other than in accordance with its investment policies and (h) no further negative pledge. The Credit Facility will be used to supplement Solar Capital’s equity capital to make additional investments and for other general corporate purposes.
On March 12, 2008, Solar Capital entered into an additional $200 million credit facility (the “Warehouse Facility”), through a newly formed wholly-owned subsidiary, Solar Funding I LLC (“Solar Funding”), by way of a Note Purchase Agreement with Citibank as deal agent, Indenture with Wells Fargo Bank, N.A. as indenture trustee, and other related transaction documents.
Under the terms of the Warehouse Facility, Citibank agreed to extend credit to Solar Capital, through Solar Funding in an aggregate principal or face amount not exceeding $200 million. The Warehouse Facility is a one-year facility with a stated maturity date of March 11, 2009, but may be extended for additional one-year terms by mutual agreement of the parties. The interest rate for amounts advanced under the Warehouse Facility is
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
equal to LIBOR plus the greater of 2.50% or the AAA/AA Equivalent Spread as defined under the Note Purchase Agreement. The amounts outstanding under the Warehouse Facility are secured by certain underlying assets of Solar Capital’s investment portfolio transferred to Solar Funding, which may include senior secured loans, second lien loans, senior unsecured loans or subordinated loans, subject to certain limitations set forth in the transaction documents. The Warehouse Facility contains certain affirmative and negative covenants. The Warehouse Facility will be used to supplement Solar Capital’s equity capital to make additional investments and for other general corporate purposes.
The average debt outstanding on the Credit Facility was $10,255 for the year ended December 31, 2008. The weighted average annual interest cost for the year ended December 31, 2008 was less than 1%, exclusive of 0.25% for commitment fees and for other prepaid expenses related to establishing the Credit Facility. This weighted average annual interest cost reflects the average interest cost for all borrowings, including EURIBOR, and USD LIBOR. The maximum amount borrowed during the year ended December 31, 2008 was $61,320 and at December 31, 2008 no amounts were outstanding. At December 31, 2008, Solar Capital was in compliance with all financial and operational covenants required by the Credit Facility and the Warehouse Facility.
As of December 31, 2008 Solar Capital had no borrowings outstanding under the Credit Facility or the Warehouse Facility.
Note 7. Fair Value
Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements  (“SFAS 157”), which defines fair value and provides a framework for measuring fair value under GAAP, as well as expanded information about assets and liabilities measured at fair value, including the effect of fair value measurements on earnings.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:
Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access (examples include active exchange-traded equity securities, exchange-traded derivatives, and most U.S. Government and agency securities).
Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
 
 	a)	Quoted prices for similar assets or liabilities in active markets;	
 
 	b)	Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);	
 
 	c)	Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and	
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
 	d)	Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.	
Level 3. Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability (examples include certain of our private debt and equity investments) and long-dated or complex derivatives (including certain equity and currency derivatives).
As required by SFAS 157, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, gains and losses for such assets and liabilities categorized within the Level 3 table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Further, it should be noted that the following tables do not take into consideration the effect of offsetting Level 1 and 2 financial instruments entered into by the Company that economically hedge certain exposures to the Level 3 positions.
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur.
The following table presents the balances of assets and liabilities measured at fair value on a recurring basis, as of December 31, 2008
Fair Value Measurements
As of December 31, 2008

 	  	Level 1	  	Level 2	  	Level 3	  	Total	
Assets:	  	 	 	  	 	 	  	 	 	  	 	 	
Bank Debt / Senior Secured Loans	  	$	—  	  	$	49,242	  	$	97,665	  	$	146,907	
Subordinated Debt / Corporate Notes	  	 	—  	  	 	22,533	  	 	509,416	  	 	531,949	
Preferred Equity	  	 	—  	  	 	—  	  	 	6,145	  	 	6,145	
Common Equity / Partnership Interests / Warrants	  	 	8,121	  	 	143	  	 	67,752	  	 	76,016	
Put/Call Options	  	 	 	  	 	7,198	  	 	 	  	 	7,198	
Derivative assets—forward contracts	  	 	—  	  	 	4,218	  	 	—  	  	 	4,218	
Liabilities:	  	 	 	  	 	 	  	 	 	  	 	 	
Derivative liabilities—forward contracts	  	 	—  	  	 	1,366	  	 	—  	  	 	1,366	
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
The following table provides a summary of the changes in fair value of Level 3 assets and liabilities for the period January 1, 2008 to December 31, 2008, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at December 31, 2008.

 	 	Bank Debt/Senior
Secured Loans	 	 	Subordinated Debt/
Corporate Notes	 	 	Preferred Equity	 	 	Common Equity/
Partnership
Interests/Warrants	 	
Fair value, January 1, 2008	 	$	192,794	  	 	$	564,615	  	 	$	55,299	  	 	$	203,071	  	
Total gains or losses included in earnings:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net realized gain (loss)	 	 	11	  	 	 	(16,529	) 	 	 	—  	  	 	 	(158	) 	
Net change in unrealized gain (loss)	 	 	(61,369	) 	 	 	(186,822	) 	 	 	(54,956	) 	 	 	(113,160	) 	
Purchases, sales, issuances, and settlements (net)	 	 	(53,661	) 	 	 	148,152	  	 	 	5,802	  	 	 	4,344	  	
Transfers into (out of) Level 3	 	 	19,890	  	 	 	—  	  	 	 	—  	  	 	 	(26,345	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value, December 31, 2008	 	$	97,665	  	 	$	509,416	  	 	$	6,145	  	 	$	67,752	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in unrealized gain (loss):	 	$	(61,337	) 	 	$	(192,773	) 	 	$	(54,956	) 	 	$	(113,160	) 	
The Company had no assets or liabilities measured at fair value on a nonrecurring basis during the year.
Note 8. Taxes
Withholding Tax
The Company is engaged in activities that for tax purposes have been deemed effectively connected with a U.S. trade or business. The Company generally is required to withhold and remit to the U.S. government a percentage of its net income and gains that are both effectively connected with that trade or business and allocated to non-U.S. unitholders, and the Company will be liable for interest and penalties with respect to amounts that are not so withheld. The relevant withholding percentage generally is the maximum applicable U.S. federal income tax rate, currently 35%. Non-U.S. unitholders that are corporations might also be subject to a “branch profits” tax on certain earnings deemed to have been repatriated to those persons. Similar withholding is required in various state and local jurisdictions.
During 2008, the Company remitted withholding taxes to the United States and various state and local taxing authorities. The Company’s entire withholding tax receivable of $16,505 is a tax benefit for our non-U.S. unitholders which they are obligated to repay.
Income Tax
The Company is classified as a partnership for U.S. tax purposes, and therefore is generally not subject to federal and state income taxes. Each Partner takes into account separately on their tax return their share of the taxable income, gains, losses, deduction or credits for the Partnership’s taxable year. Accordingly, no provisions have been made in the accompanying financial statements for federal and state income tax.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
The Company is subject to New York City unincorporated business tax (UBT), which is imposed on the business income of every unincorporated business that is carried on in New York City. The UBT is imposed for each taxable year at a rate of 4 percent of taxable income that is allocable to New York City. Estimated UBT for 2008 and 2007 was $1,641 and $410, respectively.
The Company is also subject to taxes in Luxembourg, through Solar Capital Luxembourg I S.a.r.l., a wholly-owned subsidiary. Under the laws of Luxembourg, the Company pays a corporate income tax and a municipal business tax on its subsidiary’s taxable income.
Note 9. Earnings (Loss) Per Share
The following information sets forth the computation of basic and diluted net increase (decrease) in shareholders’ capital per share resulting from operations for the year ended December 31, 2008 and the period from March 13, 2007 (inception) to December 31, 2007:

 	  	Year ended
December 31, 2008	 	 	March 13, 2007
(inception) through
December 31, 2007	
Numerator for basic and diluted earnings per share:	  	$	(405,828	) 	 	$	49,100	
Denominator for basic and diluted weighted average shares:	  	 	81,702,847	  	 	 	81,702,847	
Basic and diluted net increase (decrease) in shareholders’ capital per share resulting from operations:	  	$	(4.96	) 	 	$	0.60	
Note 10. Financial Highlights
The following is a schedule of financial highlights for the year or period ended December 31, 2008 and 2007:

  	  	Year ended
December 31, 2008	 	 	March 13, 2007
(inception) through
December 31, 2007	 	
Per Share Data:	  	 	 	 	 	 	 	 	
Net asset value, beginning of period	  	$	15.40	  	 	$	15.00	  	
Offering Costs	  	 	—  	  	 	 	(0.20	) 	
Net investment income	  	 	1.07	  	 	 	0.65	  	
Net realized and unrealized gain (loss)	  	 	(6.03	) 	 	 	(0.05	) 	
 	  	 	 	 	 	 	 	 	
Net increase (decrease) in net assets resulting from operations	  	 	 	 	 	 	 	 	
 	  	 	(4.96	) 	 	 	0.60	  	
 	  	 	 	 	 	 	 	 	
Net asset value end of period	  	$	10.44	  	 	$	15.40	  	
 	  	 	 	 	 	 	 	 	
Total return	  	 	(32	)% 	 	 	4	% 	
Net assets, end of period	  	$	852,673	  	 	$	1,258,501	  	
Ratio to average net assets	  	 	 	 	 	 	 	 	
Expenses without incentive fees	  	 	3.27	% 	 	 	2.55	% 	
Incentive fees	  	 	0.78	% 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	
Total expenses	  	 	4.05	% 	 	 	2.55	% 	
Net investment income	  	 	7.59	% 	 	 	5.36	% 	
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2008
(in thousands, except shares)
 
Note 11. Recent Accounting Pronouncement
SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement 133
On March 19, 2008, FASB released SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The application of SFAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. At this time, management is evaluating the implications of SFAS 161 and its impact on the financial statements has not yet been determined.
Note 12. Selected Quarterly Financial Data (unaudited)

For the Quarter Ended	  	Investment
Income	  	Per
Share	  	Net Investment
Income	  	Per
Share	  	Net Realized
And
Unrealized
Gain (Loss)
on Assets	 	 	Per
Share	 	 	Net Increase
(Decrease) In
Net Assets
From
Operations	 	 	Per
Share	 	 	
 	  	Total	  	 	  	Total	  	 	  	Total	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	
December 31, 2008	  	38,036	  	0.47	  	22,079	  	0.27	  	(339,193	) 	 	(4.15	) 	 	(317,114	) 	 	(3.88	) 	 	 	 	 	
September 30, 2008	  	32,464	  	0.40	  	21,990	  	0.27	  	(108,641	) 	 	(1.33	) 	 	(86,651	) 	 	(1.06	) 	 	 	 	 	
June 30, 2008	  	32,367	  	0.40	  	21,305	  	0.26	  	17,679	  	 	0.22	  	 	38,985	  	 	0.48	  	 	 	 	 	
March 31, 2008	  	31,093	  	0.38	  	22,024	  	0.27	  	(63,072	) 	 	(0.77	) 	 	(41,049	) 	 	(0.50	) 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
December 31, 2007	  	28,703	  	0.35	  	20,225	  	0.25	  	4,543	  	 	0.06	  	 	24,768	  	 	0.31	  	 	 	 	 	
September 30, 2007	  	23,654	  	0.29	  	15,918	  	0.19	  	(11,569	) 	 	(0.14	) 	 	4,349	  	 	0.05	  	 	 	 	 	
June 30, 2007	  	21,620	  	0.26	  	14,219	  	0.17	  	50	  	 	0.00	  	 	14,268	  	 	0.17	  	 	 	 	 	
March 31, 2007	  	4,478	  	0.05	  	2,632	  	0.03	  	3,082	  	 	0.04	  	 	5,714	  	 	0.07	  	 	 	 	 	
 
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Table of Contents
SOLAR CAPITAL LLC
SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES
(unaudited)
(in thousands, except shares)
Schedule 12-14

Portfolio Company	 	Investment	 	As of
December 31,
2008
Number of Shares/
Principal Amount	 	Year ended December 31, 2008	 	As of
December 31,
2008
Fair Value	 	
 	 	 	 	 	 	Amount of dividends
and interest
included in income	 	Amount of equity
in net profit
and loss	 	 	 	 	 	 	
Investments Owned Greater than 25%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
National Specialty Alloys, LLC	 	Equity	 	 	1,000,000	 	$	1,901	 	$	—  	 	$	12,900	 	 	 	 	
505 Capital Partners GP	 	Equity	 	 	30,000	 	 	—  	 	 	—  	 	 	30	 	 	 	 	
505 Capital Partners LP	 	Equity	 	 	—  	 	 	751	 	 	—  	 	 	—  	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments Owned Greater than 25%	 	 	 	 	 	 	$	2,652	 	$	—  	 	$	12,930	 	 	 	 	

Investments Owned Greater than 5% and Less than 25%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
National Interest Security Corp.	 	Senior Debt	 	$	25,182	 	$	2,381	 	$	—  	 	$	24,679	 	 	 	 	
National Interest Security Corp.	 	Subordinated	 	$	30,539	 	 	4,794	 	 	—  	 	 	27,180	 	 	 	 	
National Interest Security Corp.	 	Equity	 	 	2,265,023	 	 	—  	 	 	—  	 	 	12,951	 	 	 	 	
Ark Real Estate Partners LP	 	Equity	 	 	28,006,121	 	 	—  	 	 	—  	 	 	24,619	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments Owned Greater than 5% and Less than 25%	 	 	 	 	 	 	$	7,175	 	$	—  	 	$	89,429	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The table below represents the balance at the beginning of the period, December 31, 2007 and any gross additions and reductions and net unrealized gain (loss) made to such investments as well as the ending fair value as of December 31, 2008.
Gross additions represent increases in the investment from additional investments, payments in kind of interest or dividends.
Gross reductions represent decreases in the investment from sales of investments or repayments.

 	  	Beginning
Fair Value
December 31,
2007	  	Gross
additions	  	Gross
reductions	  	Net
Unrealized
Gain
(Loss)	 	 	Fair Value
as of
December 31,
2008	
National Specialty Alloys, LLC	  	$	13,200	  	$	—  	  	$	—  	  	$	(300	) 	 	$	12,900	
505 Capital Partners GP	  	 	—  	  	 	30	  	 	—  	  	 	—  	  	 	 	30	
505 Capital Partners LP	  	 	—  	  	 	5,025	  	 	5,025	  	 	—  	  	 	 	—  	
National Interest Security Corp.	  	 	10,000	  	 	14,963	  	 	175	  	 	(109	) 	 	 	24,679	
National Interest Security Corp.	  	 	30,000	  	 	666	  	 	—  	  	 	(3,486	) 	 	 	27,180	
National Interest Security Corp.	  	 	1,765	  	 	500	  	 	—  	  	 	10,686	 	 	 	12,951	
Ark Real Estate Partners LP	  	 	26,987	  	 	2,605	  	 	—  	  	 	(4,973	) 	 	 	24,619	
 
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Table of Contents
SOLAR CAPITAL LLC
SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES
(unaudited)
(in thousands, except shares)
Schedule 12-14

Portfolio Company	 	Investment	 	As of
December 31,
2007
Number of Shares/
Principal Amount	 	Period Ended December 31, 2007	 	As of
December 31,
2007
Fair Value	 	
 	 	 	 	 	 	Amount of dividends
and interest
included in income	 	Amount of equity
in net profit
and loss	 	 	 	 	 	 	
Investments Owned Greater than 25%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
National Specialty Alloys, LLC	 	Equity	 	 	1,000,000	 	$	—  	 	$	—  	 	$	13,200	 	 	 	 	
National Specialty Alloys, LLC	 	Preferred Equity	 	 	 	 	 	295	 	 	—  	 	 	—  	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments Owned Greater than 25%	 	 	 	 	 	 	$	295	 	$	—  	 	$	13,200	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investments Owned Greater than 5% and Less than 25%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
National Interest Security Corp.	 	Senior Debt	 	$	10,000	 	$	1,235	 	$	—  	 	$	10,000	 	 	 	 	
National Interest Security Corp.	 	Subordinated	 	$	30,000	 	 	236	 	 	—  	 	 	30,000	 	 	 	 	
National Interest Security Corp.	 	Equity	 	 	1,765	 	 	—  	 	 	—  	 	 	1,765	 	 	 	 	
Ark Real Estate Partners LP	 	Equity	 	 	25,400,788	 	 	—  	 	 	—  	 	 	26,987	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments Owned Greater than 5% and Less than 25%	 	 	 	 	 	 	$	1,471	 	$	—  	 	$	68,752	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The table below represents the balance at the beginning of the period, March 13, 2007 (inception) and any gross additions and reductions and net unrealized gain (loss) made to such investments as well as the ending fair value as of December 31, 2007.
Gross additions represent increases in the investment from additional investments, payments in kind of interest or dividends.
Gross reductions represent decreases in the investment from sales of investments or repayments.

 	  	Beginning
Fair Value
March 13,
2007
(inception)	  	Gross
additions	  	Gross
reductions	  	Net
Unrealized
Gain
(Loss)	  	Fair Value as
of
December 31,
2007	
National Specialty Alloys, LLC	  	$	—  	  	$	10,000	  	$	—  	  	$	3,200	  	$	13,200	
National Specialty Alloys, LLC	  	 	—  	  	 	8,500	  	 	8,500	  	 	—  	  	 	—  	
National Interest Security Corp.	  	 	—  	  	 	9,800	  	 	—  	  	 	200	  	 	10,000	
National Interest Security Corp.	  	 	—  	  	 	29,406	  	 	—  	  	 	594	  	 	30,000	
National Interest Security Corp.	  	 	—  	  	 	1,765,023	  	 	—  	  	 	—  	  	 	1,765	
Ark Real Estate Partners LP	  	 	—  	  	 	25,401	  	 	—  	  	 	1,586	  	 	26,987	
 
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Table of Contents
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Solar Capital LLC:
We have reviewed the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, of Solar Capital LLC (the Company) as of September 30, 2009, and the related consolidated statements of operations for the three and nine month periods ended September 30, 2009 and 2008, and the consolidated statements of changes in net assets, cash flows and the financial highlights (included in Note 10) for the nine month periods ended September 30, 2009 and 2008. These consolidated financial statements and financial highlights are the responsibility of the Company’s management.
We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial accounting and reporting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements and financial highlights in order for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, of Solar Capital LLC as of December 31, 2008, and we expressed an unqualified opinion on them in our report dated February 13, 2009.
/s/ KPMG LLP
New York, New York
November 10, 2009
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share amounts)

 	  	September 30,
2009	  	December 31,
2008	
 	  	(unaudited)	  	 	
Assets	  	 	 	  	 	 	
Investments at value:	  	 	 	  	 	 	
Companies more than 25% owned (cost: $10,000 and $10,030, respectively)	  	$	9,000	  	$	12,930	
Companies 5% to 25% owned (cost: $85,150 and $84,931, respectively)	  	 	92,474	  	 	89,429	
Companies less than 5% owned (cost: $947,823 and $1,161,773, respectively)	  	 	690,920	  	 	665,856	
 	  	 	 	  	 	 	
Total investments (cost: $1,042,973 and $1,256,734, respectively)	  	 	792,394	  	 	768,215	
Cash and cash equivalents	  	 	18,011	  	 	65,841	
Withholding tax receivable	  	 	19,611	  	 	16,505	
Interest and dividends receivable	  	 	9,116	  	 	10,741	
Receivable for investments sold	  	 	7,256	  	 	—  	
Fee revenue receivable	  	 	5,289	  	 	4,995	
Derivative assets	  	 	1,889	  	 	4,218	
Deferred offering costs	  	 	972	  	 	706	
Deferred credit facility costs	  	 	1,142	  	 	1,463	
Foreign tax receivable	  	 	—  	  	 	101	
Prepaid expenses and other receivables	  	 	770	  	 	241	
 	  	 	 	  	 	 	
Total Assets	  	 	856,450	  	 	873,026	
 	  	 	 	  	 	 	
Liabilities	  	 	 	  	 	 	
Distributions payable	  	 	81,508	  	 	—  	
Credit facility payable	  	 	25,584	  	 	—  	
Due to Solar Capital Partners LLC:	  	 	 	  	 	 	
Investment advisory and management fee payable	  	 	4,273	  	 	5,294	
Performance-based incentive fee payable	  	 	4,096	  	 	5,505	
Deferred fee revenue	  	 	3,340	  	 	3,992	
Derivative liabilities	  	 	—  	  	 	1,366	
Due to Solar Capital Management LLC	  	 	828	  	 	1,085	
Income taxes payable	  	 	782	  	 	1,735	
Interest payable	  	 	346	  	 	—  	
Other accrued expenses and payables	  	 	2,746	  	 	1,376	
 	  	 	 	  	 	 	
Total Liabilities	  	 	123,503	  	 	20,353	
 	  	 	 	  	 	 	
Net Assets	  	$	732,947	  	$	852,673	
 	  	 	 	  	 	 	
Number of shares outstanding	  	 	81,702,847	  	 	81,702,847	
Net Asset Value Per Share	  	$	8.97	  	$	10.44	
See notes to consolidated financial statements.
 
F-28

Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

 	 	Three months
ended
September 30,
2009	 	 	Three months
ended
September 30,
2008	 	 	Nine months
ended
September 30,
2009	 	 	Nine months
ended
September 30,
2008	 	
 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	
INVESTMENT INCOME:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest and dividends:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Companies more than 25% owned	 	$	—  	  	 	$	615	  	 	$	—  	  	 	$	2,216	  	
Companies 5% to 25% owned	 	 	2,320	  	 	 	1,526	  	 	 	6,877	  	 	 	4,858	  	
Other interest and dividend income	 	 	25,465	  	 	 	30,323	  	 	 	74,337	  	 	 	88,849	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total interest and dividends	 	 	27,785	  	 	 	32,464	  	 	 	81,214	  	 	 	95,923	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total investment income	 	 	27,785	  	 	 	32,464	  	 	 	81,214	  	 	 	95,923	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EXPENSES:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Performance-based incentive fee	 	 	4,096	  	 	 	712	  	 	 	12,395	  	 	 	3,503	  	
Investment advisory and management fees	 	 	4,273	  	 	 	6,378	  	 	 	12,348	  	 	 	19,003	  	
Interest and other credit facility expenses	 	 	536	  	 	 	1,227	  	 	 	1,565	  	 	 	2,393	  	
Administrative service fee	 	 	479	  	 	 	787	  	 	 	1,512	  	 	 	2,492	  	
Other general and administrative expenses	 	 	2,018	  	 	 	1,371	  	 	 	3,817	  	 	 	3,213	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	11,402	  	 	 	10,475	  	 	 	31,637	  	 	 	30,604	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net investment income	 	 	16,383	  	 	 	21,989	  	 	 	49,577	  	 	 	65,319	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FORWARD CONTRACTS AND FOREIGN CURRENCIES:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net realized gain (loss):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Companies more than 25% owned	 	 	(30	) 	 	 	—  	  	 	 	(30	) 	 	 	—  	  	
Companies less than 5% owned	 	 	(151,239	) 	 	 	18	  	 	 	(227,161	) 	 	 	(181	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net realized gain (loss) on investments	 	 	(151,269	) 	 	 	18	  	 	 	(227,191	) 	 	 	(181	) 	
Forward contracts	 	 	(1,844	) 	 	 	13,370	  	 	 	(9,674	) 	 	 	2,219	  	
Foreign currency exchange	 	 	(284	) 	 	 	(357	) 	 	 	(751	) 	 	 	465	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net realized gain (loss)	 	 	(153,397	) 	 	 	13,031	  	 	 	(237,616	) 	 	 	2,503	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in unrealized gain (loss):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Companies more than 25% owned	 	 	(800	) 	 	 	350	  	 	 	(3,900	) 	 	 	899	  	
Companies 5% to 25% owned	 	 	613	  	 	 	3,861	  	 	 	2,828	  	 	 	10,885	  	
Companies less than 5% owned	 	 	176,026	  	 	 	(132,543	) 	 	 	239,012	  	 	 	(172,455	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net unrealized gain (loss) on investments	 	 	175,839	  	 	 	(128,332	) 	 	 	237,940	  	 	 	(160,671	) 	
Forward contracts	 	 	1,725	  	 	 	4,675	  	 	 	(964	) 	 	 	2,883	  	
Foreign currency exchange	 	 	(1,986	) 	 	 	1,985	  	 	 	(1,957	) 	 	 	1,251	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in unrealized gain (loss)	 	 	175,578	  	 	 	(121,672	) 	 	 	235,019	  	 	 	(156,537	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net realized and unrealized gain (loss) on investments, forward contracts and foreign currencies	 	 	22,181	  	 	 	(108,641	) 	 	 	(2,597	) 	 	 	(154,034	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	 	$	38,564	  	 	$	(86,652	) 	 	$	46,980	  	 	$	(88,715	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings (loss) per share (see note 9)	 	$	0.47	  	 	$	(1.06	) 	 	$	0.58	  	 	$	(1.08	) 	
See notes to consolidated financial statements.
 
F-29

Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(in thousands)

 	  	Nine months ended
September 30, 2009	 	 	Nine months ended
September 30, 2008	 	
 	  	(unaudited)	 	 	(unaudited)	 	
Increase (Decrease) in net assets resulting from operations:	  	 	 	 	 	 	 	 	
Net investment income	  	$	49,577	  	 	$	65,319	  	
Net realized loss	  	 	(237,616	) 	 	 	2,503	  	
Net change in unrealized gain (loss)	  	 	235,019	  	 	 	(156,537	) 	
 	  	 	 	 	 	 	 	 	
Net increase (decrease) in net assets resulting from operations	  	 	46,980	  	 	 	(88,715	) 	
 	  	 	 	 	 	 	 	 	
Distributions to unit holders declared:	  	 	(166,706	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	
Net decrease in net assets	  	 	(119,726	) 	 	 	(88,715	) 	
Net assets at beginning of period	  	 	852,673	  	 	 	1,258,501	  	
 	  	 	 	 	 	 	 	 	
Net assets at end of period	  	$	732,947	  	 	$	1,169,786	  	

 
See notes to consolidated financial statements
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 	 	Nine months ended
September 30, 2009	 	 	Nine months ended
September 30, 2008	 	
 	 	(unaudited)	 	 	(unaudited)	 	
Cash Flows from Operating Activities:	 	 	 	 	 	 	 	 	
Net increase (decrease) in net assets from operations	 	$	46,980	  	 	$	(88,715	) 	
Adjustments to reconcile net increase in net assets from operations to net cash provided by (used in) operating activities:	 	 	 	 	 	 	 	 	
Net realized loss from investments	 	 	227,191	  	 	 	181	  	
Net change in unrealized (gain) loss on investments	 	 	(237,940	) 	 	 	160,671	  	
Net change in forward contracts	 	 	964	  	 	 	(2,883	) 	
(Increase) decrease in operating assets:	 	 	 	 	 	 	 	 	
Purchase of investment securities	 	 	(124,675	) 	 	 	(207,925	) 	
Proceeds from disposition of investment securities	 	 	111,245	  	 	 	44,284	  	
Withholding tax receivable	 	 	(3,106	) 	 	 	—  	  	
Interest and dividends receivable	 	 	1,625	  	 	 	(491	) 	
Receivable for investments sold	 	 	(7,256	) 	 	 	31,985	  	
Fee revenue receivable	 	 	(294	) 	 	 	(355	) 	
Deferred offering costs	 	 	(266	) 	 	 	(592	) 	
Deffered credit facility costs	 	 	321	  	 	 	(2,131	) 	
Foreign tax receivable	 	 	101	  	 	 	4	  	
Prepaid expenses and other receivables	 	 	(529	) 	 	 	(8,641	) 	
Increase (decrease) in operating liabilities:	 	 	 	 	 	 	 	 	
Payable for investments purchased	 	 	—  	  	 	 	(125,000	) 	
Investment advisory and management fee payable	 	 	(1,021	) 	 	 	711	  	
Performance-based incentive fee payable	 	 	(1,409	) 	 	 	131	  	
Deferred fee revenue	 	 	(652	) 	 	 	(144	) 	
Income taxes payable	 	 	(953	) 	 	 	(410	) 	
Due to Solar Capital Management LLC	 	 	(257	) 	 	 	709	  	
Interest payable	 	 	346	  	 	 	181	  	
Other accrued expenses and payables	 	 	1,370	  	 	 	(234	) 	
 	 	 	 	 	 	 	 	 	
Net Cash Provided by (Used in) Operating Activities	 	 	11,785	  	 	 	(198,664	) 	
 	 	 	 	 	 	 	 	 	
Cash Flows from Financing Activities:	 	 	 	 	 	 	 	 	
Proceeds from borrowings on credit facility	 	 	142,483	  	 	 	59,195	  	
Repayments of borrowings on credit facility	 	 	(116,900	) 	 	 	(12,000	) 	
Distributions to unit holders paid in cash	 	 	(85,198	) 	 	 	—  	  	
 	 	 	 	 	 	 	 	 	
Net Cash Provided by (Used in) Financing Activities	 	 	(59,615	) 	 	 	47,195	  	
 	 	 	 	 	 	 	 	 	
NET DECREASE IN CASH AND CASH EQUIVALENTS	 	 	(47,830	) 	 	 	(151,469	) 	
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	 	 	65,841	  	 	 	169,692	  	
 	 	 	 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	$	18,011	  	 	$	18,223	  	
 	 	 	 	 	 	 	 	 	
Supplemental disclosure of cash flow information:	 	 	 	 	 	 	 	 	
Cash paid for interest	 	$	128	  	 	$	269	  	
Cash paid for income taxes	 	$	1,180	  	 	$	620	  	
 	 	 	
Non-cash financing activity:	 	 	 	 	 	 	 	 	
Distributions payable	 	$	81,508	  	 	$	—  	  	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS
September 30, 2009
(unaudited)
(in thousands, except shares)

Description(1)	 	Industry	 	Interest(2)	 	Maturity	 	Par Amount/
Shares	 	Cost	 	Fair
Value	
Bank Debt/Senior Secured Loans—20.2%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Affinity 1st Lien	 	Printing, Publishing, Broadcasting	 	12.75	 	3/31/2010	 	 	14,887	 	 	14,272	 	 	14,142	
Asurion Corporation	 	Insurance	 	6.75	 	7/3/2015	 	 	55,000	 	 	54,937	 	 	50,050	
Classic Cruises Holdings(5)	 	Leisure, Motion Pictures, Entertainment	 	10.18	 	1/31/2015	 	 	26,000	 	 	25,409	 	 	19,500	
Emdeon Business Services LLC	 	Healthcare, Education, and Childcare	 	5.27	 	5/16/2014	 	 	15,000	 	 	15,119	 	 	14,100	
National Interest Security Corporation(11)	 	Aerospace & Defense	 	15.00	 	6/11/2013	 	 	25,182	 	 	24,697	 	 	25,938	
Nuveen Investments, Inc.	 	Finance	 	3.50	 	11/14/2014	 	 	4,635	 	 	4,716	 	 	4,014	
Questex Media Group(12)	 	Diversified / Conglomerate Service	 	6.79	 	11/4/2014	 	 	10,000	 	 	9,936	 	 	—  	
Ram Energy Resources, Inc.	 	Oil & Gas	 	12.75	 	11/29/2012	 	 	13,745	 	 	13,682	 	 	12,371	
Wyle Laboratories	 	Aerospace & Defense	 	15.00	 	1/17/2015	 	 	20,000	 	 	19,594	 	 	19,800	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Bank Debt/Senior Secured Loans	 	 	 	 	 	 	 	$	184,449	 	$	182,362	 	$	159,915	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Subordinated Debt/Corporate Notes—72.5%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Allied Capital	 	Finance	 	6.00	 	4/1/2012	 	 	15,393	 	 	8,676	 	 	11,083	
Allied Capital	 	Finance	 	6.63	 	7/15/2011	 	 	14,500	 	 	7,941	 	 	11,600	
Adams Outdoor Advertising	 	Diversified / Conglomerate Service	 	13.50	 	6/20/2011	 	 	40,000	 	 	39,369	 	 	35,800	
Adams Outdoor Advertising Subordinated Debt 20.00%	 	Diversified / Conglomerate Service	 	20.00	 	12/31/2009	 	 	2,036	 	 	2,036	 	 	2,036	
Adams Outdoor Advertising Subordinated Debt 10.875%	 	Diversified / Conglomerate Service	 	10.88	 	6/20/2011	 	 	18,979	 	 	19,100	 	 	16,427	
AMC Entertainment Holdings, Inc.	 	Leisure, Motion Pictures, Entertainment	 	5.30	 	6/13/2012	 	 	24,061	 	 	23,767	 	 	19,730	
Booz Allen	 	Aerospace & Defense	 	13.00	 	7/31/2016	 	 	43,000	 	 	42,633	 	 	43,000	
Casema B.V.(3)	 	Telecommunications	 	9.71	 	11/17/2016	 	 	8,022	 	 	7,538	 	 	7,725	
Casema B.V.(3)	 	Telecommunications	 	9.69	 	11/17/2016	 	 	8,653	 	 	8,130	 	 	8,280	
Direct Buy Inc.	 	Home and Office Furnishing, Consumer Products	 	16.00	 	5/30/2013	 	 	36,223	 	 	35,685	 	 	27,167	
DS Waters	 	Beverage, Food, and Tobacco	 	13.50	 	4/24/2012	 	 	96,157	 	 	95,173	 	 	90,868	
Earthbound	 	Beverage, Food, and Tobacco	 	15.25	 	7/20/2016	 	 	40,220	 	 	39,053	 	 	39,617	
Fleetpride Corporation	 	Cargo Transport	 	11.50	 	10/1/2014	 	 	43,000	 	 	43,151	 	 	38,915	
FreedomRoads	 	Automotive	 	12.00	 	6/20/2011	 	 	27,500	 	 	27,204	 	 	24,791	
Global Garden Products(3)(6)(12)	 	Farming & Agriculture	 	12.77	 	10/31/2016	 	 	35,973	 	 	35,382	 	 	—  	
Grakon, LLC(13)	 	Machinery	 	12.00	 	6/19/2013	 	 	20,403	 	 	19,729	 	 	5,101	
Iglo Birds Eye Group Limited(3)(4)	 	Beverage, Food, and Tobacco	 	9.33	 	12/8/2016	 	 	5,232	 	 	4,803	 	 	4,728	
Iglo Birds Eye Group Limited(3)(4)	 	Beverage, Food, and Tobacco	 	8.51	 	12/8/2016	 	 	12,009	 	 	14,575	 	 	10,977	
Jonathan Engineering Solutions Corp.(12)	 	Diversified/Conglomerate Manufacturing	 	16.50	 	6/29/2014	 	 	4,219	 	 	4,045	 	 	—  	
Jonathan Engineering Solutions Corp.(12)	 	Diversified/Conglomerate Manufacturing	 	13.00	 	6/29/2014	 	 	10,641	 	 	10,614	 	 	—  	
Learning Care Group No.2, Inc	 	Healthcare, Education, and Childcare	 	13.50	 	12/28/2015	 	 	30,975	 	 	30,585	 	 	27,103	
Magnolia River, LLC	 	Hotels, Motels, Inns & Gaming	 	14.00	 	4/28/2014	 	 	20,500	 	 	19,629	 	 	14,350	
National Interest Security Corporation(11)	 	Aerospace & Defense	 	15.00	 	6/11/2013	 	 	30,539	 	 	30,182	 	 	30,233	
Pacific Crane Maintenance Company, L.P.(12)	 	Machinery	 	13.00	 	2/15/2014	 	 	9,045	 	 	8,920	 	 	2,261	
ProSieben Sat.1 Media AG(3)(8)(13)	 	Broadcasting & Entertainment	 	8.15	 	3/6/2017	 	 	21,879	 	 	20,234	 	 	4,173	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	10.49	 	12/29/2013	 	 	17,865	 	 	15,599	 	 	15,185	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	12.00	 	12/29/2013	 	 	6,047	 	 	5,283	 	 	5,019	
Tri-Star Electronics International, Inc.	 	Aerospace & Defense	 	14.00	 	8/2/2013	 	 	22,500	 	 	22,489	 	 	11,250	
Wastequip, Inc.(13)	 	Containers, Packaging and Glass	 	12.00	 	2/5/2015	 	 	15,745	 	 	15,288	 	 	3,149	
Weetabix Group(3)(7)	 	Beverage, Food, and Tobacco	 	8.74	 	9/14/2016	 	 	13,548	 	 	16,332	 	 	9,484	
Weetabix Group(3)(7)	 	Beverage, Food, and Tobacco	 	10.62	 	5/7/2017	 	 	27,567	 	 	33,419	 	 	18,470	
Wire Rope Corporation (aka WireCo World Group)	 	Diversified/Conglomerate Manufacturing	 	11.00	 	2/8/2015	 	 	39,000	 	 	38,269	 	 	35,880	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Subordinated Debt/Corporate Notes	 	 	 	 	 	 	 	$	761,431	 	$	744,833	 	$	574,402	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)

Description(1)	 	Industry	 	Interest(2)	 	Maturity	 	Par Amount/
Shares	 	Cost	 	Fair
Value	
Preferred Equity—0.1%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Wyle Laboratories	 	Aerospace & Defense	 	8.00	 	7/17/2015	 	 	39	 	 	39	 	 	39	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Preferred Equity	 	 	 	 	 	 	 	$	39	 	$	39	 	$	39	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Common Equity / Partnership Interests / Warrants—7.2%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ark Real Estate Partners LP(9)(11)	 	Real Estate	 	 	 	 	 	 	28,006,121	 	 	28,006	 	 	20,010	
Direct Buy Inc.	 	Home and Office Furnishing, Consumer Products	 	 	 	 	 	 	5,000,000	 	 	5,000	 	 	500	
Grakon, LLC	 	Machinery	 	 	 	 	 	 	1,714,286	 	 	1,714	 	 	—  	
Great American Group Inc.(14)	 	Business Services	 	 	 	 	 	 	712,000	 	 	712	 	 	346	
Great American Group Inc.(15)	 	Business Services	 	 	 	 	 	 	572,800	 	 	2,681	 	 	2,078	
Great American Group Inc.(16)	 	Business Services	 	 	 	 	 	 	187,500	 	 	3	 	 	680	
Great American Group Inc.(17)	 	Business Services	 	 	 	 	 	 	125,000	 	 	—  	 	 	—  	
National Interest Security Corporation(11)	 	Aerospace & Defense	 	 	 	 	 	 	2,265,023	 	 	2,265	 	 	16,293	
National Specialty Alloys, LLC(10)	 	Mining, Steel and Nonprecious Metals	 	 	 	 	 	 	1,000,000	 	 	10,000	 	 	9,000	
Nuveen Investments, Inc.	 	Finance	 	 	 	 	 	 	3,000,000	 	 	30,000	 	 	6,000	
NXP Semiconductors Netherlands B.V.(3)	 	Electronics	 	 	 	 	 	 	944,628	 	 	31,057	 	 	1,733	
Pacific Crane Maintenance Company, L.P.	 	Machinery	 	 	 	 	 	 	10,000	 	 	1,000	 	 	—  	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	 	 	 	 	 	4,285,714	 	 	3,301	 	 	1,398	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Common Equity/Partnerships Interests / Warrants	 	 	 	 	 	 	 	 	 	 	$	115,739	 	$	58,038	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments	 	 	 	 	 	 	 	 	 	 	$	1,042,973	 	$	792,394	

(1)	We generally acquire our investments in private transactions exempt from registration under the Securities Act. Our investments are therefore generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.	
(2)	A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to LIBOR or EURIBOR, and which reset daily, quarterly or semi-annually. For each debt investment we have provided the current interest rate in effect as of September 30, 2009.	
(3)	The following entities are domiciled outside the United States: Casema B.V. and NXP Semiconductors Netherlands B.V. in The Netherlands; Iglo Birds Eye Group Limited, Global Garden Products and Weetabix Group in the United Kingdom; ProSieben Sat.1 Media AG in Germany; and Seven Media Group Pty Limited in Australia. All other investments are domiciled in the United States.	
(4)	Solar Capital LLC’s investments in Iglo Birds Eye Group Limited are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(5)	Solar Capital LLC’s investments in Classic Cruises Holdings are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(6)	Solar Capital LLC’s investments in Global Garden Products are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(7)	Solar Capital LLC’s investments in Weetabix Group are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(8)	Solar Capital LLC’s investments in ProSieben Sat. 1 Media AG are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(9)	Solar Capital LLC is committed to fund capital of $44,817 of which $28,006 has already been funded.	
(10)	Denotes a Control Investment. “Control Investments” are defined in the Investment Company Act of 1940, referred to as the 1940 Act as investments in those companies that the Company is deemed to “Control.” Generally, under the 1940 Act, the Company is deemed to “Control” a company in which it has invested if it owns 25% or more of the voting securities of such company or has greater than 50% representation on its board.	
(11)	Denotes an Affiliate Investment. “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of the Company, as defined in the 1940 Act, which are not “Control Investments.” The Company is deemed to be an “Affiliate” of a company in which it has invested if it owns 5% or more but less than 25% of the voting securities of such company.	
(12)	Investment is on non-accrual status.	
(13)	Investment is on non-accrual status but current on all obligations.	
(14)	Warrants	
(15)	Common Shares	
(16)	Founders Shares	
(17)	Contingent Founders Shares	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
September 30, 2009
(unaudited)

Industry Classification	  	Percentage of Total
Investments (at fair
value) as of
September 30, 2009	 	
Beverage, Food, and Tobacco	  	22	% 	
Aerospace & Defense	  	18	% 	
Diversified / Conglomerate Service	  	7	% 	
Insurance	  	6	% 	
Healthcare, Education, and Childcare	  	5	% 	
Leisure, Motion Pictures, Entertainment	  	5	% 	
Cargo Transport	  	5	% 	
Diversified / Conglomerate Manufacturing	  	5	% 	
Finance	  	4	% 	
Home and Office Furnishing, Consumer Products	  	4	% 	
Broadcasting & Entertainment	  	3	% 	
Automotive	  	3	% 	
Real Estate	  	3	% 	
Telecommunications	  	2	% 	
Hotels, Motels, Inns & Gaming	  	2	% 	
Printing, Publishing, Broadcasting	  	2	% 	
Oil & Gas	  	2	% 	
Mining, Steel, Iron, and Nonprecious Metals	  	1	% 	
Machinery	  	1	% 	
 	  	 	 	
 	  	100	% 	
 	  	 	 	
See notes to consolidated financial statements.
 
F-34

Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2008
(in thousands, except shares)

Description(1)	 	Industry	 	Interest(2)	 	Maturity	 	Par Amount/
Shares	 	Cost	 	Fair
Value	
Bank Debt/Senior Secured Loans—19.1%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advanstar Communications Inc.	 	Diversified Services	 	8.76	 	12/1/2015	 	$	15,000	 	$	15,000	 	$	4,500	
Asurion Corporation	 	Insurance	 	8.01	 	7/3/2015	 	 	55,000	 	 	54,928	 	 	33,756	
Classic Cruises Holdings(5)	 	Leisure, Motion Pictures, Entertainment	 	9.88	 	1/31/2015	 	 	26,000	 	 	25,775	 	 	17,420	
Emdeon Business Services LLC	 	Healthcare, Education, and Childcare	 	8.76	 	5/19/2014	 	 	15,000	 	 	15,138	 	 	9,900	
Greatwide Logistics Services, Inc.(13)	 	Logistics Distribution	 	10.75	 	6/19/2014	 	 	26,000	 	 	25,870	 	 	—  	
National Interest Security Corporation(11)	 	Aerospace & Defense	 	15.00	 	6/7/2013	 	 	25,182	 	 	24,588	 	 	24,679	
Nuveen Investments, Inc.	 	Finance	 	4.44	 	11/14/2014	 	 	14,888	 	 	14,848	 	 	5,881	
Questex Media Group	 	Diversified Services	 	8.71	 	11/4/2014	 	 	10,000	 	 	10,000	 	 	6,000	
Ram Energy Resources, Inc.	 	Oil & Gas	 	9.38	 	11/15/2011	 	 	14,173	 	 	14,173	 	 	10,630	
Texas Competitive Electric Holdings Company LLC	 	Utilities	 	5.37	 	10/10/2014	 	 	13,805	 	 	13,928	 	 	9,606	
Univar Inc.	 	Chemicals, Plastics, & Rubber	 	6.76	 	10/15/2014	 	 	21,780	 	 	21,462	 	 	13,285	
Wyle Laboratories	 	Aerospace & Defense	 	11.26	 	1/17/2015	 	 	15,000	 	 	14,763	 	 	11,250	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Bank Debt/Senior Secured Loans	 	 	 	 	 	 	 	$	251,828	 	$	250,473	 	$	146,907	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Subordinated Debt/Corporate Notes—69.3%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adams Outdoor Advertising	 	Broadcasting & Entertainment	 	13.50	 	8/14/2011	 	$	40,000	 	$	39,145	 	$	34,800	
Advanstar Communications Inc.	 	Diversified Services	 	10.76	 	12/1/2015	 	 	21,492	 	 	21,492	 	 	2,149	
Affinity Group, Inc.	 	Printing, Publishing, Broadcasting	 	10.88	 	10/15/2012	 	 	18,979	 	 	19,117	 	 	8,540	
AMC Entertainment Holdings, Inc.	 	Leisure, Motion Pictures, Entertainment	 	7.00	 	6/13/2012	 	 	22,941	 	 	22,589	 	 	11,370	
Booz Allen	 	Aerospace & Defense	 	13.00	 	7/31/2016	 	 	43,000	 	 	42,592	 	 	36,550	
Casema B.V.(3)	 	Telecommunications	 	12.31	 	11/17/2016	 	 	7,264	 	 	7,187	 	 	5,988	
Casema B.V.(3)	 	Telecommunications	 	12.64	 	11/17/2016	 	 	7,837	 	 	7,760	 	 	6,415	
Direct Buy Inc.	 	Home and Office Furnishing, Consumer Products	 	14.50	 	5/30/2013	 	 	35,424	 	 	34,880	 	 	26,568	
DS Waters	 	Beverage, Food, and Tobacco	 	13.00	 	4/15/2012	 	 	87,082	 	 	85,928	 	 	77,503	
Fleetpride Corporation	 	Cargo Transport	 	11.50	 	10/1/2014	 	 	43,000	 	 	43,170	 	 	37,625	
FreedomRoads	 	Automotive	 	12.00	 	5/30/2013	 	 	27,500	 	 	27,079	 	 	23,650	
Global Garden Products(3)(6)	 	Farming & Agriculture	 	15.28	 	10/31/2016	 	 	32,913	 	 	34,187	 	 	18,760	
Grakon, LLC	 	Cargo Transport	 	12.00	 	6/19/2013	 	 	20,100	 	 	19,803	 	 	12,362	
Iglo Birds Eye Group Limited(3)(4)	 	Beverage, Food, and Tobacco	 	11.04	 	12/8/2016	 	 	4,871	 	 	4,702	 	 	2,953	
Iglo Birds Eye Group Limited(3)(4)	 	Beverage, Food, and Tobacco	 	11.27	 	12/8/2016	 	 	10,486	 	 	14,223	 	 	6,357	
Jonathan Engineering Solutions Corp.	 	Diversified/Conglomerate Manufacturing	 	16.50	 	6/29/2014	 	 	3,888	 	 	3,713	 	 	2,722	
Jonathan Engineering Solutions Corp.	 	Diversified/Conglomerate Manufacturing	 	13.00	 	6/29/2014	 	 	10,480	 	 	10,448	 	 	7,336	
Learning Care Group No.2, Inc	 	Healthcare, Education, and Childcare	 	13.50	 	12/31/2015	 	 	30,395	 	 	29,962	 	 	24,316	
Magnolia River, LLC	 	Hotels, Motels, Inns & Gaming	 	14.00	 	4/28/2014	 	 	20,500	 	 	19,487	 	 	17,425	
National Interest Security Corporation(11)	 	Aerospace & Defense	 	15.00	 	1/20/2013	 	 	30,539	 	 	30,072	 	 	27,180	
Pacific Crane Maintenance Company, L.P.	 	Machinery	 	13.00	 	2/15/2014	 	 	9,000	 	 	8,862	 	 	6,300	
ProSieben Sat.1 Media AG(3)(8)	 	Broadcasting & Entertainment	 	12.37	 	3/6/2017	 	 	20,420	 	 	20,517	 	 	819	
Questex Media Group	 	Diversified Services	 	14.50	 	11/4/2014	 	 	36,798	 	 	36,296	 	 	23,919	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	10.49	 	12/12/2013	 	 	14,118	 	 	15,599	 	 	10,518	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	12.00	 	12/12/2013	 	 	4,779	 	 	5,283	 	 	3,685	
Tri-Star Electronics International, Inc.	 	Aerospace & Defense	 	13.25	 	8/2/2013	 	 	22,500	 	 	22,500	 	 	18,450	
Valley National Gases LLC	 	Industrial Gas Distribution	 	13.50	 	2/28/2015	 	 	27,000	 	 	26,612	 	 	22,950	
Wastequip, Inc.	 	Containers	 	12.00	 	2/5/2015	 	 	15,431	 	 	15,431	 	 	3,858	
Weetabix Group(3)(7)	 	Beverage, Food, and Tobacco	 	14.38	 	9/14/2016	 	 	10,835	 	 	14,898	 	 	6,230	
Weetabix Group(3)(7)	 	Beverage, Food, and Tobacco	 	13.52	 	5/7/2017	 	 	23,234	 	 	31,771	 	 	13,011	
Wire Rope Corporation (nka WireCo World Group)	 	Diversified/Conglomerate Manufacturing	 	11.00	 	2/8/2015	 	 	35,000	 	 	35,811	 	 	31,640	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Subordinated Debt/Corporate Notes	 	 	 	 	 	 	 	$	737,806	 	$	751,116	 	$	531,949	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Preferred Equity—0.8%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Reader’s Digest Association, Inc.(13)	 	Printing, Publishing, Broadcasting	 	13.50	 	3/2/2019	 	$	61,450	 	$	61,101	 	$	6,145	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Preferred Equity	 	 	 	 	 	 	 	$	61,450	 	$	61,101	 	$	6,145	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2008
(in thousands, except shares)

Description(1)	 	Industry	 	Interest(2)	 	Maturity	 	Par Amount/
Shares	 	 	Cost	 	Fair
Value	 	
Common Equity / Partnership Interests / Warrants—9.9%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advanstar Communications Inc.	 	Media	 	 	 	 	 	3,400,000	  	 	 	3,400	 	 	68	  	
Ark Real Estate Partners LP(9)(11)	 	Real Estate	 	 	 	 	 	28,006,121	  	 	 	28,006	 	 	24,619	  	
Alternative Asset Management Acquisition Corp.	 	Finance	 	 	 	 	 	712,000	  	 	 	712	 	 	50	  	
Alternative Asset Management Acquisition Corp.	 	Finance	 	 	 	 	 	286,400	  	 	 	2,681	 	 	2,646	  	
Alternative Asset Management Acquisition Corp.	 	Finance	 	 	 	 	 	1,293,750	  	 	 	3	 	 	3	  	
505 Capital Partners GP (CIT JV)(10)	 	Finance	 	 	 	 	 	30,000	  	 	 	30	 	 	30	  	
505 Capital Partners LP (CIT JV)(10)(14)	 	Finance	 	 	 	 	 	—  	  	 	 	—  	 	 	—  	  	
Direct Buy Inc.	 	Home and Office Furnishing, Consumer Products	 	 	 	 	 	5,000,000	  	 	 	5,000	 	 	2,500	  	
Grakon, LLC	 	Cargo Transport	 	 	 	 	 	1,714,286	  	 	 	1,714	 	 	343	  	
Dufry	 	Retail Stores	 	 	 	 	 	39,056	  	 	 	2,842	 	 	1,013	  	
National Interest Security Corporation(11)	 	Aerospace & Defense	 	 	 	 	 	2,265,023	  	 	 	2,265	 	 	12,951	  	
National Specialty Alloys, LLC(10)	 	Industrial	 	 	 	 	 	1,000,000	  	 	 	10,000	 	 	12,900	  	
Nuveen Investments, Inc.	 	Finance	 	 	 	 	 	3,000,000	  	 	 	30,000	 	 	4,500	  	
NXP Semiconductors Netherlands B.V.(3)	 	Technology	 	 	 	 	 	944,628	  	 	 	31,057	 	 	4,936	  	
Pacific Crane Maintenance Company, L.P.	 	Machinery	 	 	 	 	 	10,000	  	 	 	1,000	 	 	359	  	
The Reader’s Digest Association, Inc	 	Printing, Publishing, Broadcasting	 	 	 	 	 	16,606,060	  	 	 	16,606	 	 	—  	  	
Seven Media Group Pty Limited(3)	 	Broadcasting & Entertainment	 	 	 	 	 	4,285,714	  	 	 	3,301	 	 	1,494	  	
Sandridge Energy, Inc.(12)	 	Oil & Gas	 	 	 	 	 	740,556	  	 	 	13,891	 	 	4,554	  	
Station Casino, Inc.	 	Hotels, Motels, Inns & Gaming	 	 	 	 	 	40,000,000	  	 	 	40,486	 	 	2,000	  	
Wyle Laboratories	 	Aerospace & Defense	 	 	 	 	 	123,140	  	 	 	1,050	 	 	1,050	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Common Equity/Partnerships Interests / Warrants	 	 	 	 	 	 	 	 	 	 	$	194,044	 	$	76,016	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Put/Call Options Purchased or Written—0.9%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sandridge Energy, Inc.(12)	 	Oil & Gas	 	 	 	 	 	(285,000	) 	 	$	—  	 	$	(3	) 	
Sandridge Energy, Inc.(12)	 	Oil & Gas	 	 	 	 	 	285,000	  	 	 	—  	 	 	7,201	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Put/Call Options Purchased or Written	 	 	 	 	 	 	 	 	 	 	$	—  	 	$	7,198	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments	 	 	 	 	 	 	 	 	 	 	$	1,256,734	 	$	768,215	  	

(1)	 	We generally acquire our investments in private transactions exempt from registration under the Securities Act. Our investments are therefore generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.	
(2)	 	A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to LIBOR or EURIBOR, and which reset daily, quarterly or semi-annually. For each debt investment we have provided the current interest rate in effect as of December 31, 2008.	
(3)	 	The following entities are domiciled outside the United States: Casema B.V. and NXP Semiconductors Netherlands B.V. in The Netherlands; Iglo Birds Eye Group Limited, Global Garden Products and Weetabix Group in the United Kingdom; ProSieben Sat.1 Media AG in Germany; and Seven Media Group Pty Limited in Australia. All other investments are domiciled in the United States.	
(4)	 	Solar Capital LLC’s investments in Iglo Birds Eye Group Limited are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(5)	 	Solar Capital LLC’s investments in Classic Cruises Holdings are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(6)	 	Solar Capital LLC’s investments in Global Garden Products are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(7)	 	Solar Capital LLC’s investments in Weetabix Group are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(8)	 	Solar Capital LLC’s investments in ProSieben Sat. 1 Media AG are held through its wholly-owned subsidiary Solar Capital Luxembourg I S.a.r.l.	
(9)	 	Solar Capital LLC is committed to fund capital of $48,845 of which $28,006 has already been funded.	
(10)	 	Denotes a Control Investment. “Control Investments” are defined in the 1940 Act as investments in those companies that the Company is deemed to “Control.” Generally, under the 1940 Act, the Company is deemed to “Control” a company in which it has invested if it owns 25% or more of the voting securities of such company or has greater than 50% representation on its board.	
(11)	 	Denotes an Affiliate Investment. “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of the Company, as defined in the 1940 Act, which are not “Control Investments.” The Company is deemed to be an “Affiliate” of a company in which it has invested if it owns 5% or more but less than 25% of the voting securities of such company.	
(12)	 	In the third quarter of 2008 Solar Capital LLC entered into a costless collar transaction creating a partial economic hedge of the Sandridge Energy, Inc. equity investment.	
(13)	 	Investment is on non-accrual status.	
(14)	 	Investment had capital returned and has an unfunded commitment of $75 million at December 31, 2008	
See notes to consolidated financial statements.
 
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SOLAR CAPITAL LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2008

Industry Classification	  	Percentage of Total
Investments (at fair
value) as of
December 31, 2008	 	
Beverage, Food, and Tobacco	  	14	% 	
Aerospace & Defense	  	12	% 	
Printing, Publishing, Broadcasting	  	6	% 	
Oil & Gas	  	6	% 	
Diversified / Conglomerate Manufacturing	  	5	% 	
Cargo Transport	  	5	% 	
Diversified / Conglomerate Service	  	5	% 	
Business Services	  	5	% 	
Insurance	  	4	% 	
Broadcasting & Entertainment	  	4	% 	
Healthcare, Education, and Childcare	  	4	% 	
Home and Office Furnishing, Consumer Products	  	4	% 	
Real Estate	  	3	% 	
Automotive	  	3	% 	
Hotels, Motels, Inns & Gaming	  	3	% 	
Machinery	  	3	% 	
Farming & Agriculture	  	2	% 	
Leisure, Motion Pictures, Entertainment	  	2	% 	
Electronics	  	2	% 	
Chemicals, Plastics and Rubber	  	2	% 	
Finance	  	2	% 	
Mining, Steel, Iron, and Nonprecious Metals	  	2	% 	
Utilities	  	1	% 	
Containers, packaging and glass	  	1	% 	
 	  	 	 	
 	  	100	% 	
 	  	 	 	
See notes to consolidated financial statements.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009
(unaudited)
(in thousands, except shares)
Note 1. Organization
Solar Capital LLC (“Solar Capital” or the “Company”), a Maryland limited liability company organized on February 12, 2007, is a closed-end, management investment company. The Company commenced operations on March 13, 2007 with initial capital of $1.2 billion of which 47.04% was funded by affiliated parties.
The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. The Company invests primarily in middle-market companies in the form of mezzanine and senior secured loans, each of which may include an equity component, and, to a lesser extent, by making direct equity investments in such companies.
Note 2. Significant Accounting Policies
Basis of Presentation—The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”), and include the accounts of the Company and its wholly-owned subsidiary, Solar Capital Luxembourg I S.a.r.l., which was incorporated under the laws of the Grand Duchy of Luxembourg on April 26, 2007. The consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition for the periods presented. All significant intercompany balances and transactions have been eliminated.
Certain prior period amounts have been reclassified to conform to current period presentation.
Investments—The Company applies fair value accounting in accordance with GAAP. Security transactions are accounted for on the trade date. Securities for which market quotations are readily available on an exchange shall be valued at such price as of the closing price on the day of valuation. The Company may also obtain quotes with respect to certain of its investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is sufficient according to GAAP to determine the fair value of the security. If determined adequate, the Company uses the quote obtained.
Securities for which reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Company’s investment adviser (the “Adviser”) or Board of Directors (the “Board”), does not represent fair value, shall each be valued as follows:
 
 	1)	The quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for the portfolio investment;	
 
 	2)	Preliminary valuation conclusions are then documented and discussed with senior management;	
 
 	3)	Third-party valuation firms are engaged by, or on behalf of, the Board to conduct independent appraisals and review management’s preliminary valuations and make their own independent assessment, for all material assets; and	
 
 	4)	The Board discusses valuations and determines the fair value of each investment in the portfolio in good faith based on the input of the Company’s investment adviser (note 4) and, where appropriate, the respective independent valuation firms.	
Valuation methods, among other measures and as applicable, may include comparisons of financial ratios of the portfolio companies that issued such private equity securities to peer companies that are public, the nature
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will consider the pricing indicated by the external event to corroborate the private equity valuation. 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 investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.
Investments of sufficient credit quality purchased within 60 days of maturity are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value.
Cash and Cash Equivalents—Cash and cash equivalents include investments in money market accounts or investments with original maturities of three months or less.
Revenue Recognition—The Company’s revenue recognition policies are as follows:
Sales: Gains or losses on the sale of investments are calculated by using the specific identification method.
Interest Income: Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Origination, closing and/or commitment fees associated with investments in portfolio companies are accreted into interest income over the respective terms of the applicable loans. Upon the prepayment of a loan or debt security, any prepayment penalties and unamortized loan origination, closing and commitment fees are recorded as part of interest income. The Company has loans in its portfolio that contain a payment-in-kind (“PIK”) provision. PIK interest is accrued at the contractual rates and added to the loan principal on the reset dates.
Non-accrual: Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.
Income Taxes—The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions with respect to tax at the partnership level not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. Income tax expense is a component of other general and administrative expenses on the Consolidated Statements of Operations.
The major tax jurisdiction of the Company and the earliest tax year subject to examination is as follows: United States 2007.
Foreign Currency Translation—The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. The Company’s investments in foreign
 
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SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
securities may involve certain risks such as foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company.
Derivative Instruments and Hedging Activity—In accordance with GAAP, the Company recognizes derivatives as either assets or liabilities at their fair value on its Consolidated Statements of Assets and Liabilities. At this time, the Company does not document formal hedge relationships because the hedged items are recorded at fair value with realized and unrealized gains and losses recognized in current earnings. Realized and unrealized gains and losses from derivatives are also recorded in current earnings. Realized gains or losses from derivatives are recognized when contracts are settled.
The Company primarily uses foreign exchange forward contracts in order to economically hedge its foreign currency risk. Foreign exchange forward contracts are marked-to-market by recognizing the difference between the contract exchange rate and the current market exchange rate. The fair values of foreign exchange forward contracts are recognized in either derivative assets or derivative liabilities in the Company’s Consolidated Statements of Assets and Liabilities.
The Company may also borrow in foreign currencies on its multicurrency credit lines to reduce foreign currency exposure. The changes in market values of assets and liabilities denominated in the same foreign currency offset in earnings providing a “natural” foreign currency hedge.
Use of Estimates in the Preparation of Financial Statements—The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially.
Subsequent Events Evaluation—The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through November 10, 2009, the date the financial statements were available to be issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments.
Note 3. Investments
Investments consisted of the following as of September 30, 2009 and December 31, 2008:

 	  	September 30, 2009	  	December 31, 2008	
 	  	Cost	  	Fair Value	  	Cost	  	Fair Value	
Bank Debt / Senior Secured Loans	  	$	182,362	  	$	159,915	  	$	250,473	  	$	146,907	
Subordinated Debt / Corporate Notes	  	 	744,833	  	 	574,402	  	 	751,116	  	 	531,949	
Preferred Equity	  	 	39	  	 	39	  	 	61,101	  	 	6,145	
Common Equity / Partnership Interests / Warrants	  	 	115,739	  	 	58,038	  	 	194,044	  	 	76,016	
Put/Call Options Purchased or Written	  	 	—  	  	 	—  	  	 	—  	  	 	7,198	
 	  	 	 	  	 	 	  	 	 	  	 	 	
Total	  	$	1,042,973	  	$	792,394	  	$	1,256,734	  	$	768,215	

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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
Note 4. Agreements
Solar Capital has an Investment Advisory and Management Agreement with Solar Capital Partners LLC (the “Investment Adviser”), under which the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, Solar Capital. For providing these services, the Investment Adviser receives a fee from Solar Capital, consisting of two components—a base management fee and an incentive fee. The base management fee is determined by taking the average value of Solar Capital’s gross assets at the end of the two most recently completed calendar quarters calculated at an annual rate of 2.00%. The incentive fee has two parts, as follows: one part is calculated and payable quarterly in arrears based on Solar Capital’s pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, 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 we receive from portfolio companies) accrued during the calendar quarter, minus Solar Capital’s operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement with Solar Capital Management, LLC, 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 does not include any realized capital gains computed net of all realized capital losses and unrealized capital depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of Solar Capital’s net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of 1.75% per quarter (7% annualized). Our net investment income used to calculate this part of the incentive fee is also included in the amount of our gross assets used to calculate the 2% base management fee. Solar Capital pays the Investment Adviser an incentive fee with respect to Solar Capital’s pre-incentive fee net investment income in each calendar quarter as follows: (1) no incentive fee in any calendar quarter in which Solar Capital’s pre-incentive fee net investment income does not exceed the hurdle rate; (2) 100% of Solar Capital’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter; and (3) 20% of the amount of Solar Capital’s pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter. These calculations are appropriately pro-rated for any period of less than three months and adjusted for any share issuances or repurchases during the relevant quarter. The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory and Management Agreement, as of the termination date), commencing on February 12, 2007, and will equal 20% of Solar Capital’s cumulative realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the Investment Adviser.
Solar Capital has also entered into an Administration Agreement with Solar Capital Management, LLC (the “Administrator”) under which the Administrator provides administrative services for Solar Capital. For providing these services, facilities and personnel, Solar Capital reimburses the Administrator for Solar Capital’s allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including rent. The Administrator will also provide, on Solar Capital’s behalf, managerial assistance to those portfolio companies to which Solar Capital is required to provide such assistance.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
Note 5. Derivatives
The Company is exposed to foreign exchange risk through its investments denominated in foreign currencies. The Company mitigates this risk through the use of foreign currency forward contracts. As an investment company, all changes in the fair value of assets, including changes caused by foreign currency fluctuation, flow through current earnings. The forward contracts serve as an economic hedge with their realized and unrealized gains and losses also recorded in current earnings. The Company has no derivatives designated as hedging instruments. During the year we entered into 17 foreign currency forward contracts with durations of 1 to 3 months and the average U.S. dollar value of foreign currency forward contracts was ($265).
As of September 30, 2009, there were two open forward foreign currency contracts denominated in Euro and British Pounds, all of which terminated on October 16, 2009. As of December 31, 2008, there were four open foreign currency contracts denominated in Euro, Australian Dollar, and British Pounds, all of which terminated on January 15, 2009. At September 30, 2009, there was no fixed collateral held by SunTrust Bank for the open contracts and no credit-related contingent features associated with any of the open forward contracts. As of December 31, 2008, there were no collateral requirements or credit-related contingent features associated with any of the open forward contracts. The contract details are as follows:

 	 	 	 	September 30, 2009	 	December 31, 2008	 	
Purchase:	 	Counterparty	 	Local
Currency	 	USD
Value	 	Unrealized
appreciation
(depreciation)	 	Local
Currency	 	USD
Value	 	Unrealized
appreciation
(depreciation)	 	
USD / EURO	 	SunTrust Bank	 	16,378	 	$	24,116	 	$	152	 	—  	 	$	—  	 	$	—  	  	
USD / GBP	 	SunTrust Bank	 	34,062	 	 	56,171	 	 	1,737	 	—  	 	 	—  	 	 	—  	  	
USD / EURO	 	Citibank N.A., NY	 	—  	 	 	—  	 	 	—  	 	22,765	 	 	33,335	 	 	1,668	  	
USD / EURO	 	Citibank N.A., NY	 	—  	 	 	—  	 	 	—  	 	25,000	 	 	33,410	 	 	(1,366	) 	
USD / GBP	 	Citibank N.A., NY	 	—  	 	 	—  	 	 	—  	 	31,830	 	 	48,957	 	 	2,470	  	
USD / AUD	 	Citibank N.A., NY	 	—  	 	 	—  	 	 	—  	 	30,507	 	 	20,995	 	 	80	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	 	 	 	 	$	80,287	 	$	1,889	 	 	 	$	136,697	 	$	2,852	  	

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SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
The following tables show the fair value and effect of the derivative instruments on the Consolidated Statements of Assets and Liabilities and the Consolidated Statements of Operations:

Fair Values of Derivative Instruments	 	
 	 	Derivative Assets	 	
 	 	September 30, 2009	 	December 31, 2008	 	
 	 	Balance Sheet Location	  	Fair Value	 	Balance Sheet Location	  	Fair Value	 	
Derivatives not designated as hedging instruments(a)	 	 	  	 	 	 	 	  	 	 	 	
Foreign exchange contracts	 	Derivative assets	  	$	1,889	 	Derivative assets	  	$	4,218	  	
Call Options	 	Investments	  	 	—  	 	Investments	  	 	(3	) 	
 	 	 	  	 	 	 	 	  	 	 	 	
Total derivatives not designated as hedging instruments(a)	 	 	  	$	1,889	 	 	  	$	4,215	  	
 	 	 	  	 	 	 	 	  	 	 	 	
Total derivatives	 	 	  	$	1,889	 	 	  	$	4,215	  	

 	 	Derivative Liabilities	 	
 	 	September 30, 2009	 	December 31, 2008	 	
 	 	Balance Sheet Location	  	Fair Value	 	Balance Sheet Location	  	Fair Value	 	
Derivatives not designated as hedging instruments(a)	 	 	  	 	 	 	 	  	 	 	 	
Foreign exchange contracts	 	Derivative liabilities	  	$	—  	 	Derivative liabilities	  	$	1,366	  	
Put Options	 	Investments	  	 	—  	 	Investments	  	 	7,201	  	
 	 	 	  	 	 	 	 	  	 	 	 	
Total derivatives not designated as hedging instruments(a)	 	 	  	$	—  	 	 	  	$	8,567	  	
 	 	 	  	 	 	 	 	  	 	 	 	
Total derivatives	 	 	  	$	—  	 	 	  	$	8,567	  	

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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)

Effect of Derivative Instruments on the Consolidated Statements of Operations	 	 	
Derivatives not designated as hedging
instruments (a)	 	Location of Gain or (Loss)
Recognized in Income on
Derivative	 	Amount of Gain or (Loss)
Recognized in Income on
Derivative	 	 	
 	 	 	 	Three months
ended
September 30,
2009	 	 	Three months
ended
September 30,
2008	 	 	Nine months
ended
September 30,
2009	 	 	Nine months
ended
September 30,
2008	 	 	 	
Foreign exchange contracts	 	Realized gain (loss): Forward contracts	 	$	(1,844	) 	 	$	13,370	  	 	$	(9,674	) 	 	$	2,219	  	 	 	
Foreign exchange contracts	 	Unrealized gain (loss): Forward contracts	 	 	1,725	  	 	 	4,675	  	 	 	(964	) 	 	 	2,883	  	 	 	
Put Options	 	Realized gain (loss): Investments	 	 	—  	  	 	 	—  	  	 	 	7,359	  	 	 	—  	  	 	 	
Put Options	 	Unrealized gain (loss): Investments	 	 	—  	  	 	 	704	  	 	 	(7,200	) 	 	 	704	  	 	 	
Call Options	 	Realized gain (loss): Investments	 	 	—  	  	 	 	—  	  	 	 	(9	) 	 	 	—  	  	 	 	
Call Options	 	Unrealized gain (loss): Investments	 	 	—  	  	 	 	(561	) 	 	 	3	  	 	 	(561	) 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	 	 	$	(119	) 	 	$	18,188	  	 	$	(10,485	) 	 	$	5,245	  	 	 	

(a)	See Note 2 for additional information on the Company’s purpose for entering into derivatives not designated as hedging instruments and its overall risk management strategy.	
Note 6. Borrowing Facilities
On January 11, 2008, Solar Capital LLC entered into a $200 million Senior Secured Revolving Credit Facility (the “Credit Facility”) with Citigroup Global Markets Inc. (“CGMI”), various lenders and Citibank, N.A., as administrative agent for the lenders. CGMI acted as the sole lead bookrunner and the sole lead arranger for the Credit Facility. Under the terms of the Credit Facility, the lenders agreed to extend credit to Solar Capital (the “Borrower”) in an aggregate principal or face amount not exceeding $200 million at any one time outstanding. The Credit Facility also allows the Borrower and the lenders to provide for a commitment increase to an amount not greater than $600 million. The Credit Facility is a three-year multi-currency revolving facility (with a stated maturity date of January 11, 2011) and is secured by substantially all of the assets of Solar Capital’s investment portfolio. Interest rate options include Base Rate (“BR”) loans, indexed to currency specific London Interbank Offered Rates (LIBOR), and Alternate Base Rate (“ABR”) loans, indexed to the Prime or Fed Funds rates, under two different borrowing options. Under Option I terms, borrowings bear interest at a rate per annum equal to the BR plus 1.375% and ABR plus for 0.00% or BR plus 2.00% and ABR plus 0.00% under Option II terms. However, Option II terms expired in January 2009. The facility allows for Swingline, or short notice, loans, which when denominated in foreign currencies bear interest at a rate per annum agreed between the Borrower and lender at the time the loans are made. The Credit Facility contains affirmative and negative covenants, including: (a) periodic financial reporting requirements; (b) notices of material events; (c) a requirement that the Borrower will not, nor will it permit any of its subsidiaries to, create, incur, assume or permit to exist any indebtedness, except (i) indebtedness created under the Credit Facility; (ii) secured longer-term indebtedness and unsecured longer-term indebtedness in an aggregate amount required to comply with the provisions of the Credit Facility; (iii) other permitted indebtedness, (iv) indebtedness of financing subsidiaries, (v) repurchase obligations arising in the normal course of business with respect to U.S. Government Securities,
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
(vi) obligations payable to clearing agencies, brokers or dealers in connection with the purchase or sale of securities in the ordinary course of business, (vii) secured shorter-term indebtedness and unsecured shorter-term indebtedness in an aggregate amount not exceeding 5% of shareholders’ equity and (viii) obligations (including guarantees) in respect of standard securitization undertakings; (d) maintaining minimum shareholders’ equity at the last day of any fiscal quarter not to be less than the greater of (A) 40% of the total assets of the Borrower and its subsidiaries as of the last day of such fiscal quarter and (B) $700 million plus 25% of the net proceeds of the sale of equity interests by the Borrower and its subsidiaries; (e) maintaining an asset coverage ratio that is not less than 2.00 to 1.00 at any time; (f) maintaining minimum liquidity requirements; (g) a requirement that the Borrower will not, and will not permit any of its subsidiaries to, enter into any material transactions with any of its affiliates or to engage in any material extent in any business other than in accordance with its investment policies and (h) a requirement that the Borrower not make any further negative pledge. The Credit Facility will be used to supplement Solar Capital’s equity capital to make additional investments and for other general corporate purposes.
On September 23, 2009, the Credit Facility was amended, lowering the minimum shareholder’s equity covenant to $475 million from $700 million and allowing for the transfer of assets free and clear of Credit Facility liens. Per the amended Credit Facility, borrowings bear interest at a rate per annum equal to the BR plus 2.50% and ABR plus 1.50%, with a 1.00% increase when the aggregate principal loan balance exceeds $100 million. In addition, prior to the Solar Capital initial public offering, the Credit Facility will be reduced no later than the earlier of May 1, 2010 or the date of the distribution to unit-holders based on the December 31, 2009 net asset value by the greater of (i) $25 million and (ii) 50% of the aggregate available and unused commitments at that time; and thereafter the amended Credit Facility will be reduced by 50% of net cash proceeds from the sale or repayment of portfolio investments.
The weighted average annual interest cost for the three months ended September 30, 2009 and September 30, 2008 was 2.77% and 5.09%, respectively. The weighted average annual interest cost for the nine months ended September 30, 2009 and September 30, 2008 was 2.56% and 5.09%, respectively. These costs are exclusive of the 0.25% for commitment fees and for other prepaid expenses related to establishing the Credit Facility. This weighted average annual interest cost reflects the average interest cost for all borrowings.
The average debt outstanding on the Credit Facility was $15,593 for the nine months ended September 30, 2009 and $10,255 for the year ended December 31, 2008. The maximum amounts borrowed during the nine months ended September 30, 2009 and year ended December 31, 2008 were $86,743 and $61,320, respectively. The debt outstanding as of September 30, 2009 was $25,584 and there were no outstanding borrowings as of December 31, 2008. At September 30, 2009 and December 31, 2008, the Company was in compliance with all financial and operational covenants required by the Credit Facility.
On March 11, 2009, the Company’s other credit facility (previously referred to as the Warehouse Facility) expired unused on its maturity.
Note 7. Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:
Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access (examples include active exchange-traded equity securities, exchange-traded derivatives, and most U.S. Government and agency securities).
Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
 
 	a)	Quoted prices for similar assets or liabilities in active markets;	
 
 	b)	Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);	
 
 	c)	Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and	
 
 	d)	Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.	
Level 3. Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability (examples include certain of our private debt and equity investments) and long-dated or complex derivatives (including certain equity and currency derivatives).
When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, gains and losses for such assets and liabilities categorized within the Level 3 table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Further, it should be noted that the following tables do not take into consideration the effect of offsetting Levels 1 and 2 financial instruments entered into by the Company that economically hedge certain exposures to the Level 3 positions.
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
The following table presents the balances of assets and liabilities measured at fair value on a recurring basis, as of September 30, 2009 and December 31, 2008:
Fair Value Measurements
As of September 30, 2009

 	  	Level 1	  	Level 2	  	Level 3	  	Total	
Assets:	  	 	 	  	 	 	  	 	 	  	 	 	
Bank Debt/Senior Secured Loans	  	$	—  	  	$	4,014	  	$	155,901	  	$	159,915	
Subordinated Debt / Corporate Notes	  	 	—  	  	 	58,565	  	 	515,837	  	 	574,402	
Preferred Equity	  	 	—  	  	 	—  	  	 	39	  	 	39	
Common Equity / Partnership Interests / Warrants	  	 	346	  	 	2,758	  	 	54,934	  	 	58,038	
Derivative assets—forward contracts	  	 	—  	  	 	1,889	  	 	—  	  	 	1,889	
Fair Value Measurements
As of December 31, 2008

 	  	Level 1	  	Level 2	  	Level 3	  	Total	
Assets:	  	 	 	  	 	 	  	 	 	  	 	 	
Bank Debt/Senior Secured Loans	  	$	—  	  	$	49,242	  	$	97,665	  	$	146,907	
Subordinated Debt / Corporate Notes	  	 	—  	  	 	22,533	  	 	509,416	  	 	531,949	
Preferred Equity	  	 	—  	  	 	—  	  	 	6,145	  	 	6,145	
Common Equity / Partnership Interests / Warrants	  	 	8,121	  	 	143	  	 	67,752	  	 	76,016	
Put/Call Options	  	 	 	  	 	7,198	  	 	 	  	 	7,198	
Derivative assets—forward contracts	  	 	—  	  	 	4,218	  	 	—  	  	 	4,218	
Liabilities:	  	 	 	  	 	 	  	 	 	  	 	 	
Derivative liabilities—forward contracts	  	 	—  	  	 	1,366	  	 	—  	  	 	1,366	
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
The following table provides a summary of the changes in fair value of Level 3 assets and liabilities for the period January 1, 2009 to September 30, 2009 and from January 1, 2008 to September 30, 2008, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at September 30, 2009 and September 30, 2008:
Fair Value Measurements Using Level 3 Inputs
As of September 30, 2009

 	  	Bank Debt/Senior
Secured Loans	 	 	Subordinated Debt/
Corporate Notes	 	 	Preferred Equity	 	 	Common Equity/
Partnership
Interests/Warrants	 	
Fair value, January 1, 2009	  	$	97,665	  	 	$	509,416	  	 	$	6,145	  	 	$	67,752	  	
Total gains or losses included in earnings:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net realized loss	  	 	(47,663	) 	 	 	(60,677	) 	 	 	(61,303	) 	 	 	(60,521	) 	
Net change in unrealized gain (loss)	  	 	68,533	  	 	 	30,212	  	 	 	54,956	  	 	 	48,753	  	
Purchases, sales, issuances, and settlements (net)	  	 	3,610	  	 	 	36,886	  	 	 	241	  	 	 	(1,051	) 	
Transfers into Level 3	  	 	33,756	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value, September 30, 2009	  	$	155,901	  	 	$	515,837	  	 	$	39	  	 	$	54,933	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in unrealized gain (loss):	  	$	23,988	  	 	$	(5,171	) 	 	$	—  	  	 	$	(11,168	) 	
The Company had no assets or liabilities measured at fair value on a nonrecurring basis during the year.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
Fair Value Measurements Using Level 3 Inputs
As of September 30, 2008

 	  	Bank Debt/Senior
Secured Loans	 	 	Subordinated Debt/
Corporate Notes	 	 	Preferred Equity	 	 	Common Equity/
Partnership
Interests/Warrants	 	
Fair value, January 1, 2008	  	$	192,794	  	 	$	564,615	  	 	$	55,299	  	 	$	203,071	  	
Total gains or losses included in earnings:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in unrealized gain (loss)	  	 	(3,991	) 	 	 	(63,488	) 	 	 	(16,549	) 	 	 	(30,457	) 	
Purchases, sales, issuances, and settlements (net)	  	 	10,682	  	 	 	138,087	  	 	 	5,802	  	 	 	12,210	  	
Transfers into (out of) Level 3	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(25,419	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value, September 30, 2008	  	$	199,485	  	 	$	639,214	  	 	$	44,552	  	 	$	159,405	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in unrealized gain (loss):	  	$	(3,991	) 	 	$	(63,488	) 	 	$	(16,549	) 	 	$	(30,457	) 	
The Company had no assets or liabilities measured at fair value on a nonrecurring basis during the year.
Note 8. Taxes
Withholding Tax
The Company is engaged in activities that for tax purposes have been deemed effectively connected with a U.S. trade or business. The Company generally is required to withhold and remit to the U.S. government a percentage of its net income and gains that are both effectively connected with that trade or business and allocated to non-U.S. unitholders, and the Company will be liable for interest and penalties with respect to amounts that are not so withheld. The relevant withholding percentage generally is the maximum applicable U.S. federal income tax rate, currently 35%. Non-U.S. unitholders that are corporations might also be subject to a “branch profits” tax on certain earnings deemed to have been repatriated to those persons. Similar withholding is required in various state and local jurisdictions.
The Company’s entire withholding tax receivable of $19,611 at September 30, 2009 and $16,505 at December 31, 2008 benefited our non-U.S. unit holders, for which they are obligated to repay the Company.
Income Tax
The Company is classified as a partnership for U.S. tax purposes, and therefore is generally not subject to federal and state income taxes. Each partner takes into account separately on their tax return their share of the taxable income, gains, losses, deductions or credits for the partnership’s taxable year. Accordingly, no provisions have been made in the accompanying financial statements for federal and state income tax.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
The Company is subject to New York City unincorporated business tax (UBT), which is imposed on the business income of every unincorporated business that is carried on in New York City. The UBT is imposed for each taxable year at a rate of approximately 4 percent of taxable income that is allocable to New York City.
As of September 30, 2009, the Company has determined that a deferred tax asset of $2,909 may be realized in future periods due to realized and unrealized losses on originated assets associated with the Company’s unincorporated business activities in New York City as of such date. The realization of this deferred tax asset has been deemed not likely to occur and accordingly, the Company has a set up a valuation allowance for the full amount.
The Company is also subject to taxes in Luxembourg, through Solar Capital Luxembourg I S.a.r.l., a wholly-owned subsidiary. Under the laws of Luxembourg, the Company pays a corporate income tax and a municipal business tax on its subsidiary’s taxable income.
Note 9. Earnings (Loss) Per Share
The following information sets forth the computation of basic and diluted net increase (decrease) in shareholders’ capital per share resulting from operations for the three and nine months ended September 30, 2009 and 2008:

 	  	Three months ended
September 30, 2009	  	Three months ended
September 30, 2008	 	 	Nine months ended
September 30, 2009	  	Nine months ended
September 30, 2008	 	
Numerator for basic and diluted earnings per share:	  	$	38,564	  	$	(86,652	) 	 	$	46,980	  	$	(88,715	) 	
Denominator for basic and diluted weighted average shares:	  	 	81,702,847	  	 	81,702,847	  	 	 	81,702,847	  	 	81,702,847	  	
Basic and diluted net increase (decrease) in shareholders’ capital per share resulting from operations:	  	$	0.47	  	$	(1.06	) 	 	$	0.58	  	$	(1.08	) 	
On March 17, 2009, the Company made a pro rata distribution to the unitholders. This distribution was equal to 10% of the December 31, 2008 net asset value and totaled approximately $85.3 million, or $1.04 per outstanding unit. On September 29, 2009 the board of directors declared another pro rata distribution payable to unitholders. This distribution was equal to 10% of the September 30, 2009 net asset value and totaled approximately $81.4 million, or $1.00 per outstanding unit and was payable as of September 30, 2009. This distribution was paid in October 2009.
 
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Table of Contents
SOLAR CAPITAL LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 2009
(unaudited)
(in thousands, except shares)
 
Note 10. Financial Highlights
The following is a schedule of financial highlights for the nine months ended September 30, 2009 and 2008:

 	  	Nine months ended
September 30, 2009	 	 	Nine months ended
September 30, 2008	 	
Per Share Data:	  	 	 	 	 	 	 	 	
Net asset value, beginning of period	  	$	10.44	  	 	$	15.40	  	
Offering Costs	  	 	—  	  	 	 	—  	  	
Net investment income	  	 	0.61	  	 	 	0.80	  	
Net realized and unrealized gain (loss)	  	 	(0.04	) 	 	 	(1.88	) 	
 	  	 	 	 	 	 	 	 	
Net increase (decrease) in net assets resulting from operations	  	 	0.57	  	 	 	(1.08	) 	
Distributions to unit holders declared	  	 	(2.04	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	
Net asset value end of period	  	$	8.97	  	 	$	14.32	  	
 	  	 	 	 	 	 	 	 	
Total return	  	 	5.46	% 	 	 	(7.02	)% 	
Net assets, end of period	  	$	732,947	  	 	$	1,169,786	  	
Ratio to average net assets	  	 	 	 	 	 	 	 	
Expenses	  	 	2.48	% 	 	 	2.21	% 	
Incentive fees	  	 	1.60	% 	 	 	0.29	% 	
 	  	 	 	 	 	 	 	 	
Total expenses	  	 	4.08	% 	 	 	2.50	% 	
Net investment income	  	 	7.99	% 	 	 	5.33	% 	
Note 11. Related Parties
Since July 2006, Mr. Gross, the Company’s chairman and chief executive officer, has been a partner in Magnetar Capital Partners LP, a multi-strategy investment manager. Mr. Spohler, the Company’s chief operating officer together with Solar Capital Partners, LLC’s other investment professionals, currently advise Magnetar Financial LLC on certain investments which coincide with those of the Company. Magnetar Financial LLC has had and may continue to have a financial interest in Solar Capital Partners, LLC. As a result of certain transactions prior to and immediately following the Company’s initial private placement, certain entities affiliated with Magnetar Financial LLC own as of September 30, 2009, either directly or indirectly, approximately 42.84% of the Company’s outstanding equity.
 
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Table of Contents
SOLAR CAPITAL LLC
SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES
(unaudited)
(in thousands, except shares)
Schedule 12-14
(unaudited)

 	 	 	 	 	 	Nine months ended
September 30, 2009	 	 	
Portfolio Company	 	Investment	 	As of
September 30,
2009
Number of Shares/
Principal Amount	 	Amount of
dividends and
interest
included in
income	 	Amount of
equity in
net profit
and loss	 	As of
September 30,
2009
Fair Value	
 	 	 	 	(in thousands)	 	(in thousands)	 	 	 	(in thousands)	
Investments Owned Greater than 25%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
National Specialty Alloys, LLC	 	Equity	 	 	1,000,000	 	$	—  	 	$	—  	 	$	9,000	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments Owned Greater than 25%	 	 	 	 	 	 	$	—  	 	$	—  	 	$	9,000	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investments Owned Greater than 5% and Less than 25%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
National Interest Security Corp.	 	Senior Debt	 	$	25,182	 	$	3,117	 	$	—  	 	$	25,938	
National Interest Security Corp.	 	Subordinated	 	$	30,539	 	 	3,760	 	 	—  	 	 	30,233	
National Interest Security Corp.	 	Equity	 	 	2,265,023	 	 	—  	 	 	—  	 	 	16,293	
Ark Real Estate Partners LP	 	Equity	 	 	28,006,121	 	 	—  	 	 	—  	 	 	20,010	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments Owned Greater than 5% and Less than 25%	 	 	 	 	 	 	$	6,877	 	$	—  	 	$	92,474	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The table below represents the balance at the beginning of the period, December 31, 2008 and any gross additions and reductions and net unrealized gain (loss) made to such investments as well as the ending fair value as of September 30, 2009.
Gross additions represent increases in the investment from additional investments, payments in kind of interest or dividends.
Gross reductions represent decreases in the investment from sales of investments or repayments.

 	  	Beginning
Fair Value
December 31,
2008	  	Gross
additions	  	Gross
reductions	  	Change in
Unrealized
Gain
(Loss)	 	 	Fair Value
as of
September 30,
2009	
National Specialty Alloys, LLC	  	$	12,900	  	$	—  	  	$	—  	  	$	(3,900	) 	 	$	9,000	
505 Capital Partners GP	  	 	30	  	 	—  	  	 	30	  	 	—  	  	 	 	—  	
National Interest Security Corp.	  	 	24,679	  	 	128	  	 	19	  	 	1,150	  	 	 	25,938	
National Interest Security Corp.	  	 	27,180	  	 	139	  	 	29	  	 	2,943	  	 	 	30,233	
National Interest Security Corp.	  	 	12,951	  	 	—  	  	 	—  	  	 	3,342	  	 	 	16,293	
Ark Real Estate Partners LP	  	 	24,619	  	 	—  	  	 	—  	  	 	(4,609	) 	 	 	20,010	
 
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Table of Contents
SOLAR CAPITAL LLC
SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES
(unaudited)
(in thousands, except shares)
Schedule 12-14

 	 	 	 	 	 	Year ended
December 31, 2008	 	 	
Portfolio Company	 	Investment	 	As of
December 31,
2008
Number of Shares/
Principal Amount	 	Amount of
dividends and
interest
included in
income	 	Amount of
equity in
net profit
and loss	 	As of
December 31,
2008
Fair Value	
 	 	 	 	(in thousands)	 	(in thousands)	 	 	 	(in thousands)	
Investments Owned Greater than 25%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
National Specialty Alloys, LLC	 	Equity	 	 	1,000,000	 	$	1,901	 	$	—  	 	$	12,900	
505 Capital Partners GP	 	Equity	 	 	30,000	 	 	—  	 	 	—  	 	 	30	
505 Capital Partners LP	 	Equity	 	 	—  	 	 	751	 	 	—  	 	 	—  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments Owned Greater than 25%	 	 	 	 	 	 	$	2,652	 	$	—  	 	$	12,930	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investments Owned Greater than 5% and Less than 25%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
National Interest Security Corp.	 	Senior Debt	 	$	25,182	 	$	2,381	 	$	—  	 	$	24,679	
National Interest Security Corp.	 	Subordinated	 	$	30,539	 	 	4,794	 	 	—  	 	 	27,180	
National Interest Security Corp.	 	Equity	 	 	2,265,023	 	 	—  	 	 	—  	 	 	12,951	
Ark Real Estate Partners LP	 	Equity	 	 	28,006,121	 	 	—  	 	 	—  	 	 	24,619	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Investments Owned Greater than 5% and Less than 25%	 	 	 	 	 	 	$	7,175	 	$	—  	 	$	89,429	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The table below represents the balance at the beginning of the period, December 31, 2007 and any gross additions and reductions and net unrealized gain (loss) made to such investments as well as the ending fair value as of December 31, 2008.
Gross additions represent increases in the investment from additional investments, payments in kind of interest or dividends.
Gross reductions represent decreases in the investment from sales of investments or repayments.

 	  	Beginning
Fair Value
December 31,
2007	  	Gross
additions	  	Gross
reductions	  	Change in
Unrealized
Gain
(Loss)	 	 	Fair Value
as of
December 31,
2008	
National Specialty Alloys, LLC	  	$	13,200	  	$	—  	  	$	—  	  	$	(300	) 	 	$	12,900	
505 Capital Partners GP	  	 	—  	  	 	30	  	 	—  	  	 	—  	  	 	 	30	
505 Capital Partners LP	  	 	—  	  	 	5,025	  	 	5,025	  	 	—  	  	 	 	—  	
National Interest Security Corp.	  	 	10,000	  	 	14,963	  	 	175	  	 	(109	) 	 	 	24,679	
National Interest Security Corp.	  	 	30,000	  	 	666	  	 	—  	  	 	(3,486	) 	 	 	27,180	
National Interest Security Corp.	  	 	1,765	  	 	500	  	 	—  	  	 	10,686	 	 	 	12,951	
Ark Real Estate Partners LP	  	 	26,987	  	 	2,605	  	 	—  	  	 	(4,973	) 	 	 	24,619	
 
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             Shares
Solar Capital Ltd.
Common Stock

 
P R E L I M I N A R Y    P R O S P E C T U S
                        , 2010

Citi
J.P. Morgan
Morgan Stanley

 

Table of Contents
PART C — OTHER INFORMATION
ITEM 25.    FINANCIAL STATEMENTS AND EXHIBITS
1. Financial Statements
The following financial statements of Solar Capital LLC (together with Solar Capital Ltd., the “Registrant” or the “Company”) are included in Part A “Information Required to be in the Prospectus” of the Registration Statement.
INDEX TO FINANCIAL STATEMENTS

 	  	Page	
Report of Independent Registered Public Accounting Firm	  	F-2  	
Consolidated Statements of Assets and Liabilities as of December 31, 2008 and December 31, 2007	  	F-3  	
Consolidated Statements of Operations for the year ended December 31, 2008 and the period from March  13, 2007 (date of inception) through December 31, 2007	  	F-4  	
Consolidated Statements of Changes in Net Assets for the year ended December 31, 2008 and the period from March 13, 2007 (date of inception) through December 31, 2007	  	F-5  	
Consolidated Statements of Cash Flows for the year ended December 31, 2008 and the period from March  13, 2007 (date of inception) through December 31, 2007	  	F-6  	
Consolidated Schedules of Investments as of December 31, 2008 and December 31, 2007	  	F-7  	
Notes to Consolidated Financial Statements	  	F-14	
Report of Independent Registered Public Accounting Firm	  	F-27	
Consolidated Statements of Assets and Liabilities as of September 30, 2009 (unaudited) and December  31, 2008	  	F-28	
Consolidated Statements of Operations for the three and nine months ended September 30, 2009 (unaudited) and September 30, 2008 (unaudited)	  	F-29	
Consolidated Statements of Changes in Net Assets for the nine months ended September 30, 2009 (unaudited) and September 30, 2008 (unaudited)	  	F-30	
Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 (unaudited) and September 30, 2008 (unaudited)	  	F-31	
Consolidated Schedules of Investments as of September 30, 2009 (unaudited) and December 31, 2008	  	F-32	
Notes to Consolidated Financial Statements (unaudited)	  	F-38	
Schedules of Investments in and Advances to Affiliates (unaudited)	  	F-52	
 
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2. Exhibits

Exhibit
Number	 	Description	
a.	 	Articles of Amendment and Restatement*	
 	 	
b.	 	Amended and Restated Bylaws*	
 	 	
d.1	 	Form of Common Stock Certificate*	
 	 	
d.2	 	Form of Note Agreement for Senior Unsecured Notes***	
 	 	
d.3	 	Form of Senior Unsecured Notes***	
 	 	
e.	 	Dividend Reinvestment Plan*	
 	 	
f.1	 	Senior Secured Revolving Credit Agreement by and between the Registrant, the Lenders and Citibank, N.A., as administrative agent, dated as of January 11, 2008**	
 	 	
f.2	 	Form of Amended and Restated Senior Secured Revolving Credit Agreement by and between the Registrant, the Lenders and Citibank, N.A., as administrative agent***	
 	 	
g.	 	Investment Advisory and Management Agreement by and between Registrant and Solar Capital Partners, LLC**	
 	 	
h.	 	Form of Underwriting Agreement***	
 	 	
j.	 	Form of Custodian Agreement***	
 	 	
k.1	 	Administration Agreement by and between Registrant and Solar Capital Management, LLC**	
 	 	
k.2	 	Form of Indemnification Agreement by and between Registrant and each of its directors*	
 	 	
k.3	 	Registration Rights Agreement by and between Registrant, Solar Cayman Limited, Solar Offshore Limited, Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and purchasers in the initial private placement**	
 	 	
k.4	 	First Amendment to the Registration Rights Agreement by and between Registrant, Solar Cayman Limited, Solar Offshore Limited, Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and purchasers in the initial private placement*	
 	 	
k.5	 	Registration Rights Agreement by and between Registrant, Magnetar Capital Fund, LP and Solar Offshore Limited**	
 	 	
k.6	 	Trademark License Agreement by and between Registrant and Solar Capital Partners, LLC*	
 	 	
l.	 	Opinion of Sutherland Asbill & Brennan LLP***	
 	 	
n.1	 	Consent of Sutherland Asbill & Brennan LLP (Incorporated by reference to exhibit l hereto)***	
 	 	
n.2	 	Consent of Independent Registered Public Accounting Firm*	
 	 	
r.	 	Code of Ethics*	
 	 	
99.1	 	Code of Business Conduct*	
 
*	Filed herewith.	
**	Previously filed in connection with Solar Capital Ltd.’s registration statement on Form N-2 (File No. 333-148734) filed on January 18, 2008.	
***	To be filed by amendment.	
 
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ITEM 26.    MARKETING ARRANGEMENTS
The information contained under the heading “Underwriting” on this Registration Statement is incorporated herein by reference.
ITEM 27.    OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

SEC registration fee	  	$	11,790	
FINRA filing fee	  	 	30,500	
NASDAQ Global Select Market	  	 	*	
Printing and postage	  	 	*	
Legal fees and expenses	  	 	*	
Accounting fees and expenses	  	 	*	
Miscellaneous	  	 	*	
 	  	 	 	
Total	  	$	*	

Note:	All listed amounts except for the SEC registration fee, the NASDAQ Global Select Market fee and the FINRA filing fee are estimates.	
*	To be provided by amendment.	
ITEM 28.    PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Immediately prior to this offering, Solar Capital Management, LLC will own 100% of the outstanding common stock of Solar Capital Ltd. Following the completion of this offering, Solar Capital Management, LLC’s share ownership is expected to represent less than 1% of Solar Capital Ltd.’s outstanding common stock.
See “Management,” “Certain Relationships and Transactions” and “Control Persons and Principal Stockholders” in the Prospectus contained herein.
ITEM 29.    NUMBER OF HOLDERS OF SECURITIES
The following table sets forth the number of record holders of the Registrant’s common stock at January 6, 2010:

Title of Class	  	Number of
Record Holders	
Common Stock, par value $0.01 per share	  	1	
ITEM 30.    INDEMNIFICATION
Directors and Officers
Reference is made to Section 2-418 of the Maryland General Corporation Law, Article VII of the Registrant’s charter and Article XI of the Registrant’s Amended and Restated Bylaws.
Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. The Registrant’s charter contains such a provision which eliminates directors’ and officers’ liability to the maximum extent permitted by Maryland law, subject to the requirements of the Investment Company Act of 1940, as amended (the “1940 Act”).
The Registrant’s charter authorizes the Registrant, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while serving as the Registrant’s director or officer and at the Registrant’s request, serves or has
 
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served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee, from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in any such capacity and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. The Registrant’s bylaws obligate the Registrant, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while serving as the Registrant’s director or officer and at the Registrant’s request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in that capacity from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in any such capacity and to pay or reimburse his or her reasonable expenses in advance of final disposition of a proceeding. The charter and bylaws also permit the Registrant to indemnify and advance expenses to any person who served a predecessor of the Registrant in any of the capacities described above and any of the Registrant’s employees or agents or any employees or agents of the Registrant’s predecessor. In accordance with the 1940 Act, the Registrant will not indemnify any person for any liability to which such person would be subject by reason of such person’s willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.
Maryland law requires a corporation (unless its charter provides otherwise, which the Registrant’s charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or threatened to be made, a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received unless, in either case, a court orders indemnification, and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer in advance of final disposition of a proceeding upon the corporation’s receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.
Adviser and Administrator
The Investment Advisory and Management Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, Solar Capital Partners, LLC (the “Adviser”) and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from the Registrant for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of the Adviser’s services under the Investment Advisory and Management Agreement or otherwise as an investment adviser of the Registrant.
The Administration Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, Solar Capital Management, LLC and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from the Registrant for any damages, liabilities,
 
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costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of Solar Capital Management, LLC’s services under the Administration Agreement or otherwise as administrator for the Registrant.
The law also provides for comparable indemnification for corporate officers and agents. Insofar as indemnification for liability arising under the Securities Act of 1933, as amended (the “Securities Act”) may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The Registrant has entered into indemnification agreements with its directors. The indemnification agreements are intended to provide the Registrant’s directors the maximum indemnification permitted under Maryland law and the 1940 Act. Each indemnification agreement provides that the Registrant shall indemnify the director who is a party to the agreement (an “Indemnitee”), including the advancement of legal expenses, if, by reason of his or her corporate status, the Indemnitee is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed proceeding, other than a proceeding by or in the right of the Registrant.
ITEM 31.    BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
A description of any other business, profession, vocation, or employment of a substantial nature in which the Adviser, and each managing director, director or executive officer of the Adviser, is or has been during the past two fiscal years, engaged in for his or her own account or in the capacity of director, officer, employee, partner or trustee, is set forth in Part A of this Registration Statement in the sections entitled “Management — Board of Directors,” “Investment Advisory and Management Agreement” and “Portfolio Management — Investment Personnel.” Additional information regarding the Adviser and its officers and directors will be set forth in its Form ADV, as filed with the Securities and Exchange Commission (SEC File No. 801-68710), under the Investment Advisers Act of 1940, as amended, and is incorporated herein by reference.
ITEM 32.    LOCATION OF ACCOUNTS AND RECORDS
All accounts, books, and other documents required to be maintained by Section 31(a) of the 1940 Act, and the rules thereunder are maintained at the offices of:
 
 	(1)	the Registrant, Solar Capital Ltd., 500 Park Avenue, 5th Floor, New York, NY 10022;	
 
 	(2)	the Transfer Agent, American Stock Transfer & Trust Company, 59 Maiden Lane, Plaza Level, New York, NY 10038;	
 
 	(3)	the Custodian, The Bank of New York Mellon Corporation, One Wall Street, New York, NY 10286; and	
 
 	(4)	the Adviser, Solar Capital Partners, LLC, 500 Park Avenue, 5th Floor, New York, NY 10022.	
ITEM 33.    MANAGEMENT SERVICES
Not applicable.
 
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ITEM 34.    UNDERTAKINGS
(1) Registrant undertakes to suspend the offering of the shares of common stock covered hereby until it amends its prospectus contained herein if (a) subsequent to the effective date of this Registration Statement, its net asset value per share of common stock declines more than 10% from its net asset value per share of common stock as of the effective date of this Registration Statement, or (b) its net asset value per share of common stock increases to an amount greater than its net proceeds as stated in the prospectus contained herein.
(2) Not applicable.
(3) Not applicable.
(4) Not applicable.
(5) Registrant undertakes that:
(a) For purposes of determining any liability under the Securities Act of 1933, as amended, the information omitted from the form of prospectus filed as part of the Registration Statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to Rule 497(h) under the Securities Act of 1933, as amended, shall be deemed to be part of this Registration Statement as of the time it was declared effective.
(b) For purposes of determining any liability under the Securities Act of 1933, as amended, each post-effective amendment that contains a form of prospectus shall be deemed to a new registration statement relating to the securities at that time shall be deemed to be the initial bona fide offering thereof.
(6) Not applicable.
 
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused Amendment No. 7 to this Registration Statement on Form N-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, in the State of New York, on the 6th day of January, 2010.

SOLAR CAPITAL LTD.	
 	 	
By:	 	/s/    MICHAEL S. GROSS	
 	 	Michael S. Gross	
 	 	Chief Executive Officer, President, Chairman of the Board and Director	
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael S. Gross as true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to this Registration Statement (including post-effective amendments, or any abbreviated registration statement and any amendments thereto filed pursuant to Rule 462(b) and otherwise), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission granting unto said attorney-in-fact and agent the full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as to all intents and purposes as either of them might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, Amendment No. 7 to this Registration Statement on Form N-2 has been signed by the following persons on behalf of the Registrant, and in the capacities indicated, on the 6th day of January, 2010.

Signature	  	Title	
 	 	
/s/    MICHAEL S. GROSS
Michael S. Gross	  	Chief Executive Officer, President, Chairman of the Board and Director (Principal Executive Officer)	
 	 	
*
Steven Hochberg	  	Director	
 	 	
*
David S. Wachter	  	Director	
 	 	
/S/    LEONARD A. POTTER
Leonard A. Potter	  	Director	
 	 	
/S/    BRUCE SPOHLER
Bruce Spohler	  	Chief Operating Officer and Director	
 	 	
/s/    NICHOLAS RADESCA
Nicholas Radesca	  	Chief Financial Officer (Principal Financial Officer) and Secretary	
 
*	Signed by Michael S. Gross pursuant to a power of attorney signed by each individual and filed with this registration statement on January 18, 2008.	
 
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Exhibit a
SOLAR CAPITAL LTD.
ARTICLES OF AMENDMENT AND RESTATEMENT
FIRST: Solar Capital Ltd., a Maryland corporation (the “Corporation”), desires to amend and restate its charter as currently in effect and as hereinafter amended.
SECOND: The following provisions are all the provisions of the charter currently in effect and as hereinafter amended:
ARTICLE I
NAME
The name of the corporation (the “Corporation”) is Solar Capital Ltd.
ARTICLE II
PURPOSES
The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force, including, without limitation or obligation, engaging in business as a business development company under the Investment Company Act of 1940 (the “1940 Act”).
ARTICLE III
RESIDENT AGENT AND PRINCIPAL OFFICE
The name of the resident agent of the Corporation in Maryland is The Corporation Trust Incorporated, whose address is 300 East Lombard Street, Baltimore, Maryland 21202. The address of the principal office of the Corporation in the State of Maryland is c/o The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202.
ARTICLE IV
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS
Section 4.1 Number, Vacancies and Classification of Directors. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation is five, which number may be increased or decreased only by the Board of Directors pursuant to the Bylaws, but shall never be less than the minimum number required by the Maryland General Corporation Law (the “MGCL”). The names of the directors who shall serve until the first annual meeting of stockholders and until their successors are duly elected and qualify are:
Michael S. Gross
Bruce Spohler
Steven Hochberg
David S. Wachter
Leonard A. Potter

These directors may increase the number of directors and may fill any vacancy, whether resulting from an increase in the number of directors or otherwise, on the Board of Directors occurring before the first annual meeting of stockholders in the manner provided in the Bylaws.
The Corporation elects, at such time as the Corporation becomes eligible to make an election provided for under Section 3-802(b) of the MGCL, that, subject to applicable requirements of the 1940 Act and except as may be provided by the Board of Directors in setting the terms of any class or series of Preferred Stock (as hereinafter defined), any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred and until a successor is duly elected and qualifies.
On the first date on which the Corporation shall have more than one stockholder of record, the directors (other than any director elected solely by holders of one or more classes or series of Preferred Stock in connection with dividend arrearages) shall be classified, with respect to the terms for which they severally hold office, into three classes, as nearly equal in number as possible as determined by the Board of Directors, one class to hold office initially for a term expiring at the next succeeding annual meeting of stockholders, another class to hold office initially for a term expiring at the second succeeding annual meeting of stockholders and another class to hold office initially for a term expiring at the third succeeding annual meeting of stockholders, with the members of each class to hold office until their successors are duly elected and qualify. At each annual meeting of the stockholders, the successors to the class of directors whose term expires at such meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify.
Section 4.2 Extraordinary Actions. Except as specifically provided in Section 4.9 (relating to removal of directors), and in Section 6.2 (relating to certain actions and certain amendments to the charter), notwithstanding any provision of law requiring any action to be taken or approved by the affirmative vote of the holders of shares entitled to cast a greater number of votes, any such action shall be effective and valid if declared advisable and approved by the Board of Directors and taken or approved by the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter.

Section 4.3 Election of Directors. Except as otherwise provided in the Bylaws of the Corporation, each director shall be elected by the affirmative vote of the holders of a majority of the shares of stock outstanding and entitled to vote thereon.
Section 4.4 Quorum. The presence in person or by proxy of the holders of shares of stock of the Corporation entitled to cast a majority of the votes entitled to be cast (without regard to class) shall constitute a quorum at any meeting of stockholders, except with respect to any such matter that, under applicable statutes or regulatory requirements or the charter, requires approval by a separate vote of one or more classes or series of stock, in which case the presence in person or by proxy of the holders of shares entitled to cast a majority of the votes entitled to be cast by such classes or series on such a matter shall constitute a quorum. To the extent permitted by Maryland law as in effect from time to time, the foregoing quorum provision may be changed by the Bylaws.
Section 4.5 Authorization by Board of Stock Issuance. The Board of Directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable (or without consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the Bylaws.
Section 4.6 Preemptive Rights. Except as may be provided by the Board of Directors in setting the terms of classified or reclassified shares of stock pursuant to Section 5.4 or as may otherwise be provided by contract, no holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional shares of stock of the Corporation or any other security of the Corporation which it may issue or sell.
Section 4.7 Appraisal Rights. No holder of stock of the Corporation shall be entitled to exercise the rights of an objecting stockholder under Title 3, Subtitle 2 of the MGCL or any successor provision thereto unless the Board of Directors, upon the affirmative vote of a majority of the entire Board of Directors, shall determine that such rights apply, with respect to all or any classes or series of stock, or any proportion of the shares thereof, to a particular transaction or all transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.
Section 4.8 Determinations by Board. The determination as to any of the following matters, made in good faith by or pursuant to the direction of the Board of Directors consistent with the charter and in the absence of actual receipt of an improper benefit in money, property or services or active and deliberate dishonesty established by a court, shall be final and conclusive and shall be binding upon the Corporation and every holder of shares of its stock: the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, redemption of its stock or the payment of other distributions on its stock; the amount of paid-in surplus, net assets, other surplus, annual or other net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or

cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the Corporation; or any other matter relating to the business and affairs of the Corporation or required by the charter to be determined by the Board of Directors.
Section 4.9 Removal of Directors. Subject to the rights of holders of one or more classes or series of Preferred Stock to elect or remove one or more directors, any director, or the entire Board of Directors, may be removed from office at any time only for cause and only by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors. For the purpose of this paragraph, “cause” shall mean, with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active and deliberate dishonesty.
ARTICLE V
STOCK
Section 5.1 Authorized Shares. The Corporation has authority to issue 200,000,000 shares of stock, initially consisting of 200,000,000 shares of Common Stock, $0.01 par value per share (“Common Stock”). The aggregate par value of all authorized shares of stock having par value is $2,000,000. If shares of one class of stock are classified or reclassified into shares of another class or series of stock pursuant to this Article V, the number of authorized shares of the former class or series shall be automatically decreased and the number of shares of the latter class or series shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of stock of all classes and series that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of this paragraph. A majority of the entire Board of Directors, without any action by the stockholders of the Corporation, may amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.
Section 5.2 Common Stock. Each share of Common Stock shall entitle the holder thereof to one vote. The Board of Directors may reclassify any unissued shares of Common Stock from time to time in one or more classes or series of stock.
Section 5.3 Preferred Stock. The Board of Directors may classify any unissued shares of stock and reclassify any previously classified but unissued shares of stock of any class or series from time to time, in one or more classes or series of stock, including Preferred Stock (“Preferred Stock”).
Section 5.4 Classified or Reclassified Shares. Prior to issuance of classified or reclassified shares of any class or series, the Board of Directors by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of stock of the Corporation;

(b) specify the number of shares to be included in the class or series; (c) set or change, subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland (“SDAT”). Any of the terms of any class or series of stock may be made dependent upon facts or events ascertainable outside the charter (including determinations by the Board of Directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of stock is clearly and expressly set forth in the charter document filed with the SDAT.
Section 5.5 Inspection of Books and Records. A stockholder that is otherwise eligible under applicable law to inspect the Corporation’s books of account, stock ledger, or other specified documents of the Corporation shall have no right to make such inspection if the Board of Directors determines that such stockholder has an improper purpose for requesting such inspection.
Section 5.6 Charter and Bylaws. All persons who shall acquire stock in the Corporation shall acquire the same subject to the provisions of the charter and the Bylaws. The Board of Directors of the Corporation shall have the exclusive power, at any time, to make, alter, amend or repeal the Bylaws.
ARTICLE VI
AMENDMENTS; CERTAIN EXTRAORDINARY TRANSACTIONS
Section 6.1 Amendments Generally. The Corporation reserves the right from time to time to make any amendment to its charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the charter, of any shares of outstanding stock. All rights and powers conferred by the charter on stockholders, directors and officers are granted subject to this reservation.
Section 6.2. Approval of Certain Extraordinary Actions and Charter Amendments.
(a) Required Votes. The affirmative vote of the holders of shares entitled to cast at least 80 percent of the votes entitled to be cast on the matter, each voting as a separate class, shall be necessary to effect:
(i) Any amendment to the charter of the Corporation to make the Corporation’s Common Stock a “redeemable security” or the conversion of the Corporation, whether by amendment to the charter, merger or otherwise, from a “closed-end company” to an “open-end company” (as such terms are defined in the 1940 Act);

(ii) The liquidation or dissolution of the Corporation and any amendment to the charter of the Corporation to effect any such liquidation or dissolution; and
(iii) Any amendment to Section 4.1, Section 4.2, Section 4.9, Section 6.1 or this Section 6.2; provided, however, that, if the Continuing Directors (as defined herein), by a vote of at least majority of such Continuing Directors, in addition to approval by the Board of Directors, approve such proposal or amendment, the affirmative vote of the holders of a majority of the votes entitled to be cast shall be sufficient to approve such matter.
(b) Continuing Directors. “Continuing Directors” means (i) the directors identified in Section 4.1, (ii) the directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of the directors identified in Section 4.1, who are on the Board at the time of the nomination or election, as applicable, or (iii) any successor directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of the Continuing Directors or successor Continuing Directors, who are on the Board at the time of the nomination or election, as applicable.
ARTICLE VII
LIMITATION OF LIABILITY; INDEMNIFICATION
AND ADVANCE OF EXPENSES
Section 7.1 Limitation of Liability. To the maximum extent that the Maryland Law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no present or former director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages.
Section 7.2 Indemnification and Advance of Expenses. The Corporation shall have the power, to the maximum extent permitted by the Maryland Law in effect from time to time, to obligate itself to indemnify, and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to, (a) any individual who is a present or former director or officer of the Corporation or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such person may become subject or which such person may incur by reason of his status as a present or former director or officer of the Corporation. The Corporation shall have the power, with the approval of the Board of Directors, to provide such indemnification and advancement of expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation.
Section 7.3 1940 Act. The provisions of this Article VII shall be subject to the limitations of the 1940 Act.

Section 7.4 Amendment or Repeal. Neither the amendment nor repeal of this Article VII, nor the adoption or amendment of any other provision of the charter or Bylaws inconsistent with this Article VII, shall apply to or affect in any respect the applicability of the preceding sections of this Article VII with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.
THIRD: The amendment to and restatement of the charter as hereinabove set forth have been duly advised by the Board of Directors and approved by the stockholders of the Corporation as required by law.
FOURTH: The current address of the principal office of the Corporation is as set forth in Article III of the foregoing amendment and restatement of the charter.
FIFTH: The name and address of the Corporation’s current resident agent is as set forth in Article III of the foregoing amendment and restatement of the charter.
SIXTH: The number of directors of the Corporation and the names of those currently in office are as set forth in Article IV of the foregoing amendment and restatement of the charter.
SEVENTH: The total number of shares of stock which the Corporation had authority to issue immediately prior to this amendment and restatement was 100, consisting of 100 shares of Common Stock, $1.00 par value per share. The aggregate par value of all shares of stock having par value was $100.
EIGHTH: The total number of shares of stock which the Corporation has authority to issue pursuant to the foregoing amendment and restatement of the charter is 200,000,000 shares of Common Stock, $.01 par value per share. The aggregate par value of all authorized shares of stock having par value is $2,000,000.
NINTH: The undersigned President and Chief Executive Officer acknowledges these Articles of Amendment and Restatement to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President and Chief Executive Officer acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

Exhibit b
SOLAR CAPITAL LTD.
AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Corporation in the State of Maryland shall be located at such place as the Board of Directors may designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set by the Board of Directors and stated in the notice of the meeting.
Section 2. ANNUAL MEETING. Commencing with the 2010 annual meeting of stockholders of the Corporation, an annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on a date and at the time set by the Board of Directors.
Section 3. SPECIAL MEETINGS.
(a) General. The Chairman of the Board, the chief executive officer, the president or the Board of Directors may call a special meeting of the stockholders. Subject to subsection (b) of this Section 3, a special meeting of stockholders shall also be called by the secretary of the Corporation upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast at such meeting.
(b) Stockholder Requested Special Meetings. (1) Any stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice to the secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more stockholders of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date Request Notice), shall bear the date of signature of each such stockholder (or such agent) and shall set forth all information relating to each such stockholder that must be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A

(or any successor provision) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which the Record Date Request Notice is received by the secretary.
(2) In order for any stockholder to request a special meeting, one or more written requests for a special meeting signed by stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Date entitled to cast not less than a majority (the “Special Meeting Percentage”) of all of the votes entitled to be cast at such meeting (the “Special Meeting Request”) shall be delivered to the secretary. In addition, the Special Meeting Request (a) shall set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the secretary), (b) shall bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (c) shall set forth the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed) and the class, series and number of all shares of stock of the Corporation which are owned by each such stockholder, and the nominee holder for, and number of, shares owned by such stockholder beneficially but not of record, (d) shall be sent to the secretary by registered mail, return receipt requested, and (e) shall be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation or the Special Meeting Request) may revoke his, her or its request for a special meeting at any time by written revocation delivered to the secretary.
(3) The secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and mailing the notice of meeting (including the Corporation’s proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (2) of this Section 3(b), the secretary receives payment of such reasonably estimated cost prior to the mailing of any notice of the meeting.
(4) Except as provided in the next sentence, any special meeting shall be held at such place, date and time as may be designated by the Chairman of the Board, the chief executive officer, the president or the Board of Directors, whoever has called the meeting. In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder Requested Meeting”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however, that the date of any Stockholder Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder Requested Meeting, then such meeting shall be held at 2:00 p.m. local time on the 90th day after the Meeting Record Date or, if such 90th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that in the event that

the Board of Directors fails to designate a place for a Stockholder Requested Meeting within ten days after the Delivery Date, then such meeting shall be held at the principal executive office of the Corporation. In fixing a date for any special meeting, the Chairman of the Board, the chief executive officer, the president or the Board of Directors may consider such factors as he, she or it deems relevant within the good faith exercise of business judgment, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for any Stockholder Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (3) of this Section 3(b).
(5) If written revocations of the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting to the secretary, the secretary shall: (i) if the notice of meeting has not already been mailed, refrain from mailing the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for the special meeting, or (ii) if the notice of meeting has been mailed and if the secretary first sends to all requesting stockholders who have not revoked requests for a special meeting written notice of any revocation of a request for the special meeting and written notice of the secretary’s intention to revoke the notice of the meeting, revoke the notice of the meeting at any time before ten days before the commencement of the meeting. Any request for a special meeting received after a revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.
(6) The Board of Directors, the Chairman of the Board or the president may appoint independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the secretary. For the purpose of permitting the inspectors to perform such review, no such purported request shall be deemed to have been delivered to the secretary until the earlier of (i) five Business Days after receipt by the secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary represent, as of the Request Record Date, not less than the Special Meeting Percentage. Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).
(7) For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or other day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

Section 4. NOTICE OF MEETINGS. Not less than ten nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting written or printed notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, either by mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. A single notice shall be effective as to all stockholders who share an address, except to the extent that a stockholder at such address objects to such single notice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II, or the validity of any proceedings at any such meeting.
Subject to Section 11(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a “public announcement” (as defined in Section 11(c)(3)) of such postponement or cancellation prior to the meeting.
Section 5. ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment, by the Chairman of the Board, if any, or, in the case of a vacancy in the office or absence of the Chairman of the Board, by one of the following officers present at the meeting: the Vice Chairman of the Board, if any, the chief executive officer, the president, any vice president, the secretary, the treasurer or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary or, in the secretary’s absence, an assistant secretary or, in the absence of both the secretary and assistant secretaries, an individual appointed by the Board of Directors or, in the absence of such appointment, an individual appointed by the chairman of the meeting shall act as secretary. In the event that the secretary presides at a meeting of the stockholders, an assistant secretary, or, in the absence of assistant secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairman and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies or other such individuals as the chairman of the meeting

may determine; (d) limiting the time allotted to questions or comments by participants; (e) determining when the polls should be opened and closed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 6. QUORUM. The presence in person or by proxy of the holders of shares of stock of the Corporation entitled to cast a majority of the votes entitled to be cast (without regard to class) shall constitute a quorum at any meeting of the stockholders, except with respect to any such matter that, under applicable statutes or regulatory requirements, requires approval by a separate vote of one or more classes of stock, in which case the presence in person or by proxy of the holders of shares entitled to cast a majority of the votes entitled to be cast by each such class on such a matter shall constitute a quorum. This section shall not affect any requirement under any statute or the charter of the Corporation for the vote necessary for the adoption of any measure.
If, however, such quorum shall not be present at any meeting of the stockholders, the chairman of the meeting shall have the power to (a) adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting or (b) conclude the meeting without adjournment to another date. If a meeting is adjourned and a quorum is present at such adjournment, any business may be transacted which might have been transacted at the meeting as originally notified.
The stockholders present either in person or by proxy, at a meeting which has been duly called and convened, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
Section 7. VOTING. A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the charter of the Corporation. Unless otherwise provided in the charter, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders.
Section 8. PROXIES. A stockholder may cast the votes entitled to be cast by the holder of the shares of stock owned of record by the stockholder in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy.

Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any director or other fiduciary may vote stock registered in his or her name as such fiduciary, either in person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.
The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the stockholder of record of the specified stock in place of the stockholder who makes the certification.
Section 10. INSPECTORS. The Board of Directors or the chair of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor thereto .  The inspectors, if any, shall (i) determine the number of shares of stock represented at the meeting, in person or by proxy and the validity and effect of proxies, (ii) receive and tabulate all votes, ballots or consents, (iii) report such tabulation to the chair of the meeting, (iv) hear and determine all challenges and questions arising in connection with the right to vote, and (v) do such acts as are proper to conduct the election or vote with fairness to all stockholders. Each such report shall be in writing and signed by him or her or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be  prima facie  evidence thereof.

Section 11. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.
(a) Annual Meetings of Stockholders. (1) Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 11(a) and at the time of the annual meeting, who is entitled to vote at the meeting and who has complied with this Section 11(a).
(2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 11, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information required under this Section 11 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150 th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting nor later than 5:00 p.m., Eastern Time, on the 120 th  day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting (or if an annual meeting has not previously been held), notice by the stockholder to be timely must be so delivered not earlier than the 150 th  day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120 th  day prior to the date of such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth (i) as to each individual whom the stockholder proposes to nominate for election or reelection as a director, (A) the name, age, business address and residence address of such individual, (B) the class, series and number of any shares of stock of the Corporation that are beneficially owned by such individual, (C) the date such shares were acquired and the investment intent of such acquisition, (D) whether such stockholder believes any such individual is, or is not, an “interested person” of the Corporation, as defined in the Investment Company Act of 1940, as amended, and the rules promulgated thereunder (the “Investment Company Act”) and information regarding such individual that is sufficient, in the discretion of the Board of Directors or any committee thereof or any authorized officer of the Corporation, to make such determination and (E) all other information relating to such individual that is required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder (including such individual’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the reasons for proposing such business at the meeting and any material interest in such business of such stockholder and any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom; (iii) as to the stockholder giving the notice and any Stockholder Associated Person, (A) the class,

series and number of all shares of stock of the Corporation which are owned by such stockholder and by such Stockholder Associated Person, if any, (B) the nominee holder for, and number of, shares owned beneficially but not of record by such stockholder and by any such Stockholder Associated Person, (C) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk of share price changes for, or to increase the voting power of, such stockholder or any such Stockholder Associated Person with respect to any shares of stock of the Corporation (collectively, “Hedging Activities”) and (D) a general description of whether and the extent to which such stockholder or such Stockholder Associated Person has engaged in Hedging Activities with respect to shares of stock or other equity interests of any other company; (iv) as to the stockholder giving the notice and any Stockholder Associated Person covered by clauses (ii) or (iii) of this paragraph (2) of this Section 11(a), (A) the name and address of such stockholder, as they appear on the Corporation’s stock ledger and current name and address, if different, and of such Stockholder Associated Person ;  and (B) the investment strategy or objective, if any, of such stockholder or Stockholder Associated Person and a copy of the prospectus, offering memorandum or similar document, if any provided to investors or potential investors in such stockholder or Stockholder Associated Person; and (v) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.
(3) Notwithstanding anything in this subsection (a) of this Section 11 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting, a stockholder’s notice required by this Section 11(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the tenth day following the day on which such public announcement is first made by the Corporation.
(4) For purposes of this Section 11, “Stockholder Associated Person” of any stockholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder and (iii) any person controlling, controlled by or under common control with such Stockholder Associated Person.
(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 11 and at the time of the

special meeting, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 11. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any such stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (a)(2) of this Section 11 shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 120 th  day prior to such special meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90 th  day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.
(c) General. (1) If information submitted pursuant to this Section 11 by any stockholder proposing a nominee for election as a Director or any proposal for other business at a meeting of stockholders shall be inaccurate to a material extent, such information may be deemed not to have been provided in accordance with this Section 11. Upon written request by the secretary or the Board of Directors, any stockholder proposing a nominee for election as a Director or any proposal for other business at a meeting of stockholders shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), (A) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 11 and (B) a written update of any information previously submitted by the stockholder pursuant to this Section 11 as of an earlier date. If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 11.
(2) Only such individuals who are nominated in accordance with this Section 11 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 11. The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 11.
(3) For purposes of this Section 11, “public announcement” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (ii) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act or the Investment Company Act.
(4) Notwithstanding the foregoing provisions of this Section 11, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 11. Nothing in this Section 11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, nor the right of the Corporation to omit a proposal from, the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act.

Section 12. VOTING BY BALLOT. Voting on any question or in any election may be viva voce unless the presiding officer shall order or any stockholder shall demand that voting be by ballot.
Section 13. CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of the charter of the Corporation or these Bylaws, Subtitle 7 of Title 3 of the Maryland General Corporation Law (the “MGCL”), or any successor statute, shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than one, nor more than 12, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. Regular meetings of the Board of Directors shall be held from time to time at such places and times as provided by the Board of Directors by resolution, without notice other than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the chief executive officer, the president or by a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix any place as the place for holding any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place for the holding of special meetings of the Board of Directors without notice other than such resolution.

Section 5. NOTICE. Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, United States mail or courier to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.
Section 6. QUORUM. A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors are present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the charter of the Corporation or these Bylaws, the vote of a majority or other percentage of a particular group of directors is required for action, a quorum must also include a majority of such group.
The directors present at a meeting which has been duly called and convened may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.
Section 7. VOTING. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable statute or the charter. If enough directors have withdrawn from a meeting to leave less than a quorum but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable statute or the charter.
Section 8. ORGANIZATION. At each meeting of the Board of Directors, the Chairman of the Board or, in the absence of the Chairman, the Vice Chairman of the Board, if any, shall act as Chairman. In the absence of both the Chairman and Vice Chairman of the Board, the chief executive officer or in the absence of the chief executive officer, the president or in the absence of the president, a director chosen by a majority of the directors present, shall act

as Chairman. The secretary or, in his or her absence, an assistant secretary of the Corporation, or in the absence of the secretary and all assistant secretaries, a person appointed by the Chairman, shall act as secretary of the meeting.
Section 9. TELEPHONE MEETINGS. Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time; provided however, this Section 9 does not apply to any action of the directors pursuant to the Investment Company Act, that requires the vote of the directors to be cast in person at a meeting. Participation in a meeting by these means shall constitute presence in person at the meeting.
Section 10. WRITTEN CONSENT BY DIRECTORS. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent to such action is given in writing or by electronic transmission and is filed with the minutes of proceedings of the Board of Directors; provided however, this Section 10 does not apply to any action of the directors pursuant to the Investment Company Act, that requires the vote of the directors to be cast in person at a meeting.
Section 11. VACANCIES. If for any reason any or all the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder, if any. Pursuant to the Corporation’s election in Article IV of the charter, subject to applicable requirements of the Investment Company Act, except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, (a) any vacancy on the Board of Directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum and (b) any director elected to fill a vacancy shall serve for the remainder of the full term of the class in which the vacancy occurred and until a successor is elected and qualifies.
Section 12. COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they performed or engaged in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.
Section 13. LOSS OF DEPOSITS. No director shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association, or other institution with whom moneys or stock have been deposited.
Section 14. SURETY BONDS. Unless required by law, no director shall be obligated to give any bond or surety or other security for the performance of any of his or her duties.

Section 15. RELIANCE. Each director and officer of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or, with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.
Section 16. RATIFICATION. The Board of Directors or the stockholders may ratify and make binding on the Corporation any action or inaction by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the matter. Moreover, any action or inaction questioned in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, or the application of improper principles or practices of accounting, may be ratified, before or after judgment, by the Board of Directors or by the stockholders and such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.
Section 17 . EMERGENCY PROVISIONS. Notwithstanding any other provision in the charter or these Bylaws, this Section 17 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided by the Board of Directors, (i) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (ii) notice of any meeting of the Board of Directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio, and (iii) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint from among its members an Executive Committee, an Audit Committee, a Nominating and Corporate Governance Committee and other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors.

Section 2. POWERS. The Board of Directors may delegate to committees appointed under Section 1 of this Article any of the powers of the Board of Directors, except as prohibited by law.
Section 3. MEETINGS. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of any committee (if there are at least two members of the Committee) may fix the time and place of its meeting unless the Board shall otherwise provide. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member. Each committee shall keep minutes of its proceedings.
Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.
Section 5. WRITTEN CONSENT BY COMMITTEES. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent to such action is given in writing or by electronic transmission by each member of the committee and is filed with the minutes of proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill any vacancy, to designate one or more alternate members to replace any absent or disqualified member or to dissolve any such committee. Subject to the power of the Board of Directors, the members of the committee shall have the power to fill any vacancies on the committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Corporation shall include a president, a secretary and a treasurer and may include a chief executive officer, one or more vice presidents, a chief operating officer, a chief financial officer, a chief investment officer, a chief compliance officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time elect such other officers with such powers and duties as it shall deem necessary or desirable. The Board of Directors may designate a Chairman of the Board and a Vice Chairman of the Board, who shall not, solely by reason of such designation, be officers of the Corporation but shall have such powers and duties as determined by the Board of Directors from time to time. The officers of the Corporation shall

be elected annually by the Board of Directors, except that the chief executive officer or president may from time to time appoint one or more vice presidents, assistant secretaries, assistant treasurers or other officers. Each officer shall serve until his or her successor is elected and qualifies or until death, resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by giving written notice of his or her resignation to the Board of Directors, the Chairman of the Board, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the notice of resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.
Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executive officer. In the absence of such designation, the president shall be the chief executive officer of the Corporation. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time.
Section 5. CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.
Section 6. CHIEF INVESTMENT OFFICER. The Board of Directors may designate a chief investment officer. The chief investment officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.
Section 7. CHIEF FINANCIAL OFFICER. The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer.

Section 8. CHIEF COMPLIANCE OFFICER. The Chief Compliance Officer, subject to the direction of and reporting to the Board of Directors, shall be responsible for the oversight of the Corporation’s compliance with the Federal securities laws. The designation, compensation and removal of the Chief Compliance Officer must be approved by the Board of Directors, including a majority of the directors who are not “interested persons” (as such term is defined in Section 2(a)(19) of the Investment Company Act of 1940) of the Corporation. The Chief Compliance Officer shall perform such executive, supervisory and management functions and duties as may be assigned to him or her from time to time.
Section 9. PRESIDENT. In the absence of a designation of a chief executive officer by the Board of Directors, the president shall be the chief executive officer. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time.
Section 10. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to such vice president by the president or by the Board of Directors. The Board of Directors may designate one or more vice presidents as executive vice president or as vice president for particular areas of responsibility.
Section 11. SECRETARY. The secretary shall: (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him by the chief executive officer, the president or by the Board of Directors.
Section 12. TREASURER. The treasurer shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.

The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation.
Section 13. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the president or the Board of Directors.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when authorized or ratified by action of the Board of Directors and executed by an authorized person.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors.
Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors may designate.
ARTICLE VII
STOCK
Section 1. CERTIFICATES; REQUIRED INFORMATION. The Corporation may issue some or all of the shares of any or all of the Corporation’s classes or series of stock without certificates if authorized by the Board of Directors. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the Maryland General Corporation Law (the “MGCL”) and shall be signed by the officers of the Corporation in the manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates. If a class or series of stock is authorized by the Board of Directors to be issued without certificates, no stockholder shall be entitled to a

certificate or certificates representing any shares of such class or series of stock held by such stockholder unless otherwise determined by the Board of Directors and then only upon written request by such stockholder to the secretary of the Corporation.
Section 2. TRANSFERS. All transfers of stock shall be made on the books of the Corporation, by the holder of the shares, in person or by his or her attorney, in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors that such shares shall no longer be represented by certificates. Upon the transfer of uncertificated shares, to the extent then required by the MGCL, the Corporation shall provide to record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.
The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Maryland.
Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the charter of the Corporation and all of the terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors has determined such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.
Section 4. FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment or postponement thereof, except when the meeting is adjourned or postponed to a date more than 120 days after the record date fixed for the original meeting, in which case a new record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate share ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may issue fractional stock or provide for the issuance of scrip, all on such terms and under such conditions as they may determine. Notwithstanding any other provision of the charter or these Bylaws, the Board of Directors may issue units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the charter of the Corporation. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the charter.
Section 2. CONTINGENCIES. Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish any such reserve.

ARTICLE X
SEAL
Section 1. SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland.” The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.
ARTICLE XI
INDEMNIFICATION AND ADVANCE OF EXPENSES
To the maximum extent permitted by Maryland law and the Investment Company Act, in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in that capacity or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of such corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in that capacity. The Corporation may, with the approval of its Board of Directors or any duly authorized committee thereof, provide such indemnification and advance for expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. The indemnification and payment of expenses provided in these Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment of expenses may be or may become entitled under any bylaw, regulation, insurance, agreement or otherwise.
Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the Bylaws or charter of the Corporation inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.
No provision of this Article XI shall be effective to protect or purport to protect any director or officer of the Corporation against liability to the Corporation or its stockholders to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.

ARTICLE XII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the charter of the Corporation or these Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
ARTICLE XIII
INVESTMENT COMPANY ACT
If and to the extent that any provision of the MGCL, including, without limitation, Subtitle 6 and, if then applicable, Subtitle 7, of Title 3 of the MGCL, or any provision of the charter or these Bylaws conflicts with any provision of the Investment Company Act, the applicable provision of the Investment Company Act shall control.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Board of Directors shall have the exclusive power, at any time, to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.

Exhibit d.1

No.                 	  	SOLAR CAPITAL LTD.	  	                     Shares	 	
 	  	Incorporated under the Laws of the State of Maryland	  	 	 	
CUSIP NO. [                    ]	  	 	  	 	 	
 	 	 	 	
Common Stock	  	 	  	Par Value $.01 Per Share	 	
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT                                                                                                                IS THE OWNER OF                                                                                FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, WITH A PAR VALUE OF $.01 PER SHARE, OF SOLAR CAPITAL LTD. (the “Corporation”), transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this certificate if properly endorsed. This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.
WITNESS the seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated:                     , 2009

 	  	SOLAR CAPITAL LTD.
 	  	 	
Secretary	  	CORPORATE SEAL
2009
MARYLAND	  	Chief Executive Officer	
 	  	 	  	 	
Transfer Agent	  	 	  	 	

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM	  	as tenants in common	  	Unif Gift Min Act -              Custodian                 	 	
 	 	 	 	 	
TEN ENT	  	tenants by the entireties	  	(Cust)	  	(Minor)    	 	
 	 	 	 	
JT TEN	  	as joint tenants with right of survivorship and not as tenants in common	  	Under Uniform Gifts to Minors	 	
 	  	 	  	 
Act:                                     	 	
 	 	 	 	
 	  	 	  	(State)	 	
Additional Abbreviations may also be used though not in the above list.
IMPORTANT NOTICE
The Corporation will furnish to any stockholder, on request and without charge, a full statement of the information required by Section 2-211(b) of the Corporations and Associations Article of the Annotated Code of Maryland with respect to the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation has authority to issue and, if the Corporation is authorized to issue any preferred or special class in series, (i) the differences in the relative rights and preferences between the shares of each series to the extent set, and (ii) the authority of the Board of Directors to set such rights and preferences of subsequent series. This Certificate and the shares of Common Stock represented hereby are issued and shall be held subject to all the provisions of the Certificate of Incorporation and all amendments thereto and resolutions of the Board of Directors providing for the issue of shares of Preferred Stock (copies of which may be obtained from the secretary of the Corporation), to all of which the holder of this certificate by acceptance hereof assents.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
For Value Received,                          hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
        IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

shares of the Common Stock represented by this Certificate, and do hereby irrevocably constitute and appoint                      Attorney, to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.

Dated	 	 	 	 	 	By:	 	 	
 	 	 	 	 	 	NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.	
 	 	 	
Signature(s) Guaranteed:	 	 	 	 	
 	 	 	 	
By:	 	 	 	 	 	 	
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15).	 	 	 	 	

Exhibit e
DIVIDEND REINVESTMENT PLAN
OF
SOLAR CAPITAL LTD.
Solar Capital Ltd., a Maryland corporation (the “Corporation”), hereby adopts the following plan (the “Plan”) with respect to net investment income dividends and capital gains distributions declared by its Board of Directors on shares of its Common Stock:
1. Unless a stockholder specifically elects to receive cash as set forth below, all net investment income dividends and all capital gains distributions hereafter declared by the Board of Directors shall be payable in shares of the Common Stock of the Corporation, and no action shall be required on such stockholder’s part to receive a distribution in stock.
2. Such net investment income dividends and capital gains distributions shall be payable on such date or dates as may be fixed from time to time by the Board of Directors to stockholders of record at the close of business on the record date(s) established by the Board of Directors for the net investment income dividend and/or capital gains distribution involved.
3. The Corporation shall use only newly-issued shares of its Common Stock to implement the Plan if its shares are trading at a premium to net asset value. The number of shares to be issued to a stockholder shall be determined by dividing the total dollar amount of the distribution payable to such stockholder by the market price per share of the Corporation’s Common Stock at the close of regular trading on the Nasdaq Select Global Market on the valuation date fixed by the Board of Directors for such distribution. Market price per share on that date shall be the closing price for such shares on the Nasdaq Select Global Market or, if no sale is reported for such day, at the average of their electronically-reported bid and asked prices.
4. If the Corporation declares a distribution to stockholders, the Plan Administrator, as defined below, may be instructed not to credit accounts with newly-issued shares and instead to buy shares in the market if (1) the price at which newly-issued shares are to be credited does not exceed 110% of the last determined net asset value of the shares; or (2) the Corporation has advised the Plan Administrator that since such net asset value was last determined, the Corporation has become aware of events that indicate the possibility of a material change in per share net asset value as a result of which the net asset value of the shares on the payment date might be higher than the price at which the Plan Administrator would credit newly-issued shares to stockholders.
5. A stockholder may elect to receive his or its net investment income dividends and capital gains distributions in cash. To exercise this option, such stockholder shall notify American Stock Transfer & Trust Company, the plan administrator and the Corporation’s transfer agent and registrar (referred to as the “ Plan

Administrator”), in writing so that such notice is received by the Plan Administrator no later than 10 days prior to the record date fixed by the Board of Directors for the net investment income dividend and/or capital gains distribution involved. Such election shall remain in effect until the stockholder shall notify the Plan Administrator in writing of such stockholder’s withdrawal of the election, which notice shall be delivered to the Plan Administrator no later than 10 days prior to the record date fixed by the Board of Directors for the next net investment income dividend and/or capital gains distribution by the Corporation.
6. The Plan Administrator will set up an account for shares acquired pursuant to the Plan for each stockholder who has not so elected to receive dividends and distributions in cash (each a “ Participant ”). The Plan Administrator may hold each Participant’s shares, together with the shares of other Participants, in non-certificated form in the Plan Administrator’s name or that of its nominee. Upon request by a Participant, received in writing no later than 10 days prior to the record date, the Plan Administrator will, instead of crediting shares to and/or carrying shares in a Participant’s account, issue, without charge to the Participant, a certificate registered in the Participant’s name for the number of whole shares payable to the Participant and a check for any fractional share.
7. The Plan Administrator will confirm to each Participant each acquisition made pursuant to the Plan as soon as practicable but not later than 10 business days after the date thereof. Although each Participant may from time to time have an undivided fractional interest (computed to three decimal places) in a share of Common Stock of the Corporation, no certificates for a fractional share will be issued. However, dividends and distributions on fractional shares will be credited to each Participant’s account. In the event of termination of a Participant’s account under the Plan, the Plan Administrator will adjust for any such undivided fractional interest in cash at the market value of the Corporation’s shares at the time of termination.
8. The Plan Administrator will forward to each Participant any Corporation related proxy solicitation materials and each Corporation report or other communication to stockholders, and will vote any shares held by it under the Plan in accordance with the instructions set forth on proxies returned by Participants to the Corporation.
9. In the event that the Corporation makes available to its stockholders rights to purchase additional shares or other securities, the shares held by the Plan Administrator for each Participant under the Plan will be added to any other shares held by the Participant in certificated form in calculating the number of rights to be issued to the Participant.
10. The Plan Administrator’s service fee, if any, and expenses for administering the Plan will be paid for by the Corporation.

11. Each Participant may terminate his or its account under the Plan by so notifying the Plan Administrator in writing or by telephone. Such termination will be effective immediately if the Participant’s notice is received by the Plan Administrator not less than 10 days prior to any dividend or distribution record date; otherwise, such termination will be effective only with respect to any subsequent dividend or distribution. The Plan may be terminated by the Corporation upon notice in writing mailed to each Participant at least 30 days prior to any record date for the payment of any dividend or distribution by the Corporation. Upon any termination, the Plan Administrator will cause a certificate or certificates to be issued for the full shares held for the Participant under the Plan and a cash adjustment for any fractional share to be delivered to the Participant without charge to the Participant. If a Participant elects by his or its written or telephonic notice to the Plan Administrator in advance of termination to have the Plan Administrator sell part or all of his or its shares and remit the proceeds to the Participant, the Plan Administrator is authorized to deduct a $15.00 transaction fee plus brokerage commission from the proceeds.
12. These terms and conditions may be amended or supplemented by the Corporation at any time but, except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, only by mailing to each Participant appropriate written notice at least 30 days prior to the effective date thereof. The amendment or supplement shall be deemed to be accepted by each Participant unless, prior to the effective date thereof, the Plan Administrator receives written notice of the termination of his or its account under the Plan. Any such amendment may include an appointment by the Plan Administrator in its place and stead of a successor agent under these terms and conditions, with full power and authority to perform all or any of the acts to be performed by the Plan Administrator under these terms and conditions. Upon any such appointment of any agent for the purpose of receiving dividends and distributions, the Corporation will be authorized to pay to such successor agent, for each Participant’s account, all dividends and distributions payable on shares of the Corporation held in the Participant’s name or under the Plan for retention or application by such successor agent as provided in these terms and conditions.
13. The Plan Administrator will at all times act in good faith and use its best efforts within reasonable limits to ensure its full and timely performance of all services to be performed by it under this Plan and to comply with applicable law, but assumes no responsibility and shall not be liable for loss or damage due to errors unless such error is caused by the Plan Administrator’s negligence, bad faith, or willful misconduct or that of its employees or agents.
14. These terms and conditions shall be governed by the laws of the State of New York, without regard to the conflicts of law principles thereof, to the extent such principles would require or permit the application of the laws of another jurisdiction.

Exhibit k.2
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into this          day of                     , 2009, by and between Solar Capital Ltd., a Maryland corporation (the  “Company” ), and the undersigned ( “Indemnitee” ).
WHEREAS, at the request of the Company, Indemnitee currently serves as a director of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of his service;  and
WHEREAS, as an inducement to Indemnitee to continue to serve as such director, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the fullest extent permitted by law, except as otherwise expressly provided for herein;  and
WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses;
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Company and Indemnitee do hereby covenant and agree as follows:
Section 1. Definitions. For purposes of this Agreement:
(a) “Change of Control” shall mean the occurrence of any of the following events after the Effective Date of this Agreement:
(i) the sale or other disposition of all or substantially all of the Company’s assets; or
(ii) the acquisition, whether directly, indirectly, beneficially (within the meaning of rule 13d-3 of the Securities Exchange Act of 1934, as amended (the  “1934 Act” )) or of record, as a result of a merger, consolidation or otherwise, of securities of the Company representing twenty percent (20%) or more of the aggregate voting power of the Company’s then-outstanding Common Stock by any “person” (within the meaning of Sections 13(d) and 14(d) of the 1934 Act), including, but not limited to, any corporation or group of persons acting in concert, other than (i) the Company or its subsidiaries and/or (ii) any employee pension benefit plan (within the meaning of Section 3(2) of the Employee Retirement Income Security Act of 1974) of the Company or its subsidiaries, including a trust established pursuant to any such plan; or
(iii) the individuals who were members of the Board of Directors as of the Effective Date (the “Incumbent Board”) cease to constitute at least two-thirds (2/3) of the Board;  provided, however , that any director appointed by at least two-thirds (2/3) of the then Incumbent Board or nominated by at least two-thirds (2/3) of the Nominating and Corporate Governance Committee of the Board of Directors (a majority of the members of the Nominating and Corporate Governance Committee shall be members of the then Incumbent Board or appointees thereof), other than any director appointed or nominated in connection with, or as a result of, a threatened or actual proxy or control contest, shall be deemed to constitute a member of the Incumbent Board.
(b) “Corporate Status” means the status of a person who is or was a director, trustee, officer, employee or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for which such person is or was serving at the request of the Company.

(c) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(d) “Effective Date” means the date set forth in the first paragraph of this Agreement.
(e) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.
(f) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. If a Change of Control has not occurred, Independent Counsel shall be selected by the Board of Directors, with the approval of Indemnitee, which approval will not be unreasonably withheld. If a Change of Control has occurred, Independent Counsel shall be selected by Indemnitee, with the approval of the Board of Directors, which approval will not be unreasonably withheld.
(g) “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal), except one (i) initiated by an Indemnitee pursuant to Section 11 of this Agreement to enforce his rights under this Agreement or (ii) pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee.
Section 2. Services by Indemnitee. Indemnitee will serve as a director of the Company. However, this Agreement shall not impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.
Section 3. Indemnification — General. The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the fullest extent permitted by Maryland law in effect on the date hereof and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the date hereof. The rights of Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law ( “MGCL” ). Notwithstanding anything to the contrary in this Section 3 or any other section of this Agreement, for so long as the Company is subject to the Investment Company Act of 1940 and the regulations promulgated thereunder (the  “Investment Company Act” ), the Company shall not indemnify or advance Expenses to Indemnitee to the extent such indemnification or advance would violate the Investment Company Act.
Section 4. Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed Proceeding, other than a Proceeding by or in the right of the Company. Pursuant to this Section 4, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by him or on his behalf in connection with a Proceeding by

reason of his Corporate Status unless it is established that (i) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) Indemnitee actually received an improper personal benefit in money, property or services, or (iii) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that his conduct was unlawful.
Section 5. Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 5 if, by reason of his Corporate Status, he is, or is threatened to be, made a party to or a witness in any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 5, Indemnitee shall be indemnified against all amounts paid in settlement and all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding unless it is established that (i) the act or omission of Indemnitee was material to the matter giving rise to such a Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (ii) Indemnitee actually received an improper personal benefit in money, property or services.
Section 6. Court-Ordered Indemnification. Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification in the following circumstances:
(a) if it determines Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the expenses of securing such reimbursement; or
(b) if it determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper. However, indemnification with respect to any Proceeding by or in the right of the Company or in which liability shall have been adjudged in the circumstances described in Section 2-418(c) of the MGCL shall be limited to Expenses.
Section 7. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee is, by reason of his Corporate Status, made a party to and is successful, on the merits or otherwise, in the defense of any Proceeding, he shall be indemnified for all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 7 for all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
Section 8. Advance of Expenses. The Company shall advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding to which Indemnitee is, or is threatened to be, made a party or a witness, within ten days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by law and by this Agreement has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as  Exhibit A  or in such form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee relating to claims, issues or matters in the Proceeding as to which it

shall ultimately be established that the standard of conduct has not been met and which have not been successfully resolved as described in Section 7. For so long as the Company is subject to the Investment Company Act, any advancement of Expenses shall be subject to at least one of the following as a condition of the advancement: (a) Indemnitee shall provide a security for his or her undertaking, (b) the Company shall be insured against losses arising by reason of any lawful advances or (c) a majority of a quorum of the Disinterested Directors of the Company, or Independent Counsel in a written opinion, shall determine, based on a review of readily available facts (as opposed to a full-trial-type inquiry), that there is reason to believe that Indemnitee ultimately will be found entitled to indemnification . To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis. The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.
Section 9. Procedure for Determination of Entitlement to Indemnification. (a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification. (b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 9(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change of Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change of Control shall not have occurred, (A) by the Board of Directors (or a duly authorized committee thereof) by a majority vote of a quorum consisting of Disinterested Directors, or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.
Section 10. Presumptions and Effect of Certain Proceedings. (a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 9(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption. (b) The termination of any Proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.
Section 11. Remedies of Indemnitee. (a) If (i) a determination is made pursuant to Section 9 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 9(b) of this Agreement within 30 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 7 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten days after a determination has been

made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Maryland, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advance of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 11(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce his rights under Section 7 of this Agreement. (b) In any judicial proceeding or arbitration commenced pursuant to this Section 11 the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be. (c) If a determination shall have been made pursuant to Section 9(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 11, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification. (d) In the event that Indemnitee, pursuant to this Section 11, seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by him in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.
Section 12. Defense of the Underlying Proceeding. (a) Indemnitee shall notify the Company promptly upon being served with or receiving any summons, citation, subpoena, complaint, indictment, information, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced. (b) Subject to the provisions of the last sentence of this Section 12(b) and of Section 12(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 12(a) above. The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee. This Section 12(b) shall not apply to a Proceeding brought by Indemnitee under Section 11 above or Section 18 below. (c) Notwithstanding the provisions of Section 12(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that he may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company (subject to Section 11(d)), to represent Indemnitee in connection with any such matter.

Section 13. Non-Exclusivity; Survival of Rights; Subrogation; Insurance; Investment Company Act. (a) The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Articles of Amendment and Restatement of the Company (as amended from time to time, the  “Charter” ) or the Amended and Restated Bylaws of the Company (as amended from time to time, the  “Bylaws” ), any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. (b) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. (c) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as expenses hereunder if and to the extent that (i) Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise, or (ii) for so long as the Company is subject to the Investment Company Act, indemnification or payment or reimbursement of expenses would not be permissible under the Investment Company Act.
Section 14. Insurance. The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors of the Company, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee for service as a director or officer of the Company and covering the Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims made against Indemnitee for service as a director or officer of the Company. Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and reasonable Expenses incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in the previous sentence.
Section 15. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding, whether instituted by the Company or any other party, and to which Indemnitee is not a party, he shall be advanced all reasonable Expenses and indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.
Section 16. Duration of Agreement; Binding Effect. (a) This Agreement shall continue until and terminate ten years after the date that Indemnitee’s Corporate Status shall have ceased; provided, that the rights of Indemnitee hereunder shall continue until the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advance of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 11 of this Agreement relating thereto. (b) The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, trustee, officer, employee or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the written request of the Company, and shall inure to the benefit of Indemnitee and his spouse, assigns, heirs, devisees, executors and administrators and other legal representatives. (c) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

Section 17. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
Section 18. Exception to Right of Indemnification or Advance of Expenses. Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee, unless (a) the Proceeding is brought to enforce indemnification under this Agreement or otherwise or (b) the Company’s Bylaws, the Charter, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise. In addition, notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification or advance of Expenses under this Agreement to the extent such indemnification or advance of Expenses would conflict with any provision of the Company’s Bylaws or the Charter, in each case without giving effect to the non-exclusivity provision set forth in Section 7.8 of the Charter;  provided , that foregoing restriction not apply and shall be of no force or effect if and to the extent the Company’s common stock is qualified as a “covered security,” as such term is defined in Section 18 of the Securities Act of 1933, as amended.
Section 19. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.
Section 20. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
Section 21. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
Section 22. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to: The address set forth on the signature page hereto.
(b) If to the Company, to:
Solar Capital Ltd.
500 Park Avenue, 5th Floor
New York, NY 10022
or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

Section 23. Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, (i) the laws of the State of Maryland applicable to contracts formed and to be performed entirely within the State of Maryland, without regard to its conflicts of laws rules, to the extent such rules would require or permit the application of the laws of another jurisdiction, and (ii) the Investment Company Act. To the extent the applicable laws of the State of Maryland or any applicable provision of this Agreement shall conflict with the applicable provisions of the Investment Company Act, the latter shall control.
Section 24. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.
[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

ATTEST:	 	 	 	SOLAR CAPITAL LTD.	 	 	
 	 	 	 	 	
 	 	 	 	By:	 	 	 	(SEAL)	
 	 	 	 	Name:	 	 	 	 	
 	 	 	 	Title:	 	 	 	 	
 	 	 	 	
WITNESS:	 	 	 	INDEMNITEE	 	 	

 	 	 	 	Name:	 	 	 	 	
 	 	 	 	Title:	 	 	 	 	
 	 	 	 	Address:	 	 	 	 	

EXHIBIT A
FORM OF UNDERTAKING TO REPAY EXPENSES ADVANCED
The Board of Directors of Solar Capital Ltd.
Re: Undertaking to Repay Expenses Advanced
Ladies and Gentlemen:
This undertaking is being provided pursuant to that certain Indemnification Agreement (the “Indemnification Agreement”) dated the           day of                       , 20          , by and between Solar Capital Ltd. (the  “Company” ) and the undersigned Indemnitee (“ Indemnitee ”), pursuant to which I am entitled to advance of expenses in connection with  [Description of Proceeding]  (the “Proceeding” ).
Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.
I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity. I hereby affirm that at all times, insofar as I was involved as director of the Company, in any of the facts or events giving rise to the Proceeding, I (1) acted in good faith and honestly, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.
In consideration of the advance of Expenses by the Company for reasonable attorneys’ fees and related expenses incurred by me in connection with the Proceeding (the  “Advanced Expenses” ), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established and which have not been successfully resolved as described in Section 7 of the Indemnification Agreement. To the extent that Advanced Expenses do not relate to a specific claim, issue or matter in the Proceeding, I agree that such Expenses shall be allocated on a reasonable and proportionate basis.
IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this         day of             , 20        .

WITNESS:	 	 	 	 	 	 	
 	 	 	 	
  	 	 	 	  	 	(SEAL)	

Exhibit k.4
FIRST AMENDMENT
TO THE
REGISTRATION RIGHTS AGREEMENT
This FIRST AMENDMENT TO THE REGISTRATION RIGHTS AGREEMENT (this “Amendment”), dated March __, 2009, is to the REGISTRATION RIGHTS AGREEMENT, dated as of March 13, 2007 (the  “Registration Rights Agreement” ), by and among SOLAR CAPITAL LLC, a Maryland limited liability company (together with any successor entity (the  “Company” ); SOLAR CAYMAN LIMITED, a Cayman Islands corporation ( “Solar Cayman” ), and SOLAR OFFSHORE LIMITED, a Cayman Islands corporation ( “Solar Offshore,”  and together with Solar Cayman, the  “Feeder Corporations” ); and CITIGROUP GLOBAL MARKETS INC. and J.P. MORGAN SECURITIES INC. (the  “Initial Purchasers/Placement Agents” ) for the benefit of the Initial Purchasers/Placement Agents and the holders from time to time of the Securities (as defined in the Registration Rights Agreement) (including the Initial Purchasers/Placement Agents) (each a  “Holder,”  and collectively, the  “Holders” ).
WHEREAS, Section 10 of the Registration Rights Agreement provides that the provisions thereof may not be amended, modified or supplemented, and waivers or consents to departures from the provisions thereof may not be given, without the consent of the Company and the Holders of a majority of the Registrable Securities (as defined in the Registration Rights Agreement) outstanding;  and
WHEREAS, Section 10 of the Registration Rights Agreement further provides that no amendment, qualification, supplement, waiver or consent with respect to Section 8 thereof shall be effective against any Holder of Registrable Securities unless consented to in writing by such Holder;  and
WHEREAS, Section 1 of the Registration Rights Agreement defines “Registrable Securities” to exclude, among other things, any Securities that are saleable during any 90-day period pursuant to Rule 144 under the Securities Act of 1933, as amended (the  “Securities Act” ), or any successor rule or regulation thereto that may be adopted by the Securities and Exchange Commission, but only to the extent that the Holder thereof may sell all of the Securities held by such Holder pursuant thereto;  and
WHEREAS, Pursuant to Rule 144 under the Securities Act, as presently in effect, each Holder that is not, and has not been for at least 90 days, an “affiliate,” as such term is defined under Rule 144, of the Company or the Feeder Corporations may generally sell his, her or its Securities in reliance upon Rule 144; provided that at least one year has elapsed since such Holder acquired such Securities from the Company or a Feeder Corporation, as the case may be, or an affiliate thereof;  and
WHEREAS, Solar Capital Investors, LLC, a Delaware limited liability company, Solar Cayman and Solar Offshore may be deemed to be affiliates of the Company, and therefore holders of Registrable Securities as of the date of this Amendment (collectively, the  “Consenting Holders” ), by virtue of the respective positions held by the managing member of the Company at each of the Consenting Holders;  and
WHEREAS, by signing this Amendment, each of the Consenting Holders shall be deemed to have consented in writing to amend the Registration Rights Agreement in the manner set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:
 
 	1.	Registration Rights Agreement.	
a. Pursuant to Section 10 thereto, the Registration Rights Agreement is amended hereby by deleting Section 2(b) thereto and replacing it with the following language:
“(b) [Reserved]

b. Pursuant to Section 10 thereto, the Registration Rights Agreement is amended hereby by amending and restating Section 8 thereto as follows:
“If the Shelf Registration Statement is not declared effective by the Commission prior to the two year anniversary date of the Closing Date, the Company shall be subject to the obligations specified in Section 3.9 of the Company’s Operating Agreement, upon the terms and subject to the conditions set forth therein, as they may be amended from time to time.”
 
 	2.	Miscellaneous.	
a. Acknowledgement of consent. Each of the Consenting Holders acknowledge and agree that the execution of this Amendment thereby shall constitute written consent to amend the Registration Rights Agreement in the manner contemplated hereby in full satisfaction of the requirements set forth in Section 10 thereof.
b. Counterparts. This Amendment may be signed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.
c. Headings. The section headings used herein are for convenience only and shall not affect the construction hereof.
d. Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York.
e. Severability. In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law.
[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Registration Rights Agreement as of the date first written above.

SOLAR CAPITAL LLC.	
 	 	
By:	 	 	
Name:	 	Michael S. Gross	
Title:	 	Managing Member	
 	
SOLAR CAYMAN LIMITED	
 	 	
By:	 	 	
Name:	 	Michael S. Gross	
Title:	 	Director	
 	
SOLAR OFFSHORE LIMITED	
 	 	
By:	 	 	
Name:	 	Michael S. Gross	
Title:	 	Director	
 	
SOLAR CAPITAL INVESTORS, LLC	
 	 	
By:	 	 	
Name:	 	Michael S. Gross	
Title:	 	Managing Member	

Exhibit k.6
TRADEMARK LICENSE AGREEMENT
This TRADEMARK LICENSE AGREEMENT (this “Agreement”) is made and effective as of December 17, 2009 (the “ Effective Date ”) by and between SOLAR CAPITAL PARTNERS, LLC, a Delaware limited liability company (the “ Licensor ”), and SOLAR CAPITAL LTD., a Maryland corporation (the “ Company ”) (each a “ party, ” and collectively, the “ parties ”).
RECITALS
WHEREAS, Licensor is the owner of the trade name “SOLAR CAPITAL” (the “Licensed Mark”) in the United States of America (the “ Territory ”);
WHEREAS, the Company is a closed-end management investment fund that intends to elect to be treated as a business development company under the Investment Company Act of 1940, as amended;
WHEREAS, pursuant to the Investment Advisory and Management Agreement to be executed by and between the Licensor and the Company (the “ Advisory Agreement ”), the Company will engage the Licensor to act as the investment adviser to the Company; and
WHEREAS, the Company desires to use the Licensed Mark in connection with the operation of its business, and the Licensor is willing to permit the Company to use the Licensed Mark, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
LICENSE GRANT
1.1 License. Subject to the terms and conditions of this Agreement, Licensor hereby grants to the Company, and the Company hereby accepts from Licensor, a personal, non-exclusive, royalty-free right and license to use the Licensed Mark solely and exclusively as an element of the Company’s own company name and in connection with the conduct of its business. Except as provided above, neither the Company nor any affiliate, owner, director, officer, employee, or agent thereof shall otherwise use the Licensed Mark or any derivative thereof without the prior express written consent of the Licensor in its sole and absolute discretion. All rights not expressly granted to the Company hereunder shall remain the exclusive property of Licensor.
1.2 Licensor’s Use. Nothing in this Agreement shall preclude Licensor, its affiliates, or any of its respective successors or assigns from using or permitting other entities to use the Licensed Mark whether or not such entity directly or indirectly competes or conflicts with the Company’s business in any manner.
 
1

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

(b) Due Execution. This Agreement has been duly executed and delivered by such party and, with due authorization, execution and delivery by the other party, constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms.
(c) No Conflict. Such party’s execution, delivery and performance of this Agreement do not: (i) violate, conflict with or result in the breach of any provision of the organizational documents of such party; (ii) conflict with or violate any law or governmental order applicable to such party or any of its assets, properties or businesses; or (iii) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of any contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which it is a party.
ARTICLE 5
TERM AND TERMINATION
5.1 Term. This Agreement shall expire upon expiration or termination of the Advisory Agreement.
5.2 Upon Termination. Upon expiration or termination of this Agreement, all rights granted to the Company under this Agreement with respect to the Licensed Mark shall cease, and the Company shall immediately discontinue use of the Licensed Mark.
ARTICLE 6
MISCELLANEOUS
6.1 Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign, delegate or otherwise transfer this Agreement or any of its rights or obligations hereunder without the prior written consent of the other party. No assignment by either party permitted hereunder shall relieve the applicable party of its obligations under this Agreement. Any assignment by either party in accordance with the terms of this Agreement shall be pursuant to a written assignment agreement in which the assignee expressly assumes the assigning party’s rights and obligations hereunder. Notwithstanding anything to the contrary contained in this Agreement, the rights and obligations of the Company under this Agreement shall be deemed to be assigned to a newly-formed entity in the event of the merger of the Company into, or conveyance of all of the assets of the Company to, such newly-formed entity;  provided ,  further ,  however , that the sole purpose of that merger or conveyance is to effect a mere change in the Company’s legal form into another limited liability entity.
6.2 Independent Contractor. Except as expressly provided or authorized in the Advisory Agreement, neither party shall have, or shall represent that it has, any power, right or authority to bind the other party to any obligation or liability, or to assume or create any obligation or liability on behalf of the other party.
6.3 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service (with signature required), by facsimile, or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses:
 
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If to the Licensor:
Solar Capital Partners, LLC
500 Park Avenue, 5th Floor
New York, NY 10022
Tel. No.: (212) 993-1675
Fax No.: (212) 993-1699
Attn: Michael S. Gross
If to the Company:
Solar Capital Ltd.
500 Park Avenue, 5th Floor
New York, NY 10022
Tel. No.: (212) 993-1675
Fax No.: (212) 993-1699
Attn: Michael S. Gross
6.4 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to the principles of conflicts of law rules. The parties unconditionally and irrevocably consent to the exclusive jurisdiction of the courts located in the State of New York and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
6.5 Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by all parties hereto.
6.6 No Waiver. The failure of either party to enforce at any time for any period the provisions of or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights or the right of such party thereafter to enforce such provisions, and no waiver shall be binding unless executed in writing by all parties hereto.
6.7 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
6.8 Headings. The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.
6.9 Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original instrument and all of which taken together shall constitute one and the same agreement.
 
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6.10 Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the parties with respect to such subject matter.
6.11 Third-Party Beneficiaries. Nothing in this Agreement, either express or implied, is intended to or shall confer upon any third party any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
[Remainder of Page Intentionally Blank]
 
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IN WITNESS WHEREOF, each party has caused this Agreement to be executed as of the Effective Date by its duly authorized officer.

SOLAR CAPITAL LTD.	
 	 	
By:	 	/s/ Michael S. Gross	
 	 	Name: Michael S. Gross
Title:   Chief Executive Officer, President,
   Chairman of the Board and Director	

SOLAR CAPITAL PARTNERS, LLC	
 	 	
By:	 	/s/ Michael S. Gross	
 	 	Name: Michael S. Gross
Title:   Managing Member	

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Exhibit n.2
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Solar Capital Ltd.:
We consent to the use of our report, dated February 13, 2009 incorporated by reference herein for Solar Capital LLC and to the references to our firm under the headings “Independent Registered Public Accounting Firm” and “Selected Financial and Other Data” in the prospectus.

New York, New York
January 6, 2010

Exhibit r
CODE OF ETHICS
 
I.	INTRODUCTION	
Solar Capital Partners, LLC (“Adviser”) seeks to foster and maintain a reputation for honesty, integrity and professionalism. That reputation is a vital business asset. The confidence and trust placed in Adviser are highly valued and must be protected. Adviser has adopted this Code of Ethics (the “ Code ”) in accordance with Rules 204A-1 under the Investment Advisers Act of 1940 and Rule 17j-l under the Investment Company Act of 1940, as amended. The Code includes Adviser’s policy with respect to personal investment and trading and its insider trading policy and procedures. Solar Capital Ltd. (“ BDC ”  or  “ Fund ”) has similarly and jointly adopted this Code of Ethics. Thus, this Code of Ethics is applicable to all Solar Capital employees (collectively “ Solar Capital ”).
 
II.	DEFINITIONS	
A. Access Person. The term “Access Person” means (i) any Supervised Person who (1) has access to nonpublic information regarding a Client’s purchase or sale of securities; (2) has access to nonpublic information regarding the portfolio holdings of any Reportable Fund; and/or (3) is involved in making securities recommendations to Clients or who has access to such recommendations that are nonpublic and (ii) all of the directors, officers, employees, members or partners of Solar Capital. By way of example, Access Persons include portfolio management personnel and service representatives who communicate investment advice to Clients. Administrative, technical, and clerical personnel may also be Access Persons if their functions or duties provide them with access to nonpublic information.
B. Advisers Act. The term “Advisers Act” means the Investment Advisers Act of 1940, as amended.
C. Automatic Investment Plan. An “Automatic Investment Plan” is a program in which regular periodic purchases or withdrawals are made automatically in or from investment accounts according to a predetermined schedule and allocation. An Automatic Investment Plan includes a dividend reinvestment plan.
D. Beneficial Ownership. You will be considered to have “Beneficial Ownership” in a Security if: (i) you have a Pecuniary Interest in the Security; (ii) you have voting power with respect to the Security, meaning the power to vote or direct the voting of the Security; or (iii) you have the power to dispose, or direct the disposition of, the Security. If you have any question about whether an interest in a Security or an account constitutes Beneficial Ownership of that Security, you should contact a Compliance Officer.
E. Chief Compliance Officer. The “Chief Compliance Officer” is the Access Person designated respectively by Adviser and BDC for each entity respectively as such, as identified in Solar Capital’s Compliance Policies and Procedures Manual.

F. Client. The term “Client” means any investment entity or account advised or managed or subadvised by Adviser, including any pooled investment vehicle advised or subadvised by Adviser.
G. Commission. The term “Commission” means the United States Securities and Exchange Commission.
H. Compliance Officer. The term “Compliance Officer” shall mean an Access Person deemed by Solar Capital to be sufficiently experienced to perform senior-level compliance functions, and shall include the Chief Compliance Officer.
I. Exchange Act. The term “Exchange Act” means the Securities Exchange Act of 1934, as amended.
J. Federal Securities Laws. The term “Federal Securities Laws” means the Securities Act, the Exchange Act, the Sarbanes-Oxley Act of 2002, the Investment Company Act, the Advisers Act, Title V of the Gramm-Leach-Bliley Act, any rules adopted by the Commission under any of these statutes, the Bank Secrecy Act as it applies to funds and investment advisers, and any rules adopted under the Bank Secrecy Act by the Commission or the Department of the Treasury.
K. Immediate Family. The term “Immediate Family” includes a Supervised Person’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and includes any adoptive relationship.
L. Index Securities. The term “Index Securities” means exchange-traded funds and derivatives based on broad-based indices.
M. Initial Public Offering. The term “Initial Public Offering” means an offering of securities registered under the Securities Act, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act.
N. Investment Company Act. The term “Investment Company Act” means the Investment Company Act of 1940, as amended.
O. Non-Reportable Securities. The term “Non-Reportable Securities” means: (i) direct obligations of the U.S. Government; (ii) bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments (defined as any instrument that has a maturity at issuance of less than 366 days and that is rated in one of the two highest rating categories by a Nationally Recognized Statistical Rating Organization), including repurchase agreements; (iii) shares issued by money market funds; (iv) shares issued by open-end funds registered under the Investment Company Act, other than Reportable Funds; and (v) shares issued by unit investment trusts that are invested exclusively in one or more open-end funds, none of which are Reportable Funds.

P. Pecuniary Interest. You will be considered to have a “Pecuniary Interest” in a Security if you, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, have the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the Security. The term “Pecuniary Interest” is construed very broadly. The following examples illustrate this principle: (i) ordinarily, you will be deemed to have a “Pecuniary Interest” in all Securities owned by members of your Immediate Family who share the same household with you; (ii) if you are a general partner of a general or limited partnership, you will be deemed to have a “Pecuniary Interest” in all Securities held by the partnership; (iii) if you are a shareholder of a corporation or similar business entity, you will be deemed to have a “Pecuniary Interest” in all Securities held by the corporation if you are a controlling shareholder or have or share investment control over the corporation’s investment portfolio; (iv) if you have the right to acquire equity Securities through the exercise or conversion of a derivative Security, you will be deemed to have a Pecuniary Interest in the Securities, whether or not your right is presently exercisable; (v) if you are the sole member or a manager of a limited liability company, you will be deemed to have a Pecuniary Interest in the Securities held by the limited liability company; and (vi) ordinarily, if you are a trustee or beneficiary of a trust, where either you or members of your Immediate Family have a vested interest in the principal or income of the trust, you will be deemed to have a Pecuniary Interest in all Securities held by that trust. If you have any question about whether an interest in a Security or an account constitutes a Pecuniary Interest, you should contact the Chief Compliance Officer.
Q. Reportable Fund. The term “Reportable Fund” means (i) any fund for which Adviser serves as investment adviser; or (ii) any fund whose investment adviser or principal underwriter controls Adviser, is controlled by Adviser, or is under common control with Adviser. As used in this definition, the term control has the same meaning as it does in Section 2(a)(9) of the Investment Company Act.
R. Reportable Security. The term “Reportable Security” includes all Securities (including Index Securities) other than Non-Reportable Securities.
S. Restricted List. The “Restricted List” is a list maintained by the Chief Compliance Officer and will include the name of any company, whether or not a client of Adviser, as to which one or more individuals at Adviser has a fiduciary relationship or may have material information which has not been publicly disclosed. No Supervised Person may trade in Securities on the Restricted List, whether for his own account or for the account of a Client.
T. Securities Act. The term “Securities Act” means the Securities Act of 1933, as amended.
U. Security. The term “Security” has the same meaning as it has in section 202(a)(18) of the Advisers Act. For purposes of this Code, the following are Securities:
Any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option or

privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any security.
The following are not Securities:
Commodities, futures and options traded on a commodities exchange, including currency futures, except that (i) options on any group or index of Securities and (ii) futures on any group or narrow-based index of Securities are Securities.
You should note that “Security” includes a right to acquire a Security, as well as an interest in a collective investment vehicle (such as a limited partnership or limited liability company).
V. Supervised Person. The term “Supervised Person” means (i) any partner, member, officer or director of Solar Capital, or other person occupying a similar status or performing similar function; (ii) any employee of Solar Capital; (iii) any U.S. consultant who has been contracted by Solar Capital for more than ninety (90) days; and (iv) any other person who provides advice on behalf of Solar Capital and is subject to Solar Capital’s supervision and control.
 
III.	PERSONAL INVESTMENT AND TRADING POLICY	
 
 	A.	General Statement	
Solar Capital is committed to maintaining the highest standard of business conduct.
Solar Capital and its Supervised Persons must not act or behave in any manner or engage in any activity that (1) involves or creates even the suspicion or appearance of the misuse of material, nonpublic information by Solar Capital or any Supervised Person or (2) gives rise to, or appears to give rise to, any breach of fiduciary duty owed to any Client or investor.
In addition, the Federal Securities Laws require that investment advisers maintain a record of every transaction in any Security, with certain exceptions, as described below, in which any Access Person acquires or disposes of Beneficial Ownership where the Security is or was held in an account over which the Access Person has direct or indirect influence or control. Given the current size of its operations, Solar Capital has chosen to require reporting of transactions, as well as pre-approval of certain transactions, for all Supervised Persons, rather than only Access Persons.

Solar Capital has developed the following policies and procedures relating to personal trading in Securities and the reporting of such personal trading in Securities in order to ensure that each Supervised Person satisfies the requirements of this Code.
 
 	B.	Requirements of this Code	
1. Duty to Comply with Applicable Laws.
All Supervised Persons are required to comply with the Federal Securities Laws, the fiduciary duty owed by Adviser to its Clients, as applicable, and this Code.
2. Duty to Report Violations.
Each Supervised Person is required by law to promptly notify the Chief Compliance Officer or designee in the event he or she knows or has reason to believe that he or she or any other Supervised Person has violated any provision of this Code. If a Supervised Person knows or has reason to believe that the Chief Compliance Officer has violated any provision of this Code, the Supervised Person must promptly notify the Chief Financial Officer and is not required to notify the Chief Compliance Officer.
Solar Capital is committed to fostering a culture of compliance. Solar Capital therefore urges you to contact the Chief Compliance Officer or designee if you have any questions regarding compliance. You will not be penalized and your status at Solar Capital will not be jeopardized by communicating with the Chief Compliance Officer. Reports of violations or a suspected violations also may be submitted anonymously to the Chief Compliance Officer or designee. Any retaliatory action taken against any person who in good faith reports a violation or a suspected violation of this Code is itself a violation of this Code and cause for appropriate corrective action, including dismissal.
3. Duty to Provide Copy of the Code of Ethics and Related Certification.
Solar Capital will provide all Supervised Persons with a copy of this Code and all subsequent amendments. By law, all Supervised Persons must in turn provide written acknowledgement to the Chief Compliance Officer or designee of their initial receipt and review of this Code, their annual review of this Code and their receipt and review of any subsequent amendments to this Code.
 
 	C.	Restrictions on Supervised Persons Trading in Securities	
1. General Statement.
No Supervised Person may engage in a transaction in a Security, which includes an interest in a collective investment vehicle, that is also the subject of a transaction by a Client if the Supervised Person’s transaction would disadvantage or appear to disadvantage the Client or if the Supervised Person would profit from or appear to profit from the transaction, whether or not at the expense of the Client. The following specific restrictions apply to all trading activity by Supervised Persons:
(a) No Supervised Person may engage in any purchases of a Reportable Security other than an Index Security. Any transaction in an Index Security will be permitted only in compliance with the reporting requirements of this Code. Sales of Reportable Securities other than Index Securities will be permitted only in compliance with the reporting and preclearance requirements of this Code.

(b) Any transaction in a Security in anticipation of an order from or on behalf of a Client, also known as “front running,” is prohibited.
(c) Any transaction in a Security included on the Restricted List of issuers maintained by Solar Capital is prohibited. The Restricted List is maintained by the Chief Compliance Officer and his or her designees. The Chief Compliance Officer or such other Compliance Officer as may be designated shall be responsible for: (i) determining whether any security identified by a Supervised Person should be included on the Restricted List; (ii) determining when securities should be removed from the Restricted List; and (iii) ensuring that securities are added to and removed from the Restricted List, as appropriate. The Restricted List shall be reviewed by the Chief Compliance Officer or designee at least quarterly.
(d) Any transaction in a Security which the Supervised Person knows or has reason to believe is being purchased or sold, or is being considered for purchase or sale, by or on behalf of a Client is prohibited until the Client’s transaction has been completed or consideration of the transaction is abandoned. A Security is “being considered for purchase or sale” the earlier of when a recommendation to purchase or sell has been made and communicated or the Security is placed on Adviser’s research project lists and, with respect to the person making the recommendation, when the person seriously considers making such a recommendation.
(e) Any transaction in a Security during the period which begins three days before and ends three days after any Client has traded in that Security is prohibited, unless approved by a Compliance Officer.
(f) Any transaction in a Security on the same day in which any Client has a pending or actual transaction is prohibited, unless approved by a Compliance Officer.
(g) Personal account trading must be done on the Supervised Person’s own time without placing undue burden on Solar Capital’s time.
(h) No trades should be undertaken which are beyond the financial resources of the Supervised Person.
(i) Except in extraordinary circumstances, no transaction will be permitted if the Securities purchased are expected to have less than a thirty-day holding period or if they are seen as presently or potentially part of a Client strategy.
(j) There is a presumption that a Supervised Person can exert some measure of influence or control over accounts held by members of such person’s Immediate Family sharing the same household. Therefore, transactions by immediate family sharing the same household are subject to the policies herein. A Supervised Person may rebut this presumption by presenting convincing evidence, in writing, to the Chief Compliance Officer and request an exemption to the policies herein. All exemptions must be approved by the Chief Compliance Officer, in writing.

2. All Sales of Reportable Securities, other than (i) Exempt Transactions described below in Section 4 or (ii) sales of Index Securities, must be pre-cleared by the Compliance Office under Section 5(b) below.
3. Use of Broker-Dealers and Brokerage Accounts.
(a) You may not engage, and you may not permit any other person or entity to engage, in any purchase or sale of publicly traded Reportable Securities of which you have, or by reason of the transaction will acquire, Beneficial Ownership, except through a registered broker-dealer or registered investment advisor.
(b) You must provide written notice to a Compliance Officer of your opening of an account with a bank, advisor or broker through which you have the ability to purchase or sell Securities promptly after opening the account, and in any event before the first order for the purchase or sale of a Security is placed in the account. A Compliance Officer will then ask you to complete and sign a written notice to the broker or bank, (the forms of which are attached as Appendix IV and Appendix V hereto) which discloses your affiliation with Adviser and request that copies of trade confirmations and statements be sent to the Chief Compliance Officer. A Compliance Officer will execute this notice on behalf of Solar Capital and transmit it to the broker.
4. The following are Exempt Transactions that do not require preclearance by a Compliance Officer:
(a) Any transaction in Securities in an account over which a Supervised Person does not have any direct or indirect influence or control (such as a fully discretionary managed account through a registered investment advisor).
(b) Purchases of Securities under Automatic Investment Plans (such as an employee sponsored 401K).
(c) Purchases of Securities by exercise of rights issued to the holders of a class of Securities pro rata, to the extent they are issued with respect to Securities for which a Supervised Person has Beneficial Ownership.
(d) Acquisitions or dispositions of Securities as the result of a stock dividend, stock split, reverse stock split, merger, consolidation, spin-off or other similar corporate distribution or reorganization applicable to all holders of a class of Securities for which a Supervised Person has Beneficial Ownership.
(e) Such other classes of transactions as may be exempted from time to time by the Chief Compliance Officer based upon a determination that the transactions are unlikely to violate Rule 204A-1 under the Advisers Act.

(f) Such other specific transactions as may be exempted from time to time by the Chief Compliance Officer.
5. Preclearance and Verification Procedures.
The following procedures shall govern all sales of Securities in which a Supervised Person has Beneficial Ownership (“Supervised Person Sales ”) and which are subject to preclearance by a Compliance Officer.
(a) Supervised Person Sales Subject to Preclearance.
A Supervised Person Sale may be disapproved if it is determined by the Chief Compliance Officer or designee that the Supervised Person is unfairly benefiting from, or that the transaction is in conflict with, or appears to be in conflict with, any Client Transaction (as defined below) any of the above-described trading restrictions, or this Code. “ Client Transactions ” include transactions for any Client or any other account managed or advised by any Supervised Person for a fee.
The determination that a Supervised Person may unfairly benefit from, or that a Supervised Person Sale may conflict with or appears to be in conflict with, a Client Transaction will be subjective and individualized, and may include questions about the timely and adequate dissemination of information, availability of bids and offers, and other factors deemed pertinent for that transaction or series of transactions. It is possible that a disapproval of a Supervised Person Sale could be costly to a Supervised Person or members of a Supervised Person’s family; therefore, each Supervised Person should take great care to adhere to Solar Capital’s trading restrictions and avoid conflicts of interest or the appearance of conflicts of interest.
Any disapproval of a Supervised Person Sale shall be in writing. A Supervised Person may appeal any such disapproval by written notice to the Chief Financial Officer within two business days after receipt of notice of disapproval. The appeal must be resolved promptly by the Chief Financial Officer.
(b) Procedures for Preclearance of Supervised Person Sales.
(i) Supervised Person Sales through Brokers or Banks. Supervised Person Sales through brokers or banks are not permitted except through an account for which the Supervised Person has provided written notice to Adviser, and completed and signed a notice to the broker or bank to be sent by Adviser, in accordance with Section III.C.3(b).
To seek approval of a Supervised Person Sale, the Supervised Person must submit a request, to the Compliance Officer prior to executing each transaction through the broker or bank. The Compliance Officer will notify a Supervised Person within two business days of any conflict and will advise whether the Supervised Person Sale has been cleared.
(ii) Other Transactions. All other Supervised Person Sales must be cleared in writing by the Compliance Officer prior to the Supervised Person’s entering into the transaction. If a Supervised Person wishes to engage in such a transaction, he or she must submit a request to the Compliance Officer. The Compliance Officer will notify the Supervised Person within five business days of any conflict and will advise whether the Supervised Person Sale has been cleared.

IV.	REPORTING	
 
 	A.	Reports About Securities Holdings and Transactions	
Supervised Persons must submit to the Chief Compliance Officer or designee periodic written reports about their Securities holdings, transactions, and accounts, and the Securities of other persons if the Supervised Person has Beneficial Ownership of such Securities and the accounts of other persons if the Supervised Person has direct or indirect influence or control over such accounts. The obligation to submit these reports and the content of these reports are governed by the Federal Securities Laws. The reports are intended to identify conflicts of interest that could arise when a Supervised Person invests in a Security or holds accounts that permit these investments, and to promote compliance with this Code. Adviser is sensitive to privacy concerns and will try not to disclose your reports to anyone unnecessarily. Report forms are attached.
Failure to file a timely, accurate, and complete report is a serious breach of Commission rules and this Code. If a Supervised Person is late in filing a report, or files a report that is misleading or incomplete, the Supervised Person may face sanctions including identification by name to the Chief Compliance Officer, withholding of salary or bonuses, or termination of employment.
1.Initial Disclosure Reports: Within ten days after you become a Supervised Person, you must submit to the Chief Compliance Officer or designee a securities accounts report (a form of which is attached as Appendix II thereto) and private investments report (a form of which is attached as Appendix VI thereto) based on information that is current as of a date not more than 45 days prior to the date you become a Supervised Person.
(a) The Initial Report of Securities Accounts contains the following:
(i) The name/title and type of Security, and, as applicable, the exchange ticker symbol or CUSIP number, the number of equity shares and principal amount of each Reportable Security for which you had Beneficial Ownership. You may provide this information by referring to attached copies of broker transaction confirmations or account statements from the applicable recordkeepers that contain the information.
(ii) The name and address of any broker, dealer, or bank or other institution (such as a general partner of a limited partnership, or transfer agent of a company) that maintained any account holding any Securities for which you have Beneficial Ownership, and the account numbers and names of the persons for whom the accounts are held.
(iii) An executed statement (and a letter or other evidence) pursuant to which you have instructed each broker, dealer, bank, or other institution to provide duplicate account statements and confirmations of all Securities transactions, unless Adviser indicates that the information is otherwise available to it. The form of this statement is attached as Appendix IV (for personal accounts) and Appendix V (for related accounts) hereto.

(iv) The date you submitted the report.
(b) The Initial Report of Private Investments contains the following:
(i) A description of all private investments for which you have a Beneficial Ownership, the principal amount of those private investments, the approximate dates of acquisition, and whether the private investments involve or are associated with companies that have publicly traded debt or equity.
(ii) The date you submitted the report.
2.Quarterly Transaction Report: Unless, as noted below, the Chief Compliance Officer already receives trade confirmations or account statements for all of your transactions in Reportable Securities, within 30 days after the end of each calendar quarter, you, as a Supervised Person, must submit to the Chief Compliance Officer or designee a transaction report, a form of which is attached as Appendix III hereto, that contains:
(a) With respect to any transaction during the quarter in any Reportable Security in which you had, or as a result of the transaction acquired, Beneficial Ownership of the Reportable Security:
(i) The date of the transaction, the name/title and as applicable, the exchange ticker symbol or CUSIP number, interest rate and maturity date, the number of equity shares of, or the principal amount of debt represented by, and principal amount of each Reportable Security involved;
(ii) The nature of the transaction, i.e., purchase, sale or other type of acquisition or disposition;
(iii) The price at which the transaction in the Reportable Security was effected;
(iv) The name of the broker, dealer, bank, or other institution with or through which the transaction was effected.
(b) The name and address of any broker, dealer, bank, or other institution, such as a general partner of a limited partnership, or transfer agent of a company, that maintained any account in which any Securities were held during the quarter of which you have Beneficial Ownership, the account numbers and names of the persons for whom the accounts were held, and the date when each account was established.
(c) An executed statement, and a letter or other evidence, pursuant to which you have instructed each broker, dealer, bank, or other institution that has established a new account over which you have direct or indirect influence or control during the past quarter to provide duplicate account statements and confirmations of all Securities transactions to Solar Capital, unless Solar Capital indicates that the information is otherwise available to it. The form of this statement is attached as Appendix IV and Appendix V hereto.

(d) The date that you submitted the report.
***You need not submit a quarterly transaction report to the Chief Compliance Officer or designee if it would duplicate information contained in trade confirmations or account statements already received by the Chief Compliance Officer or designee, provided that those trade confirmations or statements are received not later than 30 days after the close of the calendar quarter in which the transaction takes place. ***
3. Annual Employee Certification: You must, no later than October 15 of each year, submit to the Chief Compliance Officer or designee an Annual Employee Certification, that is current as of a date no earlier than September 1 of the same calendar year (the “ Annual Report Date ”) and that contains:
(a) The name and address of any broker, dealer, investment advisor or bank or other institution, such as a general partner of a limited partnership, or transfer agent of a company, that maintained any account holding any Securities for which you have Beneficial Ownership on the Annual Report Date, the account numbers and names of the persons for whom the accounts are held, and the date when each account was established.
(b) A description of any private investments for which you have a Beneficial Ownership on the Annual Report Date, the principal amount of the investment, the approximate date of the acquisition, and whether the private investment involves or is associated with a company that has publicly trade debt or equity.
(c) The date that you submitted the report.
Exception to requirement to list transactions or holdings subject to IV.2 and IV.3(a) above: You are not required to submit (i) holdings or transactions reports for any account over which you had no direct or indirect influence or control (such as a fully discretionary managed account through a registered investment advisor) or (ii) transaction reports with respect to transactions effected pursuant to an Automatic Investment Plan, unless requested by Solar Capital. You must still identify the existence of the account in your list of accounts. Transactions that override pre-set schedules or allocations of an automatic investment plan or trades that are directed by you in a fully discretionary managed account, however, must be included in a quarterly transaction report.
4. Please ask the Chief Compliance Officer if you have questions about the above-described disclosure and transaction reporting requirements.
 
 	B.	Review of Reports and Other Documents	
The Chief Compliance Officer or a designee of the Chief Compliance Officer will review each report submitted by Supervised Persons, and each account statement or confirmation from institutions that maintain their accounts, as promptly as practicable. In any event all Initial Disclosure Reports will be reviewed within 20 business days of receipt, and the review of all

timely-submitted Quarterly Transaction Reports will be completed by the end of the quarter in which received. As part of his or her review, the Chief Compliance Officer or his or her designee will confirm that all necessary pre-approvals have been obtained. To ensure adequate scrutiny, documents concerning a member of the Compliance Office will be reviewed by a different member of the Compliance Office, or if there is only one member of the Compliance Office, by the Chief Financial Officer.
A report documenting the above review and any exceptions noted will be prepared by the Chief Compliance Officer and circulated to Solar Capital’s Management Committee within 60 days of the end of the quarter in which the reports were received.
Review of submitted holding and transaction reports will include not only an assessment of whether the Supervised Person followed all required procedures of this Code, such as preclearance, but may also: compare the personal trading to any restricted lists; assess whether the Supervised Person is trading for his or her own account in the same securities he or she is trading for Clients, and, if so, whether the Clients are receiving terms as favorable as the Supervised Person receives; periodically analyze the Supervised Person’s trading for patterns that may indicate abuse, including market timing; investigate any substantial disparities between the quality of performance the Supervised Person achieves for his or her own account and that he or she achieves for Clients; and investigate any substantial disparities between the percentage of trades that are profitable when the Supervised Person trades for his or her own account and the percentage that are profitable when he or she places trades for Clients.
 
V.	POLICY ON GIFTS	
A. Supervised Persons may not accept gifts from any person in a single year with a value in excess of $100 where such gift or gratuity is in relation to the business of Solar.
B. The Policy does not apply to gifts of de minimis value (e.g., pens, notepads, donuts, pizza, modest desk ornaments) or to promotional items of nominal value that display the person’s firm logo (e.g., umbrellas, tote bags, shirts).  De minimis  gifts and promotional items must be substantially less than the $100 limit to fall within the exclusion. Gifts valued in amounts greater than or near $25 would  not  be considered  de minimis  or nominal.
C. Regardless of dollar value, Supervised Persons may not accept any gift or entertainment that is inappropriate under the circumstances, or inconsistent with applicable law or regulations, from any person or entity that does business, or desires to do business, with Solar Capital directly or on behalf of a Client.
D. The Policy generally does not apply to personal gifts (e.g., wedding gifts), as long as the gifts are not “in relation to the business of Solar Capital”. In determining whether a gift is “in relation to the business of Solar Capital”, Solar Capital employees should consider a number of factors, including the nature of any pre-existing personal or family relationship between the person giving the gift and the Solar Capital employee, and if known, whether the person giving the gift paid for the gift themselves or if the person’s company directly or indirectly paid for the gift. When the person’s employer bears the cost of a gift, either directly or via a reimbursement, Solar Capital employees should presume that the gift is in relation to the business of Solar Capital.

E. Regardless of dollar value, Supervised Persons may not give a gift or provide entertainment that is inappropriate under the circumstances, or inconsistent with applicable law or regulations, to persons associated with securities or financial organizations, exchanges, member firms, commodity firms, news media, or Clients. Supervised Persons should not give or receive gifts or entertainment that would be embarrassing to you or Solar Capital if made public.
F. Solar Capital employees must report 1) the receipt or giving of all gifts (other than personal gifts and gifts of de minimis or nominal value, as defined above), and 2) the  receipt  of business entertainment in excess of $250 to the Chief Compliance Officer or designee. All business entertainment with a value in excess of $500 must be pre-approved by the Solar Capital employee’s supervisor prior to accepting the business entertainment.
 
VI.	COMPLIANCE	
 
 	A.	Certificate of Receipt	
Supervised Persons are required to acknowledge receipt of the Compliance Manual and, therefore, your copy of this Code and that you have read and understood the Compliance Manual. A form for this purpose is attached to this Code as Appendix I.
 
 	B.	Annual Certificate of Compliance	
Supervised Persons are required to certify upon becoming a Supervised Person or the effective date of this Code, whichever occurs later, and annually thereafter, that you have read and understand this Code and recognize that you are subject to this Code. Each annual certificate will also state that you have complied with all of the requirements of this Code during the prior year.
 
 	C.	Remedial Actions	
If you violate this Code, including filing a late, inaccurate or incomplete holdings or transaction report, you will be subject to remedial actions, which may include, but are not limited to, any one or more of the following: (1) a warning; (2) disgorgement of profits; (3) imposition of a fine, which may be substantial; (4) demotion, which may be substantial; (5) suspension of employment, with or without pay; (6) termination of employment; or (7) referral to civil or governmental authorities for possible civil or criminal prosecution. If you are normally eligible for a discretionary bonus, any violation of the Code may also reduce or eliminate the discretionary portion of your bonus.

VII. 	RETENTION OF RECORDS	
The Chief Compliance Officer will maintain, for a period of five years unless specified in further detail below, the records listed below. The records will be maintained at the Firm’s principal place of business for at least two years and in an easily accessible, but secured, place for the entire five years.
A. A record of the names of persons who are currently, or within the past five years were, Access Persons of Adviser.
B. The Annual Certificate of Compliance signed by all persons subject to this Code acknowledging receipt of copies of the Code and acknowledging they are subject to it and will comply with its terms. All Annual Certificates of each Supervised Person must be kept for five years after the individual ceases to be a Supervised Person.
C. A copy of each Code that has been in effect at any time during the five-year period.
D. A copy of each report made by a Supervised Person pursuant to this Code, including any broker trade confirmations or account statements that were submitted in lieu of the persons’ quarterly transaction reports.
E. A record of all known violations of the Code and of any actions taken as a result thereof, regardless of when the violations were committed.
F. A record of any decision, and the reasons supporting the decision, to approve the acquisition of securities by Supervised Persons, for at least five years after the end of the fiscal year in which the approval is granted.
G. A record of all reports made by the Chief Compliance Officer related to this Code.
 
VIII. 	NOTICES.	
For purposes of this Code, all notices, reports, requests for clearance, questions, contacts, or other communications to the Chief Compliance Officer or the Chief Financial Officer will be considered delivered if given to the Chief Compliance Officer or the Chief Financial Officer, respectively.
 
IX.	REVIEW.	
This Code will be reviewed by the Chief Compliance Officer on an annual basis to ensure that it is meeting its objectives, is functioning fairly and effectively, and is not unduly burdensome to Adviser or Supervised Persons. Supervised Persons are encouraged to contact the Chief Compliance Officer with any comments, questions or suggestions regarding implementation or improvement of the Code.

Appendix I
SOLAR CAPITAL
ACKNOWLEDGMENT AND CERTIFICATION
SOLAR CAPITAL
COMPLIANCE POLICIES AND PROCEDURES MANUAL
I hereby certify to Solar Capital that:
(1) I have received and reviewed Solar Capital’s Compliance Policies and Procedures Manual (the “Compliance Manual”);
(2) To the extent I had questions regarding any policy or procedure contained in the Compliance Manual, I received satisfactory answers to those questions from appropriate Solar Capital personnel;
(3) I fully understand the policies and procedures contained in the Compliance Manual;
(4) I understand and acknowledge that I am subject to the Compliance Manual;
(5) I will comply with the policies and procedures contained in the Compliance Manual at all times during my association with Solar Capital, and agree that the Compliance Manual may, under certain circumstances, continue to apply to me subsequent to the termination of my association with Solar Capital.
(6) I understand and acknowledge that if I violate any provision of the Compliance Manual, I will be subject to remedial actions, which may include, but are not limited to, any one or more of the following: (a) a warning; (b) disgorgement of profits; (c) imposition of a fine, which may be substantial; (d) demotion, which may be substantial; (e) suspension of employment, with or without pay; (f) termination of employment; or (g) referral to civil or governmental authorities for possible civil or criminal prosecution. I further understand that, to the extent I would otherwise be eligible for a discretionary bonus, if I violate the Compliance Manual this may reduce or eliminate the discretionary portion of my bonus.

Date:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	Signature	

 	 	 	 	 	 	 	 	Print Name	

Appendix II
SOLAR CAPITAL
INITIAL REPORT OF SECURITIES ACCOUNTS
In accordance with Solar Capital’s policies and procedures, please indicate whether you maintain securities accounts over which you have influence or control and/or in which any securities are held for which you have Beneficial Ownership 1  (“Securities Accounts”). Securities Accounts include accounts of any kind held at a broker, bank, investment advisor, or money manager.
 
 	¨	I do maintain Securities Accounts.	
 
 	¨	I do not maintain Securities Accounts.	
If you indicated above that you do maintain Securities Accounts, please (1) complete the Personal Trading Account and/or Related Trading Account letters of direction ( enclosed ), (2) provide the information in the following table ( use additional paper if necessary ), and (3) attach a copy of the most recent account statement listing holdings for each account identified below:

Account Name	  	Broker/Institution
Name	  	Account Number	  	Broker/Institution’s
Address	  	Is this account managed by a
3 rd  party (such as an
investment advisor) on a fully
discretionary basis in which
you do not direct any
transactions? (Yes/No)	

I certify that this form is accurate and complete, and I have attached statements (if any) for all of my Securities Accounts.

 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	Signature	
 	 	 	 	
______________________	 	 	 	 	 	 	
Date	 	 	 	 	 	Print Name	
 
1	You will be considered to have “Beneficial Ownership” in a Security if: (i) you have a Pecuniary Interest in the Security; (ii) you have voting power with respect to the Security, meaning the power to vote or direct the voting of the Security; or (iii) you have the power to dispose, or direct the disposition of, the Security. You will be considered to have a “Pecuniary Interest” in a security if you, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, have the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the security. The term “Pecuniary Interest” is construed very broadly. The following examples illustrate this principle: (i) ordinarily, you will be deemed to have a “Pecuniary Interest” in all Securities owned by members of your Immediate Family who share the same household with you; (ii) if you are a general partner of a general or limited partnership, you will be deemed to have a “Pecuniary Interest” in all Securities held by the partnership; (iii) if you are a shareholder of a corporation or similar business entity, you will be deemed to have a “Pecuniary Interest” in all Securities held by the corporation if you are a controlling shareholder or have or share investment control over the corporation’s investment portfolio; (iv) if you have the right to acquire equity Securities through the exercise or conversion of a derivative Security, you will be deemed to have a Pecuniary Interest in the Securities, whether or not your right is presently exercisable; (v) if you are the sole member or a manager of a limited liability company, you will be deemed to have a Pecuniary Interest in the Securities held by the limited liability company; and (vi) ordinarily, if you are a trustee or beneficiary of a trust, where either you or members of your Immediate Family have a vested interest in the principal or income of the trust, you will be deemed to have a Pecuniary Interest in all Securities held by that trust.	

Appendix III
SOLAR CAPITAL
QUARTERLY BROKERAGE ACCOUNT
AND NON-BROKER TRANSACTION REPORT
Notes:
1. Capitalized terms not defined in this report are defined in the Code of Ethics of Solar Capital (the “Code”).
2. You must cause each broker-dealer that maintains an account over which you have influence or control and holds Securities for which you have Beneficial Ownership to provide to the Chief Compliance Officer, on a timely basis, duplicate copies of confirmations of all transactions in the account and duplicate statements for the account and you must report to the Chief Compliance Officer, within 30 days of the end of each calendar quarter, all transactions effected without the use of a registered broker-dealer in Securities, other than transactions in Non-Reportable Securities.
The undersigned has requested that you receive duplicate statements and confirmations on his or her behalf from the following brokers:

Name	  	Broker	  	Account Number	  	Date	  	Date Account
Opened	

 	  	 	  	 	  	 	  	 	
The following are Securities transactions that havenot been reported and/or executed through a broker-dealer, i.e. during the previous calendar quarter.

Date	  	Buy/Sell	  	Security Name	  	Amount	  	Price	  	Broker/Issuer	

 	  	 	  	 	  	 	  	 	  	 	
By signing this document, I am certifying that I have caused duplicate confirmations and duplicate statements to be sent to the Chief Compliance Officer of Solar Capital for every brokerage account that trades in Securities.

  	 	 	 	  	
Date	 	 	 	Signature	

1.	Transactions required to be reported. You should report every transaction in which you acquired or disposed of any Security in which you had a Pecuniary Interest during the calendar quarter. The term “beneficial ownership” is the subject of a long history of opinions and releases issued by the Securities and Exchange Commission and generally means that you would receive the benefits of owning a Security. The term includes, but is not limited to the following cases and any other examples in the Code:	
 
 	(A)	Where the Security is held for your benefit by others, such as brokers, custodians, banks and pledgees);	
 
 	(B)	Where the Security is held for the benefit of members of your Immediate Family sharing the same household;	
 
 	(C)	Where Securities are held by a corporation, partnership, limited liability company, investment club or other entity in which you have an equity interest if you are a controlling equityholder or you have or share investment control over the Securities held by the entity;	
 
 	(D)	Where Securities are held in a trust for which you are a trustee and under which either you or any member of your Immediate Family have a vested interest in the principal or income; and	
 
 	(E)	Where Securities are held in a trust for which you are the settlor, unless the consent of all of the beneficiaries is required in order for you to revoke the trust.	
Notwithstanding the foregoing, the following transactions are not required to be reported:
 
 	(A)	Transactions in Securities which are direct obligations of the United States;	
 
 	(B)	Transactions effected in any account over which you have no direct or indirect influence or control; or	
 
 	(C)	Shares of registered open-end investment companies.	
 
2.	Security Name. State the name of the issuer and the class of the Security, e.g., common stock, preferred stock or designated issue of debt securities, including the interest rate, principal amount and maturity date, if applicable. In the case of the acquisition or disposition of a futures contract, put, call option or other right, referred to as “options,” state the title of the Security subject to the option and the expiration date of the option.	
 
3.	Futures Transactions. Please remember that duplicates of all Confirmations, Purchase and Sale Reports, and month-end Statements must be sent to Adviser by your broker. Please double check to be sure this occurs if you report a future transaction.	
 
4.	Transaction Date. In the case of a market transaction, state the trade date, not the settlement date.	

5.	Nature of Transaction (Buy or Sale). State the character of the transaction, e.g., purchase or sale of Security, purchase or sale of option, or exercise of option.	
 
6.	Amount of Security Involved (No. of Shares). State the number of shares of stock, the face amount of debt Securities or other units of other Securities. For options, state the amount of Securities subject to the option. If your ownership interest was through a spouse, relative or other natural person or through a partnership, trust, other entity, state the entire amount of Securities involved in the transaction. In such cases, you may also indicate, if you wish, the extent of your interest in the transaction.	
 
7.	Purchase or Sale Price. State the purchase or sale price per share or other unit, exclusive of brokerage commissions or other costs of execution. In the case of an option, state the price at which it is currently exercisable. No price need be reported for transactions not involving cash.	
 
8.	Broker, Dealer or Bank Effecting Transaction. State the name of the broker, dealer or bank with or through whom the transaction was effected.	
 
9.	Signature. Sign the form in the space provided.	
 
10.	Filing of Report. This report should be filed NO LATER THAN 30 CALENDAR DAYS following the end of each calendar quarter.	

Appendix IV
SOLAR CAPITAL
PERSONAL TRADING ACCOUNT
LETTER OF DIRECTION
To Whom This May Concern:
I,                                                       (print name), currently maintain an investment account with your institution, and hereby request that duplicate trade confirmations and monthly account statements be disseminated to my employer, Solar Capital, at the following address:
Attn: Chief Compliance Officer
Solar Capital
500 Park Avenue, 5th Floor
New York, NY 10022
If you should have any questions, please do not hesitate to contact me. Thank you for your cooperation.

Sincerely,	
 	 	
NAME:	 	 	
 	 	
DATE:	 	 	
 	 	
PHONE: 	 	 	

Appendix V
SOLAR CAPITAL
RELATED TRADING ACCOUNT
LETTER OF DIRECTION
To Whom This May Concern:
I,                                                                   (print your name), currently maintain an investment account with your institution. Due to my relationship with                                   (print employee’s name), who is an employee of Solar Capital, I hereby request that duplicate trade confirmations and monthly account statements be disseminated to the following address:
Attn: Chief Compliance Officer
Solar Capital
500 Park Avenue, 5th Floor
New York, NY 10022
If you should have any questions, please do not hesitate to contact me. Thank you for your cooperation.

Sincerely,	
 	 	
NAME:	 	 	
 	 	
DATE:	 	 	
 	 	
PHONE: 	 	 	

Appendix VI
SOLAR CAPITAL
INITIAL REPORT OF PRIVATE INVESTMENTS
In accordance with Solar Capital policies and procedures, please indicate whether you maintain private investments over which you have influence or control and in which any private investments are held for which you have a Beneficial Ownership 1 . The term private investment is typically defined as an intangible investment and is very broadly construed by Solar Capital. Examples of private investments may include equity in a business or company, a loan to a business or company, an investment in a hedge fund or limited partnership, or securities held in your home or in a safe deposit box. Examples of investments that generally are not considered private investments are your primary residence, vacation home, automobiles, artwork, jewelry, antiques, stamps, and coins.
 
 	¨	I do maintain private investments.	
 
 	¨	I do not maintain private investments.	
If you indicated above that you do maintain private investments, please provide the information in the following table (use additional paper if necessary ):

Description of Private Investment	  	Value of Private
Investment	  	Approximate
Acquisition Date	  	Does the private investment involve a
company that has publicly traded debt or
equity? (Yes/No)	

I certify that this form and any attachments are accurate and complete and constitute all of my private investments.

 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	Signature	
 	 	 	 	
______________________	 	 	 	 	 	 	
Date	 	 	 	 	 	Print Name	
 
1	You will be considered to have “Beneficial Ownership” in an investment if: (i) you have a Pecuniary Interest in the investment; (ii) you have voting power with respect to the investment, meaning the power to vote or direct the voting of the investment; or (iii) you have the power to dispose, or direct the disposition of, the investment. You will be considered to have a “Pecuniary Interest” in an investment if you, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, have the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the investment. The term “Pecuniary Interest” is construed very broadly. The following examples illustrate this principle: (i) ordinarily, you will be deemed to have a “Pecuniary Interest” in all investments owned by members of your Immediate Family who share the same household with you; (ii) if you are a general partner of a general or limited partnership, you will be deemed to have a “Pecuniary Interest” in all investments held by the partnership; (iii) if you are a shareholder of a corporation or similar business entity, you will be deemed to have a “Pecuniary Interest” in all investments held by the corporation if you are a controlling shareholder or have or share investment control over the corporation’s investment portfolio; (iv) if you have the right to acquire equity security through the exercise or conversion of a derivative investment, you will be deemed to have a Pecuniary Interest in the investment, whether or not your right is presently exercisable; (v) if you are the sole member or a manager of a limited liability company, you will be deemed to have a Pecuniary Interest in the investments held by the limited liability company; and (vi) ordinarily, if you are a trustee or beneficiary of a trust, where either you or members of your Immediate Family have a vested interest in the principal or income of the trust, you will be deemed to have a Pecuniary Interest in all investments held by that trust.	

Appendix VII
SOLAR CAPITAL
INITIAL REPORT OF OUTSIDE BUSINESS ACTIVITIES
In accordance with Solar Capital policies and procedures, please indicate whether you engage in any outside business activities. Outside business activities include, but are not limited to, serving as owner, partner, trustee, officer, director, finder, referrer, or employee of another business organization for compensation, or any activity for compensation outside my usual responsibilities at Solar Capital. 1
 
 	¨	I do engage in outside business activities	
 
 	¨	I do not engage in any outside business activities	
If you indicated above that you do engage in outside business activities, please complete the following table (use additional paper if necessary):

Name of Business Entity	  	Summary of Outside Business Activity	  	Summary of Compensation	  	Is the Business Entity
Related to a Publicly
Traded Company?
(Yes/No)	

 	  	 	  	 	  	 	
I certify that this form and any attachments are accurate and complete and constitute all of my outside business activities.

 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	Signature	
 	 	 	 	
______________________	 	 	 	 	 	 	
Date	 	 	 	 	 	Print Name	
 
1	Compensation includes salaries, director’s fees, referral fees, stock options, finder’s fees, and anything of present or future value.	

INSIDER TRADING POLICIES AND PROCEDURES
 
I.	BACKGROUND	
All personal securities trades are subject to these Insider Trading Policies and Procedures. However, compliance with the trading restrictions imposed by these procedures by no means assures full compliance with the prohibition on trading while in the possession of inside information, as defined in these procedures.
Insider trading — trading Securities while in possession of material, nonpublic information or improperly communicating such information to others — may expose a person to stringent penalties. Criminal sanctions may include a fine of up to $1,000,000 and/or ten years’ imprisonment. The Commission may recover the profits gained, or losses avoided, through insider trading, obtain a penalty of up to three times the illicit gain or avoided loss, and/or issue an order permanently barring any person engaging in insider trading from the securities industry. In addition, investors may sue seeking to recover damages for insider trading violations.
These Insider Trading Policies and Procedures are drafted broadly and will be applied and interpreted in a similar manner. Regardless of whether a federal inquiry occurs, Solar Capital views seriously any violation of these Insider Trading Policies and Procedures. Any violation constitutes grounds for disciplinary sanctions, including dismissal and/or referral to civil or governmental authorities for possible civil or criminal prosecution.
The law of insider trading is complex; a Supervised Person legitimately may be uncertain about the application of these Insider Trading Policies and Procedures in a particular circumstance. A question could forestall disciplinary action or complex legal problems. Supervised Persons should direct any questions relating to these Insider Trading Policies and Procedures to a Compliance Officer. A Supervised Person must also notify a Compliance Officer immediately if he or she knows or has reason to believe that a violation of these Insider Trading Policies and Procedures has occurred or is about to occur.
 
II.	STATEMENT OF FIRM POLICY	
A. At all times, the interests of Solar Capital’s Clients must prevail over the individual’s interest.
B. Buying or selling Securities in the public markets on the basis of material, nonpublic information is prohibited. Similarly, buying and selling securities in a private transaction on the basis of material, nonpublic information is prohibited, except in the limited circumstance in which the information is obtained in connection with a private transaction with an issuer of securities, in which case the private transaction itself is permitted. A prohibited transaction would include purchasing or selling (i) for a Supervised Person’s own account or one in which the Supervised Person has direct or indirect influence or control, (ii) for a Client’s account, or (iii) for Adviser’s inventory account. If any Supervised Person is uncertain as to whether information is “material” or “nonpublic,” he or she should consult the Chief Compliance Officer.

C. Disclosing material, nonpublic information to inappropriate personnel, whether or not for consideration, i.e., “tipping,” is prohibited. Material, nonpublic information must be disseminated on a “need to know basis” only to appropriate personnel. This would include any confidential discussions between the issuer and personnel of Adviser. The Chief Compliance Officer should be consulted should a question arise as to who is privy to material, nonpublic information.
D. Assisting anyone transacting business on the basis of material, nonpublic information through a third party is prohibited.
E. In view of the Gabelli & Co./GAMCO Investments, Inc. SEC proceeding, it is clear that when a portfolio manager is in a position, due to his official duties at an issuer, to have access to inside information on a relatively continuous basis, self-reporting procedures are not adequate to detect and prevent insider trading. Accordingly, neither Adviser nor an Adviser employee may trade in any securities issued by any company of which any Adviser employee is an employee or insider.  All Supervised Persons must report to the Chief Compliance Officer or designee any affiliation or business relationship they may have with any issuer (a form of which is attached as Appendix VII thereto.)
F. Supervised Persons should understand that if Solar Capital becomes aware of material, nonpublic information about the issuer of the underlying securities, even if the particular Supervised Person in question does not himself or herself have such knowledge, or enters into certain transactions for clients, Solar Capital will not bear any losses resulting in personal accounts through the implementation of these Insider Trading Policies and Procedures.
G. It is Solar’s policy that officers and directors may purchase or sell Solar securities only during the “window period that begins on the second business day after Solar publicly releases quarterly or annual financial results and extends for 20 calendar days (19 calendar days in all). However, the ability of an officer or director to engage in transactions in Solar securities during window periods is not automatic or absolute because no trades may be made even during a window period by an individual who possesses material, nonpublic information.
H. The following reviews principles important to these Insider Trading Policies and Procedures:
1. What is “Material” Information?
Information is “material” when there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions. Generally, information is material if its disclosure will have a substantial effect on the price of a company’s Securities. No simple “bright line” test exists to determine whether information is material; assessments of materiality involve highly fact-specific inquiries.  However, if the information you have received is or could be a factor in your trading decision, you must assume that the information is material.  Supervised Persons should direct any questions regarding the materiality of information to the Chief Compliance Officer or designee.

Material information often relates to a company’s results and operations, including, for example, dividend changes, earnings results, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems, and extraordinary management developments. Material information may also relate to the market for a Security. Information about a significant order to purchase or sell Securities, in some contexts, may be deemed material; similarly, prepublication information regarding reports in the financial press may also be deemed material.
2. What is “Nonpublic” Information?
Information is “nonpublic” until it has been disseminated broadly to investors in the marketplace. Tangible evidence of this dissemination is the best indication that the information is public. For example, information is public after it has become available to the general public through a public filing with the Commission or some other government agency, or available to the Dow Jones “tape” or The Wall Street Journal or some other general circulation publication, and after sufficient time has passed so that the information has been disseminated widely.  If you believe that you have information concerning an issuer which gives you an advantage over other investors, the information is, in all likelihood, non-public.
I. Identifying Inside Information.
Before executing any trade for oneself or others, including Clients, a Supervised Person must determine whether he or she has access to material, nonpublic information. If a Supervised Person believes he or she might have access to material, nonpublic information, he or she should:
1. Immediately alert the Chief Compliance Officer or designee, so that the applicable Security is placed on the Restricted List.
2. Not purchase or sell the Securities on his or her behalf or for others, including Clients (except in the limited circumstance in which the information is obtained in connection with a private transaction with an issuer of securities, in which case the private transaction itself is permitted).
3. Not communicate the information inside or outside of Adviser, other than to the Chief Compliance Officer or designee (or, in the limited circumstance of a private transaction with an issuer of securities, to Supervised Persons within Adviser involved in the transaction with a need to know the information).
The Chief Compliance Officer will review the issue, determine whether the information is material and nonpublic, and, if so, what action Adviser should take.
J. Contacts With Public Companies; Tender Offers.
Contacts with public companies may represent part of Adviser’s research efforts and Adviser may make investment decisions on the basis of its conclusions formed through these contacts and analysis of publicly available information. Difficult legal issues may arise, however, when a Supervised Person, in the course of these contacts, becomes aware of material, nonpublic information. For example, a company’s Chief Financial Officer could prematurely

disclose quarterly results, or an investor relations representative could make a selective disclosure of adverse news to certain investors. In these situations, Adviser must make a judgment about its further conduct. To protect oneself, Clients, and Adviser, a Supervised Person should immediately contact the Chief Compliance Officer if he or she believes he or she may have received material, nonpublic information.
Tender offers represent a particular concern in the law of insider trading for two reasons. First, tender offer activity often produces extraordinary movement in the price of the target company’s securities. Trading during this time is more likely to attract regulatory attention, and produces a disproportionate percentage of insider trading cases. Second, the Commission has adopted a rule expressly forbidding trading and “tipping” while in possession of material, nonpublic information regarding a tender offer received from the company making the tender offer, the target company, or anyone acting on behalf of either. Supervised Persons must exercise particular caution any time they become aware of nonpublic information relating to a tender offer.
 
III.	INSIDER TRADING PROCEDURES APPLICABLE TO ALL SUPERVISED PERSONS	
The following procedures have been established to aid Supervised Persons in avoiding insider trading, and to aid Adviser in preventing, detecting and imposing sanctions against insider trading. Every Supervised Person must follow these procedures or risk serious sanctions, including dismissal, substantial personal liability and criminal penalties. If a Supervised Person has any questions about these procedures, he or she should consult the Chief Compliance Officer or designee.
A. Responsibilities of Supervised Persons.
1. All Supervised Persons must make a diligent effort to ensure that a violation of these Insider Trading Policies and Procedures does not either intentionally or inadvertently occur. In this regard, all Supervised Persons are responsible for:
(a) Reading, understanding and consenting to comply with these Insider Trading Policies and Procedures. Supervised Persons will be required to sign an acknowledgment that they have read and understood the Compliance Manual and therefore their responsibilities under the Code;
(b) Ensuring that no trading occurs for their account, for any account over which they have direct or indirect influence or control or for any Client’s account in Securities for which they have material, nonpublic information (except in the limited circumstance in which the information is obtained in connection with a private transaction with an issuer of securities, in which case the private transaction itself is permitted);
(c) Not disclosing inside information obtained from any source whatsoever to inappropriate persons. Disclosure to family, friends or acquaintances will be grounds for immediate termination and/or referral to civil or governmental authorities for possible civil or criminal prosecution;

(d) Consulting the Chief Compliance Officer or designee when questions arise regarding insider trading or when potential violations of these Insider Trading Policies and Procedures are suspected;
(e) Ensuring that Adviser receives copies of confirmations and statements from both internal and external brokerage firms for accounts of Supervised Persons and members of the Immediate Family of such Supervised Persons sharing the same household;
(f) Advising the Chief Compliance Officer or designee of all outside business activities, directorships, or ownership of over 5% of the shares of a public company. No Supervised Person may engage in any outside business activities as employee, proprietor, partner, consultant, trustee officer or director without prior written consent of the Chief Compliance Officer, or a designee of the Chief Compliance Officer (a form of which is attached as Appendix VII thereto); and
(g) Being aware of, and monitoring, any Clients who are shareholders, directors, and/or senior officers of public companies. Any unusual activity including a purchase or sale of restricted stock must be brought to the attention of the Chief Compliance Officer or designee.
B. Security.
In order to prevent accidental dissemination of material, nonpublic information, personnel must adhere to the following guidelines:
1. Inform management when unauthorized personnel enter the premises.
2. Lock doors at all times in areas that have confidential and secure files.
3. Refrain from discussing sensitive information in public areas.
4. Refrain from leaving confidential information on message devices.
5. Maintain control of sensitive documents, including handouts and copies, intended for internal dissemination only.
6. Ensure that faxes and e-mail messages containing sensitive information are properly sent, and confirm that the recipient has received the intended message.
7. Do not allow passwords to be given to unauthorized personnel.
 
IV.	SUPERVISORY PROCEDURES	
Supervisory procedures can be divided into two classifications — prevention of insider trading and detection of insider trading.
A. Prevention of Insider Trading
To detect insider trading, the Chief Compliance Officer or designee should:
1. Answer questions regarding Solar Capital’s policies and procedures;

2. Resolve issues of whether information received by an officer, director or employee of Solar Capital constitutes Inside Information and determine what action, if any, should be taken;
3. Review these Insider Trading Policies and Procedures on a regular basis and update them as necessary;
4. When it has been determined that a Supervised Person has Inside Information:
(a) Implement measures to prevent dissemination of such information other than to appropriate Supervised Persons on a “need to know” basis, and
(b) Not permit any Solar Capital employee to execute any transaction in any securities of the issuer in question (except in the limited circumstance in which the information is obtained in connection with a private transaction with an issuer of securities, in which case the private transaction itself is permitted);
5. Implement a program of periodic “reminder” notices regarding insider trading;
6. Confirm with each trader no less frequently than quarterly whether there are any issuers for whom Adviser has Inside Information; and
7. Compile and maintain the Restricted List of securities in which no Supervised Person may trade because Adviser as an entity is deemed to have Inside Information concerning the issuers of such securities and determine when to remove securities from the Restricted List.
B. Detection of Insider Trading
To detect insider trading, the Chief Compliance Officer or designee should:
1. Review daily confirmations and quarterly trading activity reports filed by Supervised Persons; and
2. Promptly investigate all reports of any possible violations of these Insider Trading Policies and Procedures.
C. Special Reports to Management
Promptly upon learning of a potential violation of Solar Capital’s Insider Trading Policies and Procedures, the Chief Compliance Officer or designee shall prepare a written report to management providing full details, which may include (1) the name of particular securities involved, if any, (2) the date(s) Solar Capital learned of the potential violation and began investigating; (3) the accounts and individuals involved; (4) actions taken as a result of the investigation, if any; and (5) recommendations for further action.

D. General Reports to Management
At least yearly, the Chief Compliance Officer will prepare a written report to the management of Adviser setting forth some or all of the following:
1. A summary of existing procedures to detect and prevent insider trading;
2. A summary of changes in procedures made in the last year;
3. Full details of any investigation, whether internal or by a regulatory agency, since the last report regarding any suspected insider trading, the results of the investigation and a description of any changes in procedures promptly by any such investigation; and
4. An evaluation of the current procedures and a description of anticipated changes in procedures.

Exhibit 99.1
SOLAR CAPITAL LTD.
CODE OF BUSINESS
CONDUCT
September 2009

CODE OF BUSINESS CONDUCT
TABLE OF CONTENTS

 	  	Page	
Introduction	  	1	
Purpose of the Code	  	1	
Conflicts of Interest	  	2	
Corporate Opportunities	  	2	
Confidentiality	  	2	
Fair Dealing	  	3	
Protection and Proper Use of Company Assets	  	3	
Compliance with Applicable Laws, Rules and Regulations	  	3	
Equal Opportunity, Harassment	  	4	
Accuracy of Company Records	  	4	
Retaining Business Communications	  	4	
Political Contributions	  	5	
Media Relations	  	5	
Intellectual Property Information	  	5	
Internet and E-mail Policy	  	5	
Reporting Violations and Complaint Handling	  	6	
Sanctions for Code Violations	  	7	
Application/Waivers	  	7	
 	 	
Appendices	  	 	
 	 	
Code Acknowledgment	  	A-1	
 
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CODE OF BUSINESS CONDUCT
Introduction
Ethics are important to Solar Capital Ltd. (“Solar”, “our”, “us”, or “we”) and to its management. Solar is committed to the highest ethical standards and to conducting its business with the highest level of integrity.
All officers, directors and employees of Solar and its investment adviser, Solar Capital Partners LLC (the “investment adviser”) are responsible for maintaining this level of integrity and for complying with the policies contained in this Code. If you have a question or concern about what is proper conduct for you or anyone else, please raise these concerns with any member of Solar’s management, or follow the procedures outlined in applicable sections of this Code.
Purpose of the Code
This Code is intended to:
 
 	•	 	help you recognize ethical issues and take the appropriate steps to resolve these issues;	
 
 	•	 	deter ethical violations;	
 
 	•	 	assist you in reporting any unethical or illegal conduct; and	
 
 	•	 	reaffirm and promote our commitment to a corporate culture that values honesty and accountability.	
All employees, as a condition of employment or continued employment, will acknowledge in writing that they have received a copy of this Code, read it, and understand that the Code contains our expectations regarding their conduct.
 
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Conflicts of Interest
You must avoid any conflict, or the appearance of a conflict, between your personal interests and our interests. A conflict exists when your personal interest in any way interferes with our interests, or when you take any action or have any interest that may make it difficult for you to perform your job objectively and effectively. For example, a conflict of interest probably exists if:
 
 	•	 	you cause us or the investment adviser to enter into business relationships with you or a member of your family, or invest in companies affiliated with you or a member of your family;	
 
 	•	 	you use any nonpublic information about us or the investment advisor, our customers or our other business partners for your personal gain, or the gain of a member of your family; or	
 
 	•	 	you use or communicate confidential information obtained in the course of your work for your or another’s personal benefit.	
Corporate Opportunities
Each of us has a duty to advance the legitimate interests of Solar when the opportunity to do so presents itself. Therefore, you may not:
 
 	•	 	take for yourself personally opportunities, including investment opportunities, discovered through the use of your position with us or the investment adviser, or through the use of either’s property or information;	
 
 	•	 	use our or the investment adviser’s property, information, or position for your personal gain or the gain of a family member; or	
 
 	•	 	compete, or prepare to compete, with us or the investment adviser.	
Confidentiality
You must not disclose confidential information regarding us, the investment adviser, our affiliates, our lenders, our clients, or our other business partners, unless disclosure is authorized or required by law. Confidential information includes all non-public information that might be harmful to, or useful to the competitors of, Solar, our affiliates, our lenders, our clients, or our other business partners.
 
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Fair Dealing
You must endeavor to deal fairly with our customers, suppliers and business partners, or any other companies or individuals with whom we do business or come into contact with, including fellow employees and our competitors. You must not take unfair advantage of these or other parties by means of:
 
 	•	 	manipulation;	
 
 	•	 	concealment;	
 
 	•	 	abuse of privileged information;	
 
 	•	 	misrepresentation of material facts; or	
 
 	•	 	any other unfair-dealing practice.	
Protection and Proper Use of Company Assets
Our assets are to be used only for legitimate business purposes. You should protect our assets and ensure that they are used efficiently.
Incidental personal use of telephones, fax machines, copy machines, personal computers and similar equipment is generally allowed if there is no significant added cost to us, it does not interfere with your work duties, and is not related to an illegal activity or to any outside business.
Compliance with Applicable Laws, Rules and Regulations
Each of us has a duty to comply with all laws, rules and regulations that apply to our business. Highlighted below are some of the key compliance guidelines that must be followed.
 
 	•	 	Insider trading. It is against the law to buy or sell securities using material information that is not available to the public. Individuals who give this “inside” information to others may be liable to the same extent as the individuals who trade while in possession of such information. You must not trade in our securities, or the securities of our affiliates, our lenders, our clients, or our other business partners while in the possession of “inside” information.	
 
 	•	 	“Whistleblower” protections. It is against the law to discharge, demote, suspend, threaten, harass, or discriminate in any manner against an employee who provides information or otherwise assists in investigations or proceedings relating to violations of federal securities laws or other federal laws prohibiting fraud against shareholders. You must not discriminate in any way against an employee who engages in these “whistleblower” activities.	
 
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 	•	 	Investment Company Act requirements. A separate code of ethics has been established to comply with the Investment Company Act of 1940 and is applicable to those persons designated in such code.	
 
 	•	 	Document retention. You must adhere to appropriate procedures governing the retention and destruction of records consistent with applicable laws, regulations and our policies. You may not destroy, alter or falsify any document that may be relevant to a threatened or pending lawsuit or governmental investigation.	
Please talk to any member of senior management if you have any questions about how to comply with the above regulations and other laws, rules and regulations.
Equal Opportunity, Harassment
We are committed to providing equal opportunity in all of our employment practices including selection, hiring, promotion, transfer, and compensation of all qualified applicants and employees without regard to race, color, sex or gender, religion, age, national origin, handicap, disability, citizenship status, or any other status protected by law. With this in mind, there are certain behaviors that will not be tolerated. These include harassment, violence, intimidation, and discrimination of any kind involving race, color, religion, gender, age, national origin, disability, or marital status.
Accuracy of Company Records
We require honest and accurate recording and reporting of information in order to make responsible business decisions. This includes such data as quality, safety, and personnel records, as well as financial records.
All financial books, records and accounts must accurately reflect transactions and events, and conform both to required accounting principles and to our system of internal controls. No false or artificial entries may be made.
Retaining Business Communications
The law requires us to maintain certain types of corporate records, usually for specified periods of time. Failure to retain those records for those minimum periods could subject us to penalties and fines, cause the loss of rights, obstruct justice, place us in contempt of court, or seriously disadvantage us in litigation.
From time to time we establish retention or destruction policies in order to ensure legal compliance. We expect you to fully comply with any published records retention or destruction policies, provided that you should note the following exception: If you believe, or we inform you, that our records are relevant to any litigation or governmental action, or any potential litigation or action, then you must preserve those records until we determine the records are no longer needed. This exception supersedes any previously or subsequently established destruction policies for those records. If you believe that this exception may apply, or have any questions regarding the possible applicability of that exception, please contact our Chief Compliance Officer.
 
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Political Contributions
No funds of Solar may be given directly to political candidates. You may, however, engage in political activity with your own resources on your own time.
Media Relations
We must speak with a unified voice in all dealings with the press and other media. As a result, our Chief Executive Officer is the sole contact for media seeking information about Solar. Any requests from the media must be referred to our Chief Executive Officer.
Intellectual Property Information
Information generated in our business is a valuable asset. Protecting this information plays an important role in our growth and ability to compete. Such information includes business and research plans; objectives and strategies; trade secrets; unpublished financial information; salary and benefits data; lender and other business partner lists. Employees who have access to our intellectual property information are obligated to safeguard it from unauthorized access and:
 
 	•	 	Not disclose this information to persons outside of Solar;	
 
 	•	 	Not use this information for personal benefit or the benefit of persons outside of Solar; and	
 
 	•	 	Not share this information with other employees except on a legitimate “need to know” basis.	
Internet and E-Mail Policy
We provide an e-mail system and Internet access to certain of our employees to help them do their work. You may use the e-mail system and the Internet only for legitimate business purposes in the course of your duties. Incidental and occasional personal use is permitted, but never for personal gain or any improper use. Further, you are prohibited from discussing or posting information regarding Solar in any external electronic forum, including Internet chat rooms or electronic bulletin boards.
 
5

Reporting Violations and Complaint Handling
You are responsible for compliance with the rules, standards and principles described in this Code. In addition, you should be alert to possible violations of the Code by Solar’s or the investment adviser’s employees, officers and directors, and you are expected to report a violation promptly. Normally, reports should be made to one’s immediate supervisor. Under some circumstances, it may be impractical or you may feel uncomfortable raising a matter with your supervisor. In those instances, you are encouraged to contact our Chief Compliance Officer who will investigate and report the matter to our Chief Executive Officer and/or Board of Directors, as the circumstance dictates. You will also be expected to cooperate in an investigation of a violation.
Anyone who has a concern about our conduct, the conduct of an officer of Solar or its investment adviser or our accounting, internal accounting controls or auditing matters, may communicate that concern to the Audit Committee of the Board of Directors by direct communication with our Chief Compliance Officer or by email or in writing. All reported concerns shall be forwarded to the Audit Committee and will be simultaneously addressed by our Chief Compliance Officer in the same way that other concerns are addressed by us. The status of all outstanding concerns forwarded to the Audit Committee will be reported on a quarterly basis by our Chief Compliance Officer. The Audit Committee may direct that certain matters be presented to the full board and may also direct special treatment, including the retention of outside advisors or counsel, for any concern reported to it.
All reports will be investigated and whenever possible, requests for confidentiality shall be honored. And, while anonymous reports will be accepted, please understand that anonymity may hinder or impede the investigation of a report. All cases of questionable activity or improper actions will be reviewed for appropriate action, discipline or corrective actions. Whenever possible, we will keep confidential the identity of employees, officers or directors who are accused of violations, unless or until it has been determined that a violation has occurred.
There will be no reprisal, retaliation or adverse action taken against any employee who, in good faith, reports or assists in the investigation of, a violation or suspected violation, or who makes an inquiry about the appropriateness of an anticipated or actual course of action.
For reporting concerns about Solar’s or its investment adviser’s conduct, the conduct of an officer of Solar or its investment adviser, or about Solar’s or its investment adviser’s accounting, internal accounting controls or auditing matters, you may use the following means of communication:

ADDRESS:	  	SOLAR CAPITAL LTD.	
 	  	500 Park Avenue, 5th Floor	
 	  	New York, NY 10022	
 
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In the case of a confidential, anonymous submission, employees should set forth their concerns in writing and forward them in a sealed envelope to the Chairperson of the Audit Committee, in care of our Chief Compliance Officer, such envelope to be labeled with a legend such as: “To be opened by the Audit Committee only.”
Sanctions for Code Violations
All violations of the Code will result in appropriate corrective action, up to and including dismissal. If the violation involves potentially criminal activity, the individual or individuals in question will be reported, as warranted, to the appropriate authorities.
Application/Waivers
All the directors, officers and employees of Solar and its investment adviser are subject to this Code.
Insofar as other policies or procedures of Solar or its investment adviser govern or purport to govern the behavior or activities of all persons who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code.
Any amendment or waiver of the Code for an executive officer or member of our Board of Directors must be made by our Board of Directors and disclosed on a Form 8-K filed with the Securities and Exchange Commission within four business days following such amendment or waiver.
 
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APPENDIX A
Solar Capital Ltd.
Acknowledgment Regarding
Code of Business Conduct
This acknowledgment is to be signed and returned to our Chief Compliance Officer and will be retained as part of your permanent personnel file.
I have received a copy of Solar Capital Ltd.’s Code of Business Conduct, read it, and understand that the Code contains the expectations of Solar Capital Ltd. regarding employee conduct. I agree to observe the policies and procedures contained in the Code of Business Conduct and Ethics and have been advised that, if I have any questions or concerns relating to such policies or procedures, I understand that I have an obligation to report to the Audit Committee, the Chief Compliance Officer or other such designated officer, any suspected violations of the Code of which I am aware. I also understand that the Code is issued for informational purposes and that it is not intended to create, nor does it represent, a contract of employment.

  	
Employee’s Name (Printed)	

Employee’s Signature	

Date	
The failure to read and/or sign this acknowledgment in no way relieves you of your responsibility to comply with Solar Capital Ltd.’s Code of Business Conduct.
 
A-1