10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended June 30, 2015

OR

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

COMMISSION FILE NUMBER: 1-36300

CM FINANCE INC

(Exact name of registrant as specified in its charter)

Maryland	46-2883380
(State of Incorporation)	(I.R.S. Employer Identification Number)
601 Lexington Avenue 26th Floor New York, NY	10022
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 257-5199

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

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	The NASDAQ Global Select Market

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x.

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting Company)	Smaller reporting company	¨

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

The aggregate market value of the Registrant’s common stock held by non-affiliates of the Registrant as of December 31, 2014 was: Not applicable because trading of the Registrant’s common stock on the NASDAQ Global Select Market did not commence until February 6, 2014.

There were 13,667,891 shares of the Registrant’s common stock outstanding as of September 3, 2015.

Documents Incorporated by Reference

Portions of the registrant’s definitive Proxy Statement relating to the registrant’s 2015 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year, are incorporated by reference in Part III of this Annual Report on Form 10-K as indicated herein.

CM FINANCE INC

FORM 10-K FOR THE FISCAL YEAR

ENDED JUNE 30, 2015

TABLE OF CONTENTS

		Page
PART I			1
ITEM 1.	BUSINESS		1
ITEM 1A.	RISK FACTORS		27
ITEM 1B.	UNRESOLVED STAFF COMMENTS		50
ITEM 2.	PROPERTIES		50
ITEM 3.	LEGAL PROCEEDINGS		50
ITEM 4.	MINE SAFETY DISCLOSURES		50
PART II			51
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		51
ITEM 6.	SELECTED FINANCIAL DATA		53
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		54
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK		64
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		65
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON ACCOUNTING AND FINANCIAL DISCLOSURE		97
ITEM 9A.	CONTROLS AND PROCEDURES		97
ITEM 9B.	OTHER INFORMATION		97
PART III			98
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		98
ITEM 11.	EXECUTIVE COMPENSATION		98
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		98
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE		98
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES		98
PART IV			99
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES		99
SIGNATURES			103

PART I

Item 1. Business

Except as otherwise indicated, the terms “we,” “us,” “our” and “CM Finance” refer to CM Finance Inc and “CM Investment Partners” and the “Adviser” refer to our investment adviser and administrator, CM Investment Partners LLC.

We were formed in February 2012 and commenced operations in March 2012 as CM Finance LLC, a Maryland limited liability company. Immediately prior to the pricing of our initial public offering, CM Finance LLC was merged with and into CM Finance Inc, a Maryland corporation (the “CM Finance Merger”). We are an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

We are a specialty finance company that invests primarily in the debt of U.S. middle-market companies, which we generally define as those companies that have an enterprise value, which represents the aggregate of debt value and equity value of the entity, of less than $750 million. We are externally managed by CM Investment Partners. The Adviser is led by Michael C. Mauer and Christopher E. Jansen, who together have over 40 years of experience in the leveraged debt markets. Our primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing in debt and related equity of privately held lower middle-market companies.

We seek to invest primarily in lower middle-market companies that have annual revenues of at least $50 million and EBITDA of at least $15 million. We focus on companies with leading market positions, significant asset or franchise values, strong free cash flow and experienced senior management teams, with emphasis on companies with high-quality sponsors. Our investments typically range in size from $5 million to $25 million. We expect that our portfolio companies will use our capital for organic growth, acquisitions, market or product expansion, refinancings, and/or recapitalizations. We invest in unitranche loans and standalone second and first lien loans, with an emphasis on floating rate debt. Unitranche loans are loans structured as first lien loans with certain characteristics of mezzanine loan risk in one security. We also selectively invest in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments, in most cases taking such upside participation interests as part of a broader investment relationship.

We strive to maintain a strong focus on credit quality, investment discipline and investment selectivity. We believe that investing in the debt of private lower middle-market companies generally provides a more attractive relative value proposition than investing in broadly syndicated debt due to the conservative capital structures and superior default and loss characteristics typically associated with middle-market companies. We believe that, because private lower middle-market companies have limited access to capital providers, debt investments in these companies typically carry above-market interest rates and include more favorable protections, resulting in attractive risk-adjusted returns across credit cycles while better preserving capital. The companies in which we invest typically are highly leveraged, and, in most cases, our investments in such companies are not rated by national rating agencies. If such investments were rated, we believe that they would likely receive a rating that is often referred to as “junk.”

We have, through CM Finance SPV Ltd. (“CM SPV”), our wholly owned subsidiary, entered into a financing facility (the “Financing Facility”) with UBS AG, London Branch (together with its affiliates, “UBS”). The Financing Facility includes a $102.0 million term securitized financing facility (the “Term Financing”), which expires in December 2018, and a $50.0 million revolving financing (the “Revolving Financing”), which expires in December 2016. The Financing Facility is collateralized by a portion of the debt investments in our portfolio. We pay interest on the face amount of the Term Financing monthly at a rate of one-month LIBOR plus 2.75% per annum. For the period from December 5, 2017 through December 5, 2018, we will pay interest on the face amount of the Term Financing monthly at a rate of one-month LIBOR plus 3.00% per annum. The Revolving Financing bears interest at a rate of 2.00% per annum and 0.50% per annum on any undrawn amounts.

Portfolio Composition

As of June 30, 2015, our portfolio consisted of debt and equity investments in 26 portfolio companies with a fair value of $330.3 million. As of June 30, 2015, our portfolio consisted of 49.7% first lien investments, 47.1% second lien investments, 2.4% were unsecured investments and 0.8% were equity and warrant positions. At June 30, 2015, the weighted average total yield of debt and income producing securities at amortized cost (which includes income and amortization of fees and

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discounts) was 10.91%. The weighted average total yield was computed using the effective interest rates for all of our debt investments at fair value, plus the yield to maturity from June 30, 2015 of all of our debt investments. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The weighted average total yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before payment of all of our fees and expenses, including any sales load paid in connection with an offering of our securities. There can be no assurance that the weighted average total yield will remain at its current level.

The industry composition of our portfolio at fair value at June 30, 2015 was as follows:

	Percentage of Total Portfolio
Telecommunications	$	14.92	%
Healthcare-Products/Services		12.58
Entertainment and Leisure		8.91
Oil and Gas		8.59
Industrial		7.56
Oilfield Services		6.78
Automobiles and Components		6.08
Construction & Building		5.86
Media		5.84
Trucking and Leasing		5.83
Utilities		4.45
Cable		3.39
Pipelines		2.84
Services		2.58
Chemicals		2.51
Food & Beverage		1.28

CM Investment Partners LLC

CM Investment Partners is a registered investment adviser and serves as our external investment adviser. The Adviser is responsible for sourcing investment opportunities, conducting industry research, performing diligence on potential investments, structuring our investments and monitoring our portfolio companies on an ongoing basis. The Adviser is led by Michael C. Mauer, the Chairman of our board of directors, our Chief Executive Officer, and the Co-Chief Investment Officer of the Adviser, and Christopher E. Jansen, our President and Secretary, a member of our board of directors, and the Co-Chief Investment Officer of the Adviser. Mr. Mauer was formerly Global Co-Head of Leveraged Finance and Global Co-Head of Fixed Income Currency and Commodity Distribution at Citigroup Inc. and a senior member of its credit committee responsible for all underwriting and principal commitments of leveraged finance capital worldwide. Mr. Jansen was a founding Managing Partner and Senior Portfolio Manager for Stanfield Capital Partners and had a leading role in planning its strategic direction. At Stanfield, Mr. Jansen was responsible for the management of 15 different portfolios aggregating in excess of $7 billion in assets consisting of large corporate loans, middle-market loans, second lien loans, high yield bonds and structured finance securities.

The Adviser’s investment team, led by Messrs. Mauer and Jansen, is supported by five additional investment professionals, who, together with Messrs. Mauer and Jansen, we refer to as the “Investment Team.” The members of the Investment Team have over 100 combined years of structuring customized debt solutions for middle-market companies, which we believe will enable us to generate favorable returns across credit cycles with an emphasis on preserving capital. Messrs. Mauer and Jansen have developed an investment process for reviewing lending opportunities, structuring transactions and monitoring investments throughout multiple credit cycles. The members of the Investment Team have extensive networks for sourcing investment opportunities through direct corporate relationships and relationships with private equity firms, investment banks, restructuring advisors, law firms, boutique advisory firms and distressed/specialty lenders. The members of the Investment Team also have extensive experience across various industries, including aviation, cable, defense, healthcare, media, mining, oil and gas, power, retail, telecommunications, trucking and asset-backed special situations.

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As a result, we believe we will be able to achieve appropriate risk-adjusted returns by investing in companies that have restructured but do not have sufficient track records to receive traditional lending terms from a commercial bank or the broadly syndicated leveraged finance market. We believe the members of the Investment Team share a common investment philosophy built on a framework of rigorous business assessment, extensive due diligence and disciplined risk valuation methodology.

Every initial investment requires the unanimous approval of the Adviser’s investment committee. Every follow-on investment decision in an existing portfolio company and any investment dispositions require approval by a majority of the Adviser’s investment committee. The Adviser’s investment committee consists of Michael C. Mauer, Christopher E. Jansen and Michael Nitka.

We have entered into an investment advisory agreement (the “Investment Advisory Agreement”) with CM Investment Partners, as our investment adviser, pursuant to which we pay the Adviser a management fee equal to 1.75% of our gross assets, payable in arrears on a quarterly basis. In addition, pursuant to the Investment Advisory Agreement, we pay the Adviser an Incentive Fee equal to 20.0% of pre-incentive fee net investment income, subject to an annualized hurdle rate of 8.0% with a “catch up” fee for returns between the 8.0% hurdle and 10.0% as well as 20.0% of net capital gains. From February 11, 2014 (the completion of our initial public offering) to December 31, 2014, the Adviser agreed to waive its fees (base management and incentive fee), without recourse against or reimbursement by us, to the extent required in order for us to earn a quarterly net investment income to support a minimum dividend payment on shares of common stock outstanding on the relevant dividend payment dates of 9.0% (to be paid on a quarterly basis). For the periods from January 1, 2015 to December 31, 2015 and from January 1, 2016 to December 31, 2016, the Adviser has agreed to waive its incentive fees, without recourse against or reimbursement by us, to the extent required in order for the Company to earn a quarterly net investment income to support minimum dividend payments on shares of common stock outstanding on the relevant dividend payment dates of 9.25% and 9.375%, respectively (to be paid on a quarterly basis).

Under an administration agreement with the Adviser (the “Administration Agreement”), the Adviser provides us with our chief financial officer, accounting and back-office professionals, equipment and clerical, bookkeeping, recordkeeping and other administrative services. The Adviser also has a strategic relationship with Cyrus Capital Partners, L.P. (“Cyrus Capital”) in which the Adviser can utilize the expertise of Cyrus Capital’s investment, accounting and back office professionals on an as needed basis pursuant to a personnel sharing arrangement to assist the Adviser in fulfilling certain of its obligations to us under the Administration Agreement.

Market Opportunity

We believe that the current investment environment presents a compelling case for investing in secured debt (including unitranche debt and standalone second and first lien loans) and unsecured debt (including mezzanine/structured equity) of lower middle-market companies. The following factors represent the key drivers of our focus on this attractive market segment:

• Reduced Availability of Capital for Middle-Market Companies. We believe there are fewer providers of financing and less capital available for middle-market companies compared to prior to the recent economic downturn. We believe that, as a result of that downturn:

• many financing providers have chosen to focus on large, liquid corporate loans and syndicated capital markets transactions rather than lending to middle-market businesses;

• recent regulatory changes, including adoption of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, and the introduction of international capital and liquidity requirements under the 2012 Basel III Accords, or Basel III, have caused banks to curtail lending to middle-market companies;

• hedge funds and collateralized loan obligation managers are less likely to pursue investment opportunities in our target market as a result of reduced availability of funding for new investments; and

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• consolidation of regional banks into money center banks has reduced their focus on middle-market lending.

As a result, we believe that less competition facilitates higher quality deal flow and allows for greater selectivity throughout the investment process.

• Robust Demand for Debt Capital. According to Pitchbook, a market research firm, private equity firms had approximately $534 billion of uncalled capital as of December 31, 2014. They have expanded their focus to include middle market opportunities due to the lack of opportunities in large capital buyout transactions. We expect the large amount of uninvested capital and the expanded focus on middle market opportunities to drive buyout activity over the next several years, which should, in turn, continue to create lending opportunities for us.

• Attractive Deal Pricing and Structures. We believe that, in general, middle-market debt investments are priced more attractively to lenders than larger, more liquid, public debt financings, due to the more limited universe of lenders as well as the highly negotiated nature of these financings. Middle-market transactions tend to offer stronger covenant packages, higher interest rates, lower leverage levels and better call protection compared to larger financings. In addition, middle-market loans typically offer other investor protections such as default penalties, lien protection, change of control provisions and information rights for lenders.

• Specialized Lending Requirements. We believe that several factors render many U.S. financial institutions ill-suited to lend to U.S. middle-market companies. For example, based on the Investment Team’s experience, lending to private U.S. middle-market companies is generally more labor-intensive than lending to larger companies due to the smaller size of each investment and the fragmented nature of information for such companies. Lending to smaller capitalization companies requires due diligence and underwriting practices consistent with the demands and economic limitations of the middle-market and may also require more extensive ongoing monitoring by the lender. As a result, middle-market companies historically have been served by a limited segment of the lending community.

Competitive Strengths

We believe that the Adviser’s disciplined approach to origination, portfolio construction and risk management should allow us to achieve favorable risk-adjusted returns while preserving our capital. We believe that the following competitive strengths provide positive returns for our investors:

• Large and Experienced Team with Substantial Resources. The Adviser and its Investment Team is led by Michael C. Mauer and Christopher E. Jansen, who each has over 20 years of experience investing in, providing corporate finance services to, restructuring and consulting with middle-market companies. Messrs. Mauer and Jansen are supported by five additional investment professionals, who together have over 100 combined years of structuring strategic capital for business expansion, refinancings, capital restructuring, post-reorganization financing and servicing the general corporate needs of middle-market companies. We believe that the Investment Team and its resources provide a significant advantage and contribute to the strength of our business and enhance the quantity and quality of investment opportunities available to us.

• Capitalize on the Investment Team’s Extensive Relationships with Middle-Market Companies, Private Equity Sponsors and Intermediaries. The members of the Investment Team have extensive networks for sourcing investment opportunities through corporate relationships and relationships with private equity firms, investment banks, restructuring advisors, law firms, boutique advisory firms and distressed/specialty lenders. We believe that the strength of these relationships in conjunction with the Investment Team’s ability to structure financing solutions for companies that incorporate credit protections at attractive returns for us provide us with a competitive advantage in identifying investment opportunities in our target market. In addition, pursuant to the terms of our relationship with Stifel and subject to certain restrictions, Stifel must use its commercially reasonable efforts to present to us to review and bid on, Stifel Nicolaus & Company, Incorporated-originated leveraged finance and high yield corporate debt opportunities consistent with our investment strategy.

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• Disciplined Underwriting Policies and Rigorous Portfolio Management. Messrs. Mauer and Jansen have an established credit analysis and investment process to analyze investment opportunities thoroughly. This process, followed by the Investment Team, includes structuring loans with appropriate covenants and pricing loans based on our knowledge of the middle market and our rigorous underwriting standards. We focus on capital preservation by extending loans to portfolio companies with assets that we believe will retain sufficient value to repay us even in depressed markets or under liquidation scenarios. Each investment is analyzed from its initial stages by either Mr. Mauer or Mr. Jansen, the Adviser’s Co-Chief Investment Officers, and a senior investment professional of the Investment Team. Every initial investment requires the unanimous approval of the Adviser’s investment committee, consisting of Messrs. Mauer, Jansen and Nitka. Every follow-on investment decision in an existing portfolio company and any investment dispositions requires approval by at least a majority of the Adviser’s investment committee. Under the supervision of Messrs. Mauer and Jansen, the Investment Team’s senior investment professionals also monitor the portfolio for developments on a daily basis, perform credit updates on each investment, review financial performance on at least a quarterly basis, and have regular discussions with the management of portfolio companies. We believe the Adviser’s investment and monitoring process and the depth and experience of the Investment Team gives us a competitive advantage in identifying investments and evaluating risks and opportunities throughout the life cycle of an investment.

• Ability to Structure Investments Creatively. Our Investment Team has the expertise and ability to structure investments across all levels of a company’s capital structure. These individuals have extensive experience in cash flow, asset-based lending, workout situations and investing in distressed debt, which should enable us to take advantage of attractive investments in recently restructured companies. Furthermore, with the capital raised in our initial public offering, we believe we are in a better position to leverage the existing knowledge and relationships that the Investment Team has developed to lead investments that meet our investment criteria. We believe that current market conditions allow us to structure attractively priced debt investments and may allow us to incorporate other return-enhancing mechanisms such as commitment fees, original issue discounts, early redemption premiums, payment-in-kind (“PIK”) interest and certain forms of equity securities.

Investment Strategy

We invest in unitranche loans, standalone second and first lien loans, and selectively in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments, in most cases taking advantage of a potential benefit from an increase in the value of such portfolio company as part of an overall relationship. We seek to invest primarily in lower middle-market companies that have annual revenues of at least $50 million and EBITDA of at least $15 million. Our investments typically range in size from $5 million to $25 million. We may invest in smaller or larger companies if there is an attractive opportunity, especially when there are dislocations in the capital markets, including the high yield and large syndicated loan markets. During such dislocations, we expect to see more deep value investment opportunities offering prospective returns that are disproportionate to the associated risk profile. We focus on companies with leading market positions, significant asset or franchise values, strong free cash flow and experienced senior management teams, with an emphasis on companies with high-quality sponsors. Our primary investment objective is to maximize current income and capital appreciation by investing directly in privately held lower middle-market companies.

The Adviser pursues investments for us with favorable risk-adjusted returns, including debt investments that offer cash origination fees and lower leverage levels. The Adviser seeks to structure our debt investments with strong protections, including default penalties, information rights, and affirmative and negative financial covenants, such as lien protection and restrictions concerning change of control. We believe these protections, coupled with the other features of our investments, allow us to reduce our risk of capital loss and achieve attractive risk-adjusted returns, although there can be no assurance that we are always able to structure our investments to minimize risk of loss and achieve attractive risk-adjusted returns.

Investment Criteria

The principals of the Adviser use the following investment criteria and guidelines to evaluate prospective portfolio companies. However, not all of these criteria and guidelines are used or met in connection with each of our investments.

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• Established companies with a history of positive operating cash flow. We seek to invest in established companies with sound historical financial performance. We typically focus on companies with a history of profitability on an operating cash flow basis. We do not intend to invest in start-up companies or companies with speculative business plans.

• Defensible and sustainable business. We seek to invest in companies with proven products and/or services that provide a competitive advantage versus its competitors or new entrants. The Adviser places an emphasis on the strength of historical operations and profitability and the generation of free cash flow to reinvest in the business or to utilize for debt service. The Adviser also focuses on the relative strength of the valuation and liquidity of collateral used to provide security for our investments, when applicable.

• Seasoned management team with meaningful equity ownership. The Adviser generally requires that our portfolio companies have a seasoned management team, with strong corporate governance. The Adviser also seeks to invest in companies with management teams that have meaningful equity ownership. The Adviser believes that companies that have proper incentives in place, including having significant equity interests, motivate management teams to enhance enterprise value, which will act in accordance with our interests.

• Significant Invested Capital. The Adviser believes that the existence of significant underlying equity value provides important support to our debt investments. The Adviser seeks investments in portfolio companies where it believes that the aggregate enterprise value significantly exceeds aggregate indebtedness, after consideration of our investment.

• Investment Partnerships. We seek to invest where private equity sponsors have demonstrated capabilities in building enterprise value. In addition, we seek to partner with specialty lenders and other financial institutions. The Adviser believes that private equity sponsors and specialty lenders can serve as committed partners and advisors that will actively work with the Adviser, the company and its management team to meet company goals and create value.

• Ability to exert meaningful influence. We target investment opportunities in which we will be a significant investor in the tranche and in which we can add value through active participation in the direction of the company, sometimes through advisory positions.

• Exit strategy. We generally seek to invest in companies that the Adviser believes possess attributes that will provide us with the ability to exit our investments. We typically expect to exit our investments through one of three scenarios: (i) the sale of the company resulting in repayment of all outstanding debt, (ii) the recapitalization of the company through which our loan is replaced with debt or equity from a third party or parties or (iii) the repayment of the initial or remaining principal amount of our loan then outstanding at maturity. In some investments, there may be scheduled amortization of some portion of our loan, which would result in a partial exit of our investment prior to the maturity of the loan.

Deal Origination

The Adviser’s deal-originating efforts are focused on its direct corporate relationships and relationships with private equity firms, investment banks, restructuring advisers, law firms, boutique advisory firms and distressed/specialty lenders. The Adviser’s investment team continues to enhance and expand these relationships. In addition, pursuant to the Stifel arrangement and subject to certain restrictions, Stifel uses its commercially reasonable efforts to present to us to review and bid on Stifel Nicolaus & Company, Incorporated-originated leveraged finance and high yield corporate debt opportunities consistent with our investment strategy, subject to the approval of our board of directors as necessary, under the 1940 Act and certain other limitations.

The origination process is designed to thoroughly evaluate potential financings and to identify the most attractive of these opportunities on the basis of risk-adjusted returns. Each investment is analyzed from its initial stages through our investment by one of the Co-Chief Investment Officers of the Adviser and a senior investment professional. If an opportunity fits our criteria for investment and merits further review and consideration, the investment is presented to the investment committee.

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This first stage of analysis involves a preliminary, but detailed, description of the potential financing. An investment summary is then generated after preliminary due diligence. The opportunity may be discussed several times by members of the Investment Team. Prior to funding, every initial investment requires the unanimous approval of the Adviser’s investment committee consisting of the Adviser’s Co-Chief Investment Officers and one member appointed by Stifel, currently Michael Nitka. Follow-on investment decisions in existing portfolio companies and investment dispositions require the approval of a majority of the Adviser’s investment committee.

If the Adviser decides to pursue an opportunity, a preliminary term sheet will be produced for the target portfolio company. This term sheet serves as a basis for the discussion and negotiation of the critical terms of the proposed financing. At this stage, the Adviser begins its formal underwriting and investment approval process as described below. After the negotiation of a transaction, the financing is presented to the investment committee of the Adviser for approval. Upon approval of a financing transaction, the parties will prepare the relevant loan documentation. An investment is funded only after all due diligence is satisfactorily completed and all closing conditions have been satisfied. Each of the investments in our portfolio is monitored on a daily basis by a member of our investment committee aided by the senior investment professionals of the Investment Team, who also perform credit updates on each investment quarterly.

Underwriting

Underwriting Process and Investment Approval

The Adviser makes investment decisions only after considering a number of factors regarding the potential investment including, but not limited to:

• historical and projected financial performance;

• company and industry specific characteristics, such as strengths, weaknesses, opportunities and threats;

• composition and experience of the management team; and

• track record of the private equity sponsor leading the transaction, if applicable.

This methodology is employed to screen a high volume of potential investment opportunities on a consistent basis.

If an investment is deemed appropriate to pursue, a more detailed and rigorous evaluation is made after considering relevant investment parameters. The following outlines the general parameters and areas of evaluation and due diligence for investment decisions, although not all are necessarily considered or given equal weighting in the evaluation process.

Business model and financial assessment

The Adviser undertakes a review and analysis of the financial and strategic plans for the potential investment. There is significant evaluation of and reliance upon the due diligence performed by the private equity sponsor, if applicable, and third party experts, including accountants and consultants. Areas of evaluation include:

• historical and projected financial performance;

• quality of earnings, including source and predictability of cash flows;

• customer and vendor interviews and assessments;

• potential exit scenarios, including probability of a liquidity event;

• internal controls and accounting systems; and

• assets, liabilities and contingent liabilities.

Industry dynamics

The Adviser evaluates the portfolio company’s industry, and may, if considered appropriate, consult or retain industry experts. The following factors are among those the Adviser analyzes:

• sensitivity to economic cycles;

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• competitive environment, including number of competitors, threat of new entrants or substitutes;

• fragmentation and relative market share of industry leaders;

• growth potential; and

• regulatory and legal environment.

Management assessment

The Adviser makes an in-depth assessment of the management team, including evaluation along several key metrics:

• background checks;

• the number of years in their current positions;

• track record;

• industry experience;

• management incentive, including the level of direct investment in the enterprise; and

• completeness of the management team (positions that need to be filled or added).

Sponsor Assessment

Among critical due diligence investigations is the evaluation of a private equity sponsor or specialty lender that has, or is also making, an investment in the portfolio company. A private equity sponsor is typically a controlling stockholder upon completion of an investment and as such is considered critical to the success of the investment. In addition, a management team with meaningful equity ownership can serve as a committed partner to us and any private equity sponsor or specialty lender. The Adviser evaluates a private equity sponsor or specialty lender along several key criteria, including:

• investment track record;

• industry experience;

• capacity and willingness to provide additional financial support to the company through additional capital contributions, if necessary; and

• reference checks.

Investments

The following describes the types of loans we generally make:

Unitranche loans. Unitranche loans are loans structured as first lien loans with certain characteristics of mezzanine loan risk in one security, such as risk relating to the fact that the loans may be unsecured and will typically rank junior to secured lenders. Unitranche loans typically provide for moderate loan amortization in the initial years of the loan with the majority of the principal repayment deferred until loan maturity. Unitranche loans provide us with greater control over a portfolio company’s capital structure, as they provide a one-stop financing solution and limit “frictional costs” (e.g., negotiations with, and concessions to, other lien holders) in the event of a workout process. Consistent with our focus on capital preservation, unitranche loans typically have less volatile returns than standalone second lien or mezzanine loans.

Standalone second lien loans. Standalone second lien loans are loans that are typically senior on a lien basis to other liabilities in the issuer’s capital structure and have the benefit of a security interest over the assets of the borrower, although ranking junior to first lien loans. Standalone second lien loans may provide for moderate loan amortization in the early years

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of the loan, with the majority of the amortization deferred until loan maturity. Standalone second lien loans can incur greater “frictional costs” (e.g., increased professional costs relating to resolving conflicts among the lenders) in the event of a workout and, partly because of this possible impact on recovery rates, we expect to demand a significantly higher risk premium in the form of higher spreads, call protection and/or warrants for extending standalone second lien loans, compared to first lien loans of similar credit quality.

Standalone first lien loans. Standalone first lien loans are loans that are typically senior on a lien basis to other liabilities in the issuer’s capital structure and have the benefit of a security interest on the assets of the portfolio company. Standalone first lien loans may provide for moderate loan amortization in the early years of the loan, with the majority of the amortization deferred until loan maturity.

Mezzanine loans/structured equity. Mezzanine loans are subordinated to senior secured loans on a payment basis, are typically unsecured and rank pari passu with other unsecured creditors of the issuer. As with standalone second lien loans, we expect to demand a significantly higher risk premium in the form of higher spreads, call protection and/or warrants for mezzanine loans, given the lower recovery rates for such securities due in part to the greater “frictional costs” (e.g., increased professional costs relating to resolving conflicts among the lenders) in a protracted workout. We may take mezzanine type risk in the form of “structured equity” investments. In cases where portfolio companies may be constrained in their ability to raise additional capital in the form of debt, we may have the opportunity to structure preferred equity or other equity-like instruments. These equity instruments typically have redemption rights and will either be convertible into common equity at our option, or will have detachable warrants compensating us for the additional risk inherent in such investments. In most cases, these equity instruments will have debt-like characteristics, which provide more downside protection than a typical equity instrument.

Equity components. In connection with some of our debt investments, we will also invest in preferred or common stock or receive nominally priced warrants or options to buy an equity interest in the portfolio company. As a result, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. The Adviser may structure such equity investments and warrants to include provisions protecting our rights as a minority-interest holder, as well as a “put,” or right to sell such securities back to the issuer, upon the occurrence of specified events. In many cases, we may also seek to obtain registration rights in connection with these equity interests, which may include demand and “piggyback” registration rights.

Portfolio Management Strategy

Each of the investments in our portfolio is monitored on a daily basis by a member of our investment committee aided by the senior investment professionals of the Investment Team, who also perform credit updates on each investment quarterly.

Risk Ratings

In addition to various risk management and monitoring tools, we use the Adviser’s investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. This investment rating system uses a five-level numeric rating scale. The following is a description of the conditions associated with each investment rating:

Investment Rating 1	Investments that are performing above expectations, and whose risks remain favorable compared to the expected risk at the time of the original investment.
Investment Rating 2	Investments that are performing within expectations and whose risks remain neutral compared to the expected risk at the time of the original investment. All new loans are initially rated 2.
Investment Rating 3	Investments that are performing below expectations and that require closer monitoring, but where no loss of return or principal is expected. Portfolio companies with a rating of 3 may be out of compliance with their financial covenants.
Investment Rating 4	Investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are often in workout. Investments with a rating of 4 are those for which some loss of return but no loss of principal is expected.
Investment Rating 5	Investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are almost always in workout. Investments with a rating of 5 are those for which some loss of return and principal is expected.

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If the Adviser determines that an investment is underperforming, or circumstances suggest that the risk associated with a particular investment has significantly increased, the Adviser will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending events and suggesting recommended actions. While the investment rating system identifies the relative risk for each investment, the rating alone does not dictate the scope and/or frequency of any monitoring that will be performed. The frequency of the Adviser’s monitoring of an investment is determined by a number of factors, including, but not limited to, the trends in the financial performance of the portfolio company, the investment structure and the type of collateral securing the investment.

The following table shows the investment rankings of the debt investments in our portfolio:

	As of June 30, 2015							As of June 30, 2014
Investment Rating	Fair Value		% of Portfolio			Number of Investments		Fair Value		% of Portfolio			Number of Investments
1	$	—		—	%		—	$	4,925,000		1.8	%		1
2		307,288,963		93.2			23		255,227,578		94.0			22
3		15,681,780		4.8			1		11,496,010		4.2			1
4		6,798,345		2.0			1		—		—			—
5		—		—			—		—		—			—
Total	$	329,769,088		100.0	%		25	$	271,648,588		100	%		24

Determination of Net Asset Value and Portfolio Valuation Process

The net asset value per share of our outstanding shares of common stock is determined quarterly by dividing the value of total assets minus liabilities by the total number of shares outstanding.

In calculating the value of our total assets, investment transactions will be recorded on the trade date. Realized gains or losses will be computed using the specific identification method. 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 price is not readily available are valued at fair value as determined in good faith by our board of directors based on the input of our management and audit committee. In addition, our board of directors retains one or more independent valuation firms to review each quarter, the valuation of each portfolio investment for which a market quotation is not available. We also have adopted Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurements and Disclosures, or “ASC 820.” This accounting statement requires us to assume that the portfolio investment is assumed to be sold in the principal market to market participants, or in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the market in which we can exit portfolio investments with the greatest volume and level activity is considered our principal market.

Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. We generally obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker dealers or market makers.

Debt and equity securities for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued at fair value as determined in good faith by our board of directors. Because a

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readily available market value for many of the investments in our portfolio is often not available, we value many of our portfolio investments at fair value as determined in good faith by our board of directors using a consistently applied valuation process in accordance with a documented valuation policy that has been reviewed and approved by our board of directors. Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that we may ultimately realize. In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of our investments than on the fair values of our investments for which market quotations are not readily available. Market quotations may also be deemed not to represent fair value in certain circumstances where we believe that facts and circumstances applicable to an issuer, a seller or purchaser, or the market for a particular security causes current market quotations not to reflect the fair value of the security. Examples of these events could include cases where a security trades infrequently, causing a quoted purchase or sale price to become stale, where there is a “forced” sale by a distressed seller, where market quotations vary substantially among market makers, or where there is a wide bid-ask spread or significant increase in the bid ask spread.

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

• our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio investment;

• preliminary valuation conclusions are then documented and discussed our senior management and the Investment Adviser;

• on a periodic basis, at least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm engaged by our board of directors;

• the valuation committee of our board of directors then reviews these preliminary valuations; and

• the board of directors then discusses these preliminary valuations and determines the fair value of each investment in our portfolio in good faith, based on the input of the Investment Adviser, the independent valuation firm and the valuation committee.

Those investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in determining the fair value of our investments include, as relevant and among other factors: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, our principal market (as the reporting entity) and enterprise values.

Realization of Investments

The potential exit scenarios of a portfolio company will play an important role in evaluating investment decisions. The Adviser will formulate specific exit strategies at the time of such investment. Our debt orientation will provide for increased potential exit opportunities, including the sale of investments in the private markets, the refinancing of investments held, often due to maturity or recapitalizations, and other liquidity events including the sale or merger of the portfolio company. Since we seek to maintain a debt orientation in our investments, we generally expect to receive interest income over the course of the investment period, receiving a significant return on invested capital well in advance of final exit.

Derivatives

We may utilize hedging techniques such as interest rate swaps to mitigate potential interest rate risk on our indebtedness. Such interest rate swaps would principally be used to protect us against higher costs on our indebtedness

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resulting from increases in both short-term and long-term interest rates. We also may use various hedging and other risk management strategies to seek to manage various risks, including changes in currency exchange rates and market interest rates. Such hedging strategies would be utilized to seek to protect the value of our portfolio investments, for example, against possible adverse changes in the market value of securities held in our portfolio.

Managerial Assistance

As a BDC, we offer, and must provide upon request, managerial assistance to our portfolio companies. This assistance could involve 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. The Adviser will provide such managerial assistance on our behalf to portfolio companies that request this assistance. We may receive fees for these services and will reimburse the Adviser for its allocated costs in providing such assistance, subject to the review by our board of directors, including our independent directors.

SBIC License

We intend to apply for a license to form a small business investment company subsidiary, or SBIC subsidiary. The application is subject to approval by the United States Small Business Administration, or the SBA, and we can make no assurances that the SBA will approve our application. If a license is granted by the SBA, the SBIC subsidiary would be allowed to issue SBA-guaranteed debentures up to a maximum of $150 million under current SBIC regulations, subject to required capitalization of the SBIC subsidiary and other requirements. SBA-guaranteed debentures generally have longer maturities and lower interest rates than other forms of debt that may be available to us. Neither we nor the Adviser has ever operated an SBIC. See “Risk Factors—Risks Relating to Our Business and Structure—If we receive qualification from the SBA to be licensed as an SBIC but we are unable to comply with SBA regulations thereafter, our business plan and investment objective could be adversely affected.” In addition, if we were to receive an SBIC license, we also may apply for exemptive relief from the SEC to permit us to exclude the indebtedness of any such wholly-owned SBIC subsidiary from the 200% asset coverage requirement applicable to us.

Competition

Our primary competitors in providing financing to middle-market companies include public and private funds, other BDCs, commercial and investment banks, commercial finance companies and, to the extent they provide an alternative form of financing, private equity funds and hedge funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, we believe some competitors may have 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 imposes on us as a BDC or to the distribution and other requirements we must satisfy to maintain our qualification as a RIC.

We use the expertise of the investment professionals of the Adviser (including those provided to the Adviser under the Services Agreement) to assess investment risks and determine appropriate pricing for our investments in portfolio companies. In addition, we the relationships of these investment professionals will enable us to learn about, and compete effectively for, financing opportunities with attractive middle-market companies in the industries in which we seek to invest.

Staffing

We do not have any direct employees, and our day-to-day investment operations are managed by the Adviser. We have a Chief Executive Officer, President, Chief Financial Officer and Chief Compliance Officer. To the extent necessary, our board of directors may hire additional personnel in the future. Our officers, except for our Chief Compliance Officer, are employees of the Adviser and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer, and his respective staffs, is paid by us pursuant to the Administration Agreement with the Adviser. Edward J. Cook serves as our chief compliance officer and is a Director of Alaric Compliance Services, LLC. Mr. Cook performs his functions as our chief compliance officer under the terms of an agreement between us and Alaric Compliance Services, LLC. The Adviser has retained Mr. Cook and Alaric Compliance Services, LLC pursuant to its obligations under our Administration Agreement. The Adviser also has a strategic relationship with Cyrus Capital in which the Adviser can utilize the expertise of Cyrus Capital’s investment, accounting and back office professionals on an as needed basis pursuant to a personnel sharing arrangement.

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Management Agreements

The Adviser was formed in July 2013 and is registered as an investment adviser under the Advisers Act.

Investment Advisory Agreement

Subject to the overall supervision of our board of directors and in accordance with the 1940 Act, the Adviser manages our day-to-day operations and provides investment advisory services to us. Under the terms of the Investment Advisory Agreement, the Adviser:

• determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

• identifies, evaluate and negotiate the structure of the investments we make;

• executes, closes, services and monitors the investments we make;

• determines the securities and other assets that we purchase, retain or sell;

• performs due diligence on prospective portfolio companies; and

• provides us with such other investment advisory, research and related services as we may, from time to time, reasonably require for the investment of our funds.

Pursuant to the Investment Advisory Agreement, we have agreed to pay the Adviser a fee for investment advisory and management services consisting of two components—a base management fee and an incentive fee. The cost of both the base management fee and the incentive fee will ultimately be borne by our stockholders.

For the period commencing upon the consummation of our initial public offering to December 31, 2014, the Adviser has agreed to waive its fees (base management and incentive fee), without recourse against or reimbursement by us, to the extent required in order for the Company to earn a quarterly net investment income to support a minimum dividend payment on shares of common stock outstanding on the relevant dividend payment dates of 9.0% (to be paid on a quarterly basis). For the periods January 1, 2015 to December 31, 2015 and January 1, 2016 to December 31, 2016, the Adviser has agreed to waive its incentive fees, without recourse against or reimbursement by us, to the extent required in order for the Company to earn a quarterly net investment income to support minimum dividend payments on shares of common stock outstanding on the relevant dividend payment dates of 9.25% and 9.375%, respectively (to be paid on a quarterly basis). The annual dividend yield will be based on our initial public offering price per share. Net investment income is defined as GAAP net income before net realized and unrealized gains (losses).

Management Fee

The base management fee is calculated at an annual rate of 1.75% of our gross assets, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents. For services rendered under the Investment Advisory 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, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters. Base management fees for any partial month or quarter will be appropriately pro-rated.

Incentive Fee

We pay the Adviser an incentive fee. Incentive fees are calculated as below and payable quarterly in arrears (or, upon termination of the Investment Advisory Agreement, as of the termination date). The incentive fee, which provides the Adviser with a share of the income that it generates for us, has two components, ordinary income and capital gains, calculated as follows:

The ordinary income component is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the immediately preceding calendar quarter, subject to a total return requirement and deferral of non-cash

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amounts, and is 20.0% of the amount, if any, by which our pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets attributable to our common stock, for the immediately preceding calendar quarter, exceeds a 2.0% (which is 8.0% annualized) hurdle rate and a “catch-up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, the Adviser receives no incentive fee until our pre-incentive fee net investment income equals the hurdle rate of 2.0%, but then receives, as a “catch-up,” 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 rate but is less than 2.5% (which is 10.0% annualized). The effect of the “catch-up” provision is that, subject to the total return and deferral provisions discussed below, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, the Adviser receives 20.0% of our pre-incentive fee net investment income as if a hurdle rate did not apply. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial assistance 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 and any interest expense and any distributions 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 OID, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash. The foregoing incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of the Company’s pre-incentive fee net investment income will be payable except to the extent 20.0% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding quarters exceeds the cumulative incentive fees accrued and/or paid for the 11 preceding quarters. In other words, any ordinary income incentive fee that is payable in a calendar quarter will be limited to the lesser of (i) 20.0% of the amount by which our pre-incentive fee net investment income for such calendar quarter exceeds the 2.0% hurdle, subject to the “catch-up” provision, and (ii) (x) 20.0% of the cumulative net increase in net assets resulting from operations for the then current and 11 preceding calendar quarters minus (y) the cumulative incentive fees accrued and/or paid for the 11 preceding calendar quarters. For the foregoing purpose, the “cumulative net increase in net assets resulting from operations” is the amount, if positive, of the sum of pre-incentive fee net investment income, realized gains and losses and unrealized appreciation and depreciation of the Company for the then current and 11 preceding calendar quarters. In addition, the portion of such incentive fee that is attributable to deferred interest (such as PIK interest or OID) will be paid to the Adviser only if and to the extent we actually receive such interest in cash, and any accrual thereof will be reversed if and to the extent such interest is reversed in connection with any write-off or similar treatment of the investment giving rise to any deferred interest accrual. Any reversal of such accounts would reduce net income for the quarter by the net amount of the reversal (after taking into account the reversal of incentive fees payable) and would result in a reduction and possible elimination of the incentive fees for such quarter. There is no accumulation of amounts on the hurdle rate from quarter to quarter, and accordingly there is no clawback of amounts previously paid if subsequent quarters are below the quarterly hurdle, and there is no delay of payment if prior quarters are below the quarterly hurdle.

Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that we may pay an incentive fee in a quarter where we incur a loss, subject to the total return requirement and deferral of non-cash amounts. For example, if we receive pre-incentive fee net investment income in excess of the quarterly minimum hurdle rate, we will pay the applicable incentive fee even if we have incurred a loss in that quarter due to realized and unrealized capital losses. Our net investment income used to calculate this component of the incentive fee is also included in the amount of our gross assets used to calculate the 1.75% base management fee. These calculations will be appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

The following is a graphic 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)

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Percentage of Pre-incentive Fee Net Investment Income

Allocated to Income-Related Portion of Incentive Fee

The capital gains component 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 Agreement, as of the termination date), commencing on December 31, 2014, and is equal to 20.0% of our cumulative aggregate realized capital gains from inception through the end of that calendar year, computed net of our aggregate cumulative realized capital losses and our aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid capital gains incentive fees, provided that the incentive fee determined as of December 31, 2014 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 for the period ending December 31, 2014. If such amount is negative, then no capital gains incentive fee will be payable for such year. Additionally, if the Investment Advisory Agreement is terminated as of a date that is not a calendar year end, the termination date will be treated as though it were a calendar year end for purposes of calculating and paying the capital gains incentive fee.

Examples of Quarterly Incentive Fee Calculation

Example 1: Income Related Portion of Incentive Fee before Total Return Requirement Calculation:

Alternative 1

Assumptions

Investment income (including interest, dividends, fees, etc.) = 1.25%

Hurdle rate ⁽¹⁾ = 2.0%

Management fee ⁽²⁾ = 0.4375%

Other expenses (legal, accounting, custodian, transfer agent, etc.) ⁽³⁾ = 0.2%

Pre-incentive fee net investment income

(investment income – (management fee + other expenses) = 0.6125%

Pre-incentive fee net investment income does not exceed hurdle rate, therefore there is no income-related incentive fee.

Alternative 2

Assumptions

Investment income (including interest, dividends, fees, etc.) = 2.9%

Hurdle rate ⁽¹⁾ = 2.0%

Management fee ⁽²⁾ = 0.4375%

Other expenses (legal, accounting, custodian, transfer agent, etc.) ⁽³⁾ = 0.2%

Pre-incentive fee net investment income

(investment income – (management fee + other expenses) = 2.2625%

Incentive fee = 100% × Pre-incentive fee net investment income (subject to “catch-up”) ⁽⁴⁾

= 100% × (2.2625% – 2.0%)

= 0.2625%

Pre-incentive fee net investment income exceeds the hurdle rate, but does not fully satisfy the “catch-up” provision, therefore the income related portion of the incentive fee is 0.2625%.

Alternative 3

Assumptions

Investment income (including interest, dividends, fees, etc.) = 3.5%

Hurdle rate ⁽¹⁾ = 2.0%

Management fee ⁽²⁾ = 0.4375%

Other expenses (legal, accounting, custodian, transfer agent, etc.) ⁽³⁾ = 0.2%

Pre-incentive fee net investment income

(investment income – (management fee + other expenses) = 2.8625%

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Incentive fee =	100% × Pre-incentive fee net investment income
	(subject to “catch-up”) (4)
Incentive fee =	100% × “catch-up” + (20.0% × (Pre-Incentive Fee Net Investment Income – 2.5%))
“Catch-up” = 2.5% – 2.0%
= 0.5%
Incentive fee =	(100% × 0.5%) + (20.0% × (2.8625% – 2.5%))
	= 0.5% + (20.0% × 0.3625%)
	= 0.5% + 0.725%
	= 0.5725%

Pre-incentive fee net investment income exceeds the hurdle rate, and fully satisfies the “catch-up” provision, therefore the income related portion of the incentive fee is 0.5725%.

(1) Represents 8.0% annualized hurdle rate.

(2) Represents 1.75% annualized base management fee.

(3) Excludes organizational and offering expenses.

(4) The “catch-up” provision is intended to provide the Adviser with an incentive fee of 20.0% on all pre-incentive fee net investment income as if a hurdle rate did not apply when our net investment income exceeds 2.5% in any fiscal quarter.

Example 2: Income Portion of Incentive Fee with Total Return Requirement Calculation:

Alternative 1:

Assumptions

Investment income (including interest, dividends, fees, etc.) = 3.5%

Hurdle rate ⁽¹⁾ = 2.0%

Management fee ⁽²⁾ = 0.4375%

Other expenses (legal, accounting, custodian, transfer agent, etc.) ⁽³⁾ = 0.2%

Pre-incentive fee net investment income

(investment income – (management fee + other expenses) = 2.8625%

Cumulative incentive compensation accrued and/or paid for preceding 11 calendar quarters = $9,000,000

20.0% of cumulative net increase in net assets resulting from operations over current and preceding 11 calendar quarters = $8,000,000

Although our pre-incentive fee net investment income exceeds the hurdle rate of 2.0% (as shown in Alternative 3 of Example 1 above), no incentive fee is payable because 20.0% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding calendar quarters did not exceed the cumulative income and capital gains incentive fees accrued and/or paid for the preceding 11 calendar quarters.

Alternative 2:

Assumptions

Investment income (including interest, dividends, fees, etc.) = 3.5%

Hurdle rate ⁽¹⁾ = 2.0%

Management fee ⁽²⁾ = 0.4375%

Other expenses (legal, accounting, custodian, transfer agent, etc.) ⁽³⁾ = 0.2%

Pre-incentive fee net investment income

(investment income – (management fee + other expenses) = 2.8625%

Cumulative incentive compensation accrued and/or paid for preceding 11 calendar quarters = $9,000,000

20.0% of cumulative net increase in net assets resulting from operations over current and preceding 11 calendar quarters = $10,000,000

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Because our pre-incentive fee net investment income exceeds the hurdle rate of 2.0% and because 20.0% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative income and capital gains incentive fees accrued and/or paid for the preceding 11 calendar quarters, an incentive fee would be payable, as shown in Alternative 3 of Example 1 above.

(1) Represents 8.0% annualized hurdle rate.

(2) Represents 1.75% annualized base management fee.

(3) Excludes organizational and offering expenses.

(4) The “catch-up” provision is intended to provide the Adviser with an incentive fee of 20.0% on all pre-incentive fee net investment income as if a hurdle rate did not apply when our net investment income exceeds 2.5% in any fiscal quarter.

Example 3: Capital Gains Portion of Incentive Fee(*):

Alternative 1:

Assumptions

Year 1: $2.0 million investment made in Company A (“Investment A”), and $3.0 million investment made in Company B (“Investment B”)

Year 2: Investment A sold for $5.0 million and fair market value (“FMV”) of Investment B determined to be $3.5 million

Year 3: FMV of Investment B determined to be $2.0 million

Year 4: Investment B sold for $3.25 million

The capital gains portion of the incentive fee would be:

Year 1: None

Year 2: Capital gains incentive fee of $0.6 million—($3.0 million realized capital gains on sale of Investment A multiplied by 20.0%)

Year 3: None—$0.4 million (20.0% multiplied by ($3.0 million cumulative capital gains less $1.0 million cumulative capital depreciation)) less $0.6 million (previous capital gains fee paid in Year 2)

Year 4: Capital gains incentive fee of $50,000—$0.65 million ($3.25 million cumulative realized capital gains multiplied by 20%) less $0.6 million (capital gains incentive fee taken in Year 2)

Alternative 2

Assumptions

Year 1: $2.0 million investment made in Company A (“Investment A”), $5.25 million investment made in Company B (“Investment B”) and $4.5 million investment made in Company C (“Investment C”)

Year 2: Investment A sold for $4.5 million, FMV of Investment B determined to be $4.75 million and FMV of Investment C determined to be $4.5 million

Year 3: FMV of Investment B determined to be $5.0 million and Investment C sold for $5.5 million

Year 4: FMV of Investment B determined to be $6.0 million

Year 5: Investment B sold for $4.0 million

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The capital gains incentive fee, if any, would be:

Year 1: None

Year 2: $0.4 million capital gains incentive fee—20.0% multiplied by $2.0 million ($2.5 million realized capital gains on Investment A less $0.5 million unrealized capital depreciation on Investment B)

Year 3: $0.25 million capital gains incentive fee ⁽¹⁾—$0.65 million (20.0% multiplied by $3.25 million ($3.5 million cumulative realized capital gains less $0.25 million unrealized capital depreciation)) less $0.4 million capital gains incentive fee received in Year 2

Year 4: $0.05 million capital gains incentive fee—$0.7 million ($3.50 million cumulative realized capital gains multiplied by 20.0%) less $0.65 million cumulative capital gains incentive fee paid in Year 2 and Year 3

Year 5: None—$0.45 million (20.0% multiplied by $2.25 million (cumulative realized capital gains of $3.5 million less realized capital losses of $1.25 million)) less $0.7 million cumulative capital gains incentive fee paid in Year 2, Year 3 and Year 4 ⁽²⁾

* The hypothetical amounts of returns shown are based on a percentage of our total net assets and assume no leverage. There is no guarantee that positive returns will be realized and actual returns may vary from those shown in this example.

(1) As illustrated in Year 3 of Alternative 1 above, if a portfolio company were to be wound up on a date other than its fiscal year end of any year, it may have paid aggregate capital gains incentive fees that are more than the amount of such fees that would be payable if such portfolio company had been wound up on its fiscal year end of such year.

(2) As noted above, it is possible that the cumulative aggregate capital gains fee received by the Adviser ($0.70 million) is effectively greater than $0.45 million (20% of cumulative aggregate realized capital gains less net realized capital losses or net unrealized depreciation ($2.25 million)).

Payment of Our Expenses

The base management fee and incentive compensation remunerates the Adviser for work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other out-of-pocket costs and expenses of our operations and transactions, including, without limitation, those relating to:

• organization and offerings;

• calculating our net asset value (including the cost and expenses of any independent valuation firm);

• fees and expenses payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or otherwise relating to, or associated with, evaluating and making investments;

• interest payable on debt, if any, incurred to finance our investments and expenses related to unsuccessful portfolio acquisition efforts;

• offerings of our common stock and other securities;

• administration fees and expenses, if any, payable under the Administration Agreement (including our allocable portion of the Adviser’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our chief compliance officer, chief financial officer and their respective staffs);

• transfer agent, dividend agent and custodial fees and expenses;

• costs associated with our reporting and compliance obligations under the 1940 Act, as amended, and other applicable federal and state securities laws, and stock exchange listing fees;

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• fees and expenses associated with independent audits and outside legal costs;

• federal, state and local taxes;

• independent directors’ fees and expenses;

• costs of any reports, proxy statements or other notices to or communications and meetings with stockholders;

• costs associated with investor relations;

• costs and fees associated with any fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;

• direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff; and

• all other expenses incurred by us or the Adviser in connection with administering our business.

Duration and Termination

Unless terminated earlier as described below, the Investment Advisory Agreement will continue in effect for a period of two years from its effective date. It 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, and, in either case, if also approved by a majority of our directors who are not “interested persons.” The Investment Advisory Agreement automatically terminates in the event of its assignment, as defined in the 1940 Act, by the Adviser and may be terminated by either party without penalty upon not less than 60 days’ written notice to the other. The holders of a majority of our outstanding voting securities may also terminate the Investment Advisory Agreement without penalty upon 60 days’ written notice.

Indemnification

The Investment Advisory 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 under the Investment Advisory Agreement, the Adviser and its officers, managers, partners, agents, employees, controlling persons and members, and any other person or entity affiliated with it, are entitled to indemnification from us 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 Agreement or otherwise as the Adviser.

Board Approval of the Investment Advisory Agreement

Our board of directors approved the Investment Advisory Agreement, effective as of February 5, 2014, at its first meeting, held on October 8, 2013 to be effective as of February 5, 2014. In its consideration of the investment advisory agreement, the board of directors focused on information it had received relating to, among other things: (a) the nature, quality and extent of the advisory and other services to be provided to us by our investment adviser; (b) comparative data with respect to advisory fees or similar expenses paid by other BDCs with similar investment objectives; (c) any existing and potential sources of indirect income to our investment adviser from its relationships with us and the profitability of those relationships; (d) information about the services to be performed and the personnel performing such services under the investment advisory agreement; (e) the organizational capability and financial condition of our investment adviser; and (f) various other factors.

Based on the information reviewed and the discussions, the board of directors, including a majority of the non-interested directors, concluded that the investment management fee rates and terms are reasonable in relation to the services to be provided and approved the Investment Advisory Agreement as being in the best interests of our stockholders.

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Administration Agreement

Under the Administration Agreement, the Adviser furnishes us with office facilities and equipment and provides us with clerical, bookkeeping, recordkeeping and other administrative services at such facilities. Under the Administration Agreement, the Adviser also performs, or oversees the performance of, our required administrative services, which include being responsible for the financial and other records that we are required to maintain and preparing reports to our stockholders and reports and other materials filed with the SEC. In addition, the Adviser 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 and other materials to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others. Pursuant to the Administration Agreement, the Adviser also provides managerial assistance on our behalf to those portfolio companies that have accepted our offer to provide such assistance. The Adviser satisfies certain of its obligations under the Administration Agreement to us through the Services Agreement with Cyrus Capital, including supplying us with accounting and back-office professionals.

Payments under the Administration Agreement are equal to an amount based upon our allocable portion (subject to the review of our board of directors) of the Adviser’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 cost of our chief financial officer and chief compliance officer and their respective staffs. In addition, if requested to provide significant managerial assistance to our portfolio companies, the Adviser is paid an additional amount based on the services provided, which shall not exceed the amount we receive from such portfolio companies for providing this assistance. The Administration Agreement has an initial term of two years and may be renewed with the approval of our board of directors. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party. To the extent that the Adviser outsources any of its functions, we will pay the fees associated with such functions on a direct basis without any incremental profit to the Adviser.

Indemnification

The Administration Agreement provides that, absent criminal conduct, 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, the Adviser and its officers, managers, partners, agents, employees, controlling persons and members, and any other person or entity affiliated with it, are entitled to indemnification from us 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 Administration Agreement or otherwise as our administrator.

License Agreement

We have entered into a license agreement with the Adviser under which the Adviser has agreed to grant us a non-exclusive, royalty-free license to use the name “CM Finance.” Under this agreement, we have a right to use the “CM Finance” name for so long as the Adviser or one of its affiliates remains the Adviser. Other than with respect to this limited license, we have no legal right to the “CM Finance” name. This license agreement will remain in effect for so long as the Investment Advisory Agreement with the Adviser is in effect.

Exchange Act Reports

We maintain a website at www.cmfn-inc.com. The information on our website is not incorporated by reference in this annual report on Form 10-K.

We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the SEC in accordance with the Securities Exchange Act of 1934, or the “Exchange Act.” These include our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC.

Regulation as a BDC

We are a BDC under the 1940 Act. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates (including any investment advisers), principal underwriters and affiliates of those affiliates or underwriters and requires that a majority of the directors be persons other than “interested persons,” as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless approved by a majority of our outstanding voting securities.

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Qualifying Assets

Under the 1940 Act, a BDC 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 company’s total assets. The principal categories of qualifying assets relevant to our 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. Under the 1940 Act and the rules thereunder, “eligible portfolio companies” include (1) private domestic operating companies, (2) public domestic operating companies whose securities are not listed on a national securities exchange (e.g., NASDAQ), and (3) public domestic operating companies having a market capitalization of less than $250 million. Public domestic operating companies whose securities are quoted on the over-the-counter bulletin board or through Pink Sheets LLC are not listed on a national securities exchange and therefore are eligible portfolio companies.

(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 to such a private transaction, 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 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 that mature in one year or less from the date of investment.

The regulations defining qualifying assets may change over time. We may adjust our investment focus as needed to comply with and/or take advantage of any regulatory, legislative, administrative or judicial actions in this area.

Managerial Assistance to Portfolio Companies

In order to count portfolio securities as qualifying assets for the purpose of the 70% test, a BDC must either control the issuer of the securities or must offer to make available to the issuer of the securities significant managerial assistance. However, when the BDC purchases securities in conjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial assistance. Making available managerial assistance means any arrangement whereby the BDC, through its directors, officers, employees or agents, 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. The Adviser will provide such managerial assistance on our behalf to portfolio companies that request this assistance.

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, repurchase agreements and high-quality debt investments that mature in one year or less from the date of investment, which we refer to, collectively, as temporary investments, so that 70% of our assets are qualifying assets or temporary investments. Typically, we will invest in U.S. Treasury bills or in repurchase agreements, so long as the 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

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by the seller to repurchase it at an agreed-upon future date and at a price that 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 U.S. federal income tax purposes. Accordingly, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit. The 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—Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital. As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.”

Common Stock

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 at a price below the current net asset value of the common stock if our board of directors determines that such sale is in our best interests and that of our 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 which, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount).

Codes of Ethics

We and the Adviser have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to each such code may invest in securities for their personal investment accounts, including securities that may be purchased or held by us, so long as such investments are made in accordance with such code’s requirements. You may read and copy our code 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 available on the EDGAR Database on the SEC’s website at www.sec.gov. You may also obtain copies of each code of ethics, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.

Proxy Voting Policies and Procedures

We have delegated our proxy voting responsibility to the Adviser. The Proxy Voting Policies and Procedures of the Adviser are set out below. The guidelines will be reviewed periodically by the Adviser and our directors who are not “interested persons,” and, accordingly, are subject to change.

Introduction

As an investment adviser registered under the Advisers Act, the Adviser has a fiduciary duty to act solely in our best interests. As part of this duty, the Adviser recognizes that it must vote our securities in a timely manner free of conflicts of interest and in our best interests.

The Adviser’s policies and procedures for voting proxies for its investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

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Proxy Policies

The Adviser votes proxies relating to our portfolio securities in what it perceives to be the best interest of our stockholders. The Adviser reviews on a case-by-case basis each proposal submitted to a stockholder vote to determine its effect on the portfolio securities we hold. In most cases, the Adviser will vote in favor of proposals that the Adviser believes are likely to increase the value of the portfolio securities we hold. Although the Adviser will generally vote against proposals that may have a negative effect on our portfolio securities, the Adviser may vote for such a proposal if there exist compelling long-term reasons to do so.

The Adviser has established a proxy voting committee and adopted proxy voting guidelines and related procedures. The proxy voting committee establishes proxy voting guidelines and procedures, oversees the internal proxy voting process, and reviews proxy voting issues. To ensure that the Adviser’s vote is not the product of a conflict of interest, the Adviser requires that (1) anyone involved in the decision-making process disclose to our Chief Compliance Officer 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 (2) employees involved in the decision-making process or vote administration are prohibited from revealing how the Adviser intends to vote on a proposal in order to reduce any attempted influence from interested parties. Where conflicts of interest may be present, the Adviser will disclose such conflicts to us, including our independent directors and may request guidance from us on how to vote such proxies.

Proxy Voting Records

You may obtain information about how the Adviser voted proxies by making a written request for proxy voting information to: CM Finance Inc, Attention: Investor Relations, 601 Lexington Avenue, 26^th Floor, New York, New York 10022, or by calling us collect at (212) 257-5199. The SEC also maintains a website at www.sec.gov that contains this information.

Privacy Principles

We are committed to maintaining the privacy of our stockholders and to safeguarding their nonpublic 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 nonpublic personal information relating to our stockholders, although certain nonpublic personal information of our stockholders may become available to us. We do not disclose any nonpublic 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 nonpublic personal information about our stockholders to employees of the Adviser and its affiliates with a legitimate business need for the information. We intend to maintain physical, electronic and procedural safeguards designed to protect the nonpublic personal information of our stockholders.

Other

We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a BDC, we are 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.

We and the Adviser are each required to adopt and implement written policies and procedures reasonably designed to prevent violation of relevant federal securities laws, review these 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.

We may be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our board of directors who are not interested persons and, in some cases, prior approval by the SEC. Thus, based on current SEC interpretations, co-investment transactions involving a BDC like us and an entity that is advised by the Adviser or an affiliated adviser generally could not be effected without SEC relief. The staff of the SEC has, however, granted no-action relief permitting purchases of a single class of privately placed securities, provided that the adviser negotiates no term other than price and certain other conditions are met.

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Under the Stifel arrangement and subject to certain restrictions, Stifel uses its commercially reasonable efforts to present to us the opportunity to review and bid on Stifel Nicolaus & Company, Incorporated-originated leveraged finance and high yield corporate debt opportunities, consistent with our investment strategy and subject to the approval of our board of directors as necessary under the 1940 Act and certain other limitations. Stifel may invest in the same portfolio companies that we invest in (regardless of whether our investment arose from a Stifel-originated opportunity) and Stifel may, through such investments, have interests that conflict with ours, including receiving fees from the portfolio company directly as well as through its interest in the Adviser. We believe that we may co-invest with Stifel and its affiliates upon approval of a majority of our directors who are not “interested persons” as defined in Section 2(a)(19) of the 1940 Act. See “Risk Factors—Our relationship with Stifel may create conflicts of interest.”

As a result of the relationship with Cyrus and the Cyrus Funds, we could be presumed to be an affiliate of the Cyrus Funds under the 1940 Act. However, a person’s status as an “affiliate” under the 1940 Act is a rebuttable assumption, which we believe we can successfully rebut. As a result, we believe that we may invest in the same portfolio companies that the Cyrus Funds invest in, without seeking exemptive relief from the SEC.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 imposes a wide variety of regulatory requirements on publicly held companies and their insiders. Many of these requirements affect us. For example:

• pursuant to Rule 13a-14 under the Exchange Act, our principal executive officer and principal financial officer must certify the accuracy of the financial statements contained in our periodic reports;

• pursuant to Item 307 under Regulation S-K, our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures;

• pursuant to Rule 13a-15 under the Exchange Act, our management must prepare an annual report regarding its assessment of our internal control over financial reporting; and

• pursuant to Item 308 of Regulation S-K and Rule 13a-15 under the Exchange 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.

Taxation as a Regulated Investment Company

As a BDC, we intend to elect to be treated as a RIC under Subchapter M of the Code. As a RIC, we generally do not have to pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders as dividends. 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 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”).

If we qualify as a RIC and satisfy the Annual Distribution Requirement, then we generally will not be subject to U.S. federal income tax on the portion of our income we distribute (or are deemed to distribute) to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gains not distributed (or deemed distributed) to our stockholders.

We will be subject to a 4% nondeductible U.S. 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 net ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (the “Excise Tax Avoidance Requirement”).

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In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:

• continue to qualify as a BDC under the 1940 Act at all times during each taxable year;

• derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to loans of certain securities, gains from the sale of stock or other securities, net income from certain “qualified publicly traded partnerships,” or other income derived with respect to our business of investing in such stock or securities (the “90% Income Test”); 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 the securities, other than U.S. government securities or securities of other RICs, of one issuer, of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or of certain “qualified publicly traded partnerships” (the “Diversification Tests”).

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 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. We may also have to include in income other amounts that we have not yet received in cash, such as PIK interest and deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation such as warrants or stock. Because any original issue discount or other amounts 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.

Although we do not presently expect to do so, we are authorized to borrow funds and to sell assets in order to satisfy the distribution requirements. However, under the 1940 Act, we are not permitted in certain circumstances to make distributions to our stockholders while our debt obligations and other senior securities are outstanding unless certain “asset coverage” tests are met. Moreover, our ability to dispose of assets to meet our distribution requirements may be limited by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our status as a RIC, including the Diversification Tests. If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement, we may make such dispositions at times that, from an investment standpoint, are not advantageous.

In accordance with certain applicable Treasury regulations and private letter rulings issued by the Internal Revenue Service, a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution. If too many stockholders elect to receive cash, each stockholder electing to receive cash must receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 20% of his or her entire distribution in cash. If these and certain other requirements are met, for U.S federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. We have no current intention of paying dividends in shares of our stock in accordance with these Treasury regulations or private letter rulings.

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Our Status as an Emerging Growth Company

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These eased requirements include an exemption from certain financial disclosure and governance requirements and relaxed restrictions on the sale of securities. The JOBS Act provides scaled disclosure provisions for emerging growth companies, including, among other things, removing the requirement that emerging growth companies comply with Sarbanes-Oxley Act Section 404(b) auditor attestation of internal control over financial reporting. Section 107(b) of the JOBS Act also permits an emerging growth companies to elect an extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until such time as these new or revised standards are made applicable to all private companies. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards, which may make it more difficult for investors and securities analysts to evaluate us since our financial statements may not be comparable to companies that comply with public company effective dates. We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the completion of our initial public offering (IPO), (ii) in which we have total annual gross revenue of at least $1.0 billion, or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30^th, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

The NASDAQ Stock Market Corporate Governance Regulations

Our common stock is listed on the Nasdaq Global Select Market under the symbol “CMFN.” The NASDAQ Stock Market has adopted corporate governance regulations that listed companies must comply with. We are in compliance with such corporate governance listing standards applicable to BDCs.

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Item 1A. Risk Factors

Investing in our common stock involves a number of significant risks. 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 annual report on Form 10-K, before you decide whether to make an investment in our common stock. The risks set out below are the principal risks with respect to an investment in our common stock generally and with respect to a BDC with investment objectives, investment policies, capital structures or trading markets similar to ours. However, they may not be the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us may also impair our operations and performance. If any of the following events occur, our business, financial condition, results of operations and cash flows could be materially and adversely affected. In such case, our net asset value and the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Business and Structure

We have a limited operating history as a BDC. The Adviser has limited experience advising a BDC or a RIC, and we and our Adviser may not be able to operate our business successfully or generate sufficient revenue to make or sustain distributions to our stockholders.

We were formed in February 2012 and commenced operations in March 2012. Prior to the completion of our initial public offering in February 2014, we did not operate as a BDC and our Adviser had never managed a BDC. In addition, we had not qualified to be treated as a RIC. As a result of our limited operating history, we have limited operating results under these regulatory frameworks that can demonstrate to you either their effect on our business or our ability to manage our business under these frameworks. We are subject to the business risks and uncertainties associated with recently formed businesses, including the risk that we will not achieve our investment objective and that the value of your investment could decline substantially.

The 1940 Act and the Code impose numerous constraints on the operations of BDCs and RICs that do not apply to other investment vehicles previously managed by the Adviser. BDCs are required, for example, to invest at least 70% of their total assets primarily in securities of U.S. private or thinly traded public companies, cash, cash equivalents, U.S. government securities and other high-quality debt instruments that mature in one year or less from the date of investment. Moreover, qualification for taxation as a RIC requires satisfaction of source-of-income, asset diversification and distribution requirements. We and the Adviser have limited experience operating or advising under these constraints, which may hinder our ability to take advantage of attractive investment opportunities and to achieve our investment objective.

We depend upon key personnel of the Adviser for our future success. If the Adviser were to lose any of its key personnel, our ability to achieve our investment objective could be significantly harmed.

We depend on the diligence, skill, experience and network of business contacts of the Investment Team of the Adviser, in particular Messrs. Mauer and Jansen, who are also members of the Adviser’s investment committee, our executive officers and members of our board of directors. We can offer no assurance that Messrs. Mauer and Jansen will continue to provide investment advice to us. The loss of either Mr. Mauer or Mr. Jansen would limit our ability to achieve our investment objective and operate as we anticipate.

Our business model depends to a significant extent upon our Adviser’s network of relationships. Any inability of the Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.

We depend upon the Adviser to maintain its relationships with private equity sponsors, placement agents, investment banks, management groups and other financial institutions, including Stifel and Cyrus Capital, and we expect to rely to a significant extent upon these relationships to provide us with potential investment opportunities. If the Adviser or members of the Investment Team fail to maintain such relationships, or to develop new relationships with other sources of investment opportunities, we will not be able to grow our investment portfolio. In addition, individuals with whom the Adviser has relationships are not obligated to provide us with investment opportunities, and we can offer no assurance that these relationships will generate investment opportunities for us in the future.

Our relationship with Stifel may create conflicts of interest.

Stifel owns approximately 16% of our outstanding common stock. Stifel also has a 20% interest in the Adviser. The Adviser employs five investment professionals that are members of the Adviser’s Investment Team and serve as employees of Stifel. These members of the Investment Team spend substantially all of their time in the Adviser’s office providing services to the Adviser. As the remainder of their time is spent in investment advisory activities for Stifel, this could potentially result in a conflict of interest and

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may distract them from their responsibilities to us. Stifel has a right to nominate an individual to fill the vacancy created on our board of directors upon Stephan Kuppenheimer’s resignation in May 2015, which term will expire in 2017. We expect that Stifel’s director appointee would also be an employee of Stifel, and would continue to engage in investment advisory activities for Stifel, which could result in a conflict of interest and may distract such director appointee from his or her responsibilities to us.

Under the Stifel arrangement and subject to certain restrictions, Stifel will use its commercially reasonable efforts to present to us to review and bid on, Stifel Nicolaus & Company, Incorporated-originated leveraged finance and high yield corporate debt opportunities consistent with our investment strategy, subject to the approval of our board of directors, as necessary under the 1940 Act, and certain other limitations. Stifel may invest in the same portfolio companies that we invest in (regardless of whether our investment arose from a Stifel-originated opportunity), and Stifel may, through such investments, have interests that conflict with ours, including receiving fees from the portfolio company directly as well as through its interest in the Adviser. We believe that we may co-invest with Stifel and its affiliates upon approval of a majority of our directors that are not “interested persons” as defined in Section 2(a)(19) of the 1940 Act. However, we can provide no assurance that the SEC or its staff will not take a contrary position. If the SEC or its staff takes a contrary position, we would be required to obtain an exemptive order from the SEC in order to co-invest with Stifel and its affiliates. We can offer no assurance that we will successfully obtain such an order. If we cannot co-invest with Stifel and its affiliates, our business, financial condition, results of operations and cash flows could be materially adversely affected.

Our relationship with Cyrus Capital may create conflicts of interest.

The Cyrus Funds, managed by Cyrus Capital, own approximately 28% of our outstanding common stock. The Cyrus Funds also have a 38% indirect economic interest in the Adviser. Pursuant to the services arrangement with Cyrus Capital, employees of Cyrus Capital, including administrative professionals and investment professionals (the “Cyrus Professionals”), will be made available to the Adviser upon request of the Adviser. These Cyrus Professionals also engage in investment advisory activities for the private investment funds managed by Cyrus Capital, including the Cyrus Funds, which could result in conflicts of interest with respect to, among other things, the allocation of investment opportunities, and may distract them from their responsibilities to us. Cyrus Capital also provides certain financial, accounting and administrative services to the Adviser pursuant to the Services Agreement with the Adviser upon which the Adviser relies to satisfy its obligations under the Administration Agreement, and is reimbursed by the Adviser for the expenses it incurs in connection with providing such services. The Adviser has the ability, in its sole discretion, to include or exclude any Cyrus investment professional from its team and no Cyrus Professional has any authority over investment decisions of the Company. Currently the Cyrus Professionals allocate in the aggregate less than 10% of their time to the Adviser’s business.

In addition, as a result of the relationship with Cyrus Capital and the Cyrus Funds, we could be presumed to be an affiliate of the Cyrus Funds under the 1940 Act. However, a person’s status as an “affiliate” under the 1940 Act is a rebuttable presumption, which we believe we can successfully refute. As a result, we believe that we may invest in the same portfolio companies that the Cyrus Funds invest in, without seeking exemptive relief from the SEC. However, we can provide no assurance that the SEC or its staff will not take a contrary position. If the SEC or its staff does deem us to be an affiliate of Cyrus Capital, we would be required to obtain an exemptive order from the SEC in order to co-invest with affiliates of Cyrus Capital. We can offer no assurance that we will successfully obtain such an order. If we cannot co-invest with affiliates of Cyrus Capital, our business, financial condition, results of operations and cash flows could be materially adversely affected. In addition, the Cyrus Funds may, through such co-investments, have interests that conflict with ours, including receiving fees from the portfolio company directly as well as through its economic interest in the Adviser.

There are significant potential conflicts of interest that could negatively affect our investment returns.

There may be times when the Adviser or the members of the Investment Team have interests that differ from those of our stockholders, giving rise to conflicts of interest. The members of the Adviser’s investment committee and the Investment Team serve, or may serve, as officers, directors, members, or principals of entities that operate in the same or a related line of business as we do, such as Stifel, or of investment funds, accounts, or investment vehicles managed by the Adviser or Stifel. Similarly, the Adviser or the members of the Investment Team may have other clients with similar, different or competing investment objectives. In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders. In addition, the Adviser and some of its affiliates, including our officers and our non-independent directors, are not prohibited from raising money for, or managing, another investment entity that makes the same types of investments as those we target. The members of the Investment Team also include five investment professionals that also serve as employees of Stifel, and spend substantially all of their time in the Adviser’s office providing services to the Adviser. These investment professionals may continue to engage in investment advisory activities for Stifel, which could result in a conflict of interest and may distract them from their responsibilities to us. As a result, and although the Adviser and its Investment Team are subject to a written conflicts of interest policy, the time and resources the Adviser’s Investment Team and certain members of the Adviser’s investment committee could devote to us may be diverted. In addition, we may compete with any such investment entity for the same investors and investment opportunities.

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To the extent we determine to utilize the services of the Cyrus Professionals, such individuals will also be engaging in investment advisory activities for the private investment funds managed by Cyrus Capital, including the Cyrus Funds, and are not prohibited from raising money for, or managing another investment entity that makes the same types of investments as those we target, which could result in a conflict of interest.

The members of the Investment Team may, from time to time, possess material non-public information, limiting our investment discretion.

The Investment Team of the Adviser may serve as directors of, or in a similar capacity with, portfolio companies in which we invest. In the event that material nonpublic information is obtained with respect to such companies, or we become subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us.

There are conflicts related to other arrangements with the Adviser.

We have entered into a License Agreement with the Adviser under which the Adviser has agreed to grant us a non-exclusive, royalty-free license to use the name “CM Finance.” See “Business— Management Agreements—License Agreement.” In addition, we have entered into an Administration Agreement with the Adviser pursuant to which we are required to pay to the Adviser our allocable portion of overhead and other expenses incurred by the Adviser in performing its obligations under such Administration Agreement, such as rent and our allocable portion of the cost of our chief financial officer and our chief compliance officer and their respective staffs. This will create conflicts of interest that our board of directors will monitor. For example, under the terms of the license agreement, we will be unable to preclude the Adviser from licensing or transferring the ownership of the “CM Finance” name to third parties, some of whom may compete against us. Consequently, we will be unable to prevent any damage to goodwill that may occur as a result of the activities of the Adviser or others. Furthermore, in the event the license agreement is terminated, we will be required to change our name and cease using “CM Finance” as part of our name. Any of these events could disrupt our recognition in the market place, damage any goodwill we may have generated and otherwise harm our business.

Our financial condition, results of operations and cash flows will depend on our ability to manage our business effectively.

Our ability to achieve our investment objective will depend on our ability to manage our business and to grow our investments and earnings. This will depend, in turn, on the Adviser’s ability to identify, invest in and monitor portfolio companies that meet our investment criteria. The achievement of our investment objective on a cost-effective basis will depend upon the Adviser’s execution of our investment process, its ability to provide competent, attentive and efficient services to us and, to a lesser extent, our access to financing on acceptable terms. The Adviser’s investment professionals may have substantial responsibilities in connection with the management of other investment funds, accounts and investment vehicles. The personnel of the Adviser may also be called upon to provide managerial assistance to our portfolio companies. These activities may distract them from identifying new investment opportunities for us or slow our rate of investment. Any failure to manage our business and our future growth effectively could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The Adviser’s incentive fee structure may create incentives to it that are not fully aligned with the interests of our stockholders.

In the course of our investing activities, we pay management and incentive fees to the Adviser. We have entered into an Investment Advisory Agreement with the Adviser that provides that these fees will be based on the value of our gross assets. 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 one might achieve through direct investments. Because these fees are based on the value of our gross assets, the Adviser will benefit when we incur debt or use leverage. This fee structure may encourage the Adviser to cause us to borrow money to finance additional investments. Under certain circumstances, the use of borrowed money may increase the likelihood of default, which would disfavor our stockholders.

Our board of directors is charged with protecting our interests by monitoring how the Adviser addresses these and other conflicts of interests associated with its management services and compensation. While our board of directors is not expected to review or approve each investment decision, borrowing or incurrence of leverage, our independent directors will periodically review the Adviser’s services and fees as well as its portfolio management decisions and portfolio performance. In connection with these reviews, our independent directors will consider whether our fees and expenses (including those related to leverage) remain appropriate. As a result of this arrangement, the Adviser may from time to time have interests that differ from those of our stockholders, giving rise to a conflict.

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Our incentive fee may induce the Adviser to make speculative investments.

The Adviser receives an 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. Additionally, under the incentive fee structure, the Adviser may benefit when we recognize capital gains and, because the Adviser will determine when to sell a holding, the Adviser will control the timing of the recognition of such capital gains. As a result, the Adviser may have a tendency to invest more capital in investments likely to result in capital gains, 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.

We may be obligated to pay the Adviser incentive compensation even if we incur a loss and may pay more than 20.0% of our net capital gains because we cannot recover payments made in previous years.

The Adviser is entitled to incentive compensation for each fiscal quarter in an amount equal to a percentage of the excess of our investment income for that quarter (before deducting incentive compensation) above a threshold return for that quarter. Thus, we may be required to pay the Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter. If we pay an incentive fee of 20% of our realized capital gains (net of all realized capital losses and unrealized capital depreciation on a cumulative basis) and thereafter experience additional realized capital losses or unrealized capital depreciation, we will not be able to recover any portion of the incentive fee previously paid.

PIK interest payments we receive will increase our assets under management and, as a result, will increase the amount of base management fees and incentive fees payable by us to the Adviser.

Certain of our debt investments contain provisions providing for the payment of PIK interest. Because PIK interest results in an increase in the size of the loan balance of the underlying loan, and receipt of PIK interest will have the effect of increasing our assets under management. As a result, because the base management fee that we pay to the Adviser is based on the value of our gross assets, and receipt of PIK interest will result in an increase in the amount of the base management fee payable by us. In addition, any such increase in a loan balance due to the receipt of PIK interest will cause such loan to accrue interest on the higher loan balance, which will result in an increase in our pre-incentive fee net investment income and, as a result, an increase in incentive fees that are payable to the Adviser.

The involvement of our interested directors in the valuation process may create conflicts of interest.

We expect to make most of our portfolio investments in the form of loans and securities that are not publicly traded and for which there are limited or no market based price quotation is available. As a result, our board of directors will determine the fair value of these loans and securities in good faith as described below in “—Most of our portfolio investments will be recorded at fair value as determined in good faith by our board of directors and, as a result, there may be uncertainty as to the value of our portfolio investments.” In connection with that determination, investment professionals from the Adviser may provide our board of directors with valuations based upon the most recent portfolio company financial statements available and projected financial results of each portfolio company. While the valuation for each portfolio investment will be reviewed by an independent valuation firm quarterly, the ultimate determination of fair value will be made by our board of directors and not by such third-party valuation firm. In addition, Messrs. Mauer and Jansen, each an interested member of our board of directors, has a direct or indirect pecuniary interest in the Adviser. The participation of the Adviser’s investment professionals in our valuation process, and the pecuniary interest in the Adviser by certain members of our board of directors, could result in a conflict of interest as the Adviser’s management fee is based, in part, on the value of our gross assets, and our incentive fees will be based, in part, on realized gains and realized and unrealized losses.

The Investment Advisory Agreement and the Administration Agreement with the Adviser were not negotiated on an arm’s length basis and may not be as favorable to us as if they had been negotiated with an unaffiliated third party.

The Investment Advisory Agreement and the Administration Agreement were negotiated between related parties. Consequently, their terms, including fees payable to the Adviser, may not be as favorable to us as if they had been negotiated with an unaffiliated third party. In addition, we may choose not to enforce, or to enforce less vigorously, our rights and remedies under these agreements because of our desire to maintain our ongoing relationship with the Adviser and its affiliates. Any such decision, however, would breach our fiduciary obligations to our stockholders.

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Our incentive fee arrangements with the Adviser may vary from those of other investment funds, account or investment vehicles that the Adviser may manage in the future, which may create an incentive for the Adviser to devote time and resources to a higher fee-paying fund.

If the Adviser is paid a higher performance-based fee from any other fund that it may manage in the future, it may have an incentive to devote more research and development or other activities, and/or recommend the allocation of investment opportunities, to such higher fee-paying fund. For example, to the extent the Adviser’s incentive compensation is not subject to a hurdle or total return requirement with respect to another fund, it may have an incentive to devote time and resources to such other fund. As a result, the investment professionals of the Adviser may devote time and resources to a higher fee-paying fund.

The Adviser’s liability is limited under the Investment Advisory Agreement and we have agreed to indemnify the Adviser against certain liabilities, which may lead the Adviser to act in a riskier manner on our behalf than it would when acting for its own account.

Under the Investment Advisory Agreement, the Adviser has not assumed any responsibility to us other than to render the services called for under that agreement. It will not be responsible for any action of our board of directors in following or declining to follow the Adviser’s advice or recommendations. Under the Investment Advisory Agreement, the Adviser, its officers, members and personnel, and any person controlling or controlled by the Adviser will not be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the Investment Advisory Agreement, except those resulting from acts constituting gross negligence, willful misconduct, bad faith or reckless disregard of the duties that the Adviser owes to us under the Investment Advisory Agreement. In addition, as part of the Investment Advisory Agreement, we have agreed to indemnify the Adviser and each of its officers, directors, members, managers and employees from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Investment Advisory Agreement, except where attributable to gross negligence, willful misconduct, bad faith or reckless disregard of such person’s duties under the Investment Advisory Agreement. These protections may lead the Adviser to act in a riskier manner when acting on our behalf than it would when acting for its own account.

We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses.

A number of entities compete with us to make the types of investments that we plan to make. We will compete with public and private funds, other BDCs, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity and hedge funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, we believe some of our competitors may have 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 imposes on us as a BDC or the source-of-income, asset diversification and distribution requirements we must satisfy to maintain our RIC qualification. The competitive pressures we face may have a material adverse effect on our business, financial condition, results of operations and cash flows. As a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we may not be able to identify and make investments that are consistent with our investment objective.

With respect to the investments we make, we do not seek to compete based primarily on the interest rates we offer, and we believe that some of our competitors may make loans with interest rates that will be lower than the rates we offer. With respect to all investments, we may lose some 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, lower yields and increased risk of credit loss.

We will be subject to corporate-level U.S. federal income tax if we are unable to qualify or maintain our qualification as a RIC under Subchapter M of the Code.

To qualify as a RIC under Subchapter M of the Code, we must meet certain source-of-income, asset diversification and distribution requirements. The source-of-income 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 distribution requirement for a RIC is satisfied if we distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders on an annual basis. Because we intend to incur debt, we will be 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 qualify as a RIC. If we are unable to obtain cash from other sources, we may fail to qualify as a RIC and, thus, may be subject to corporate-level U.S. federal income tax. To qualify as a RIC, we must

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also meet certain asset diversification requirements at the end of each calendar quarter. Failure to meet these tests may result in our having to dispose of certain investments quickly in order to prevent the loss of our qualification as a RIC. Because most of our investments will be in private or thinly traded public companies, any such dispositions may be made at disadvantageous prices and may result in substantial losses. If we fail to qualify as a RIC for any reason and become subject to corporate income tax, the resulting corporate income taxes could substantially reduce our net assets, the amount of income available for distributions to our stockholders and the amount of funds available for new investments. Such a failure would have a material adverse effect on us and our stockholders. See “Business—Material U.S. Federal Income Tax Considerations—Taxation as a RIC.”

We may need to raise additional capital to grow because we must distribute most of our income.

We may need additional capital to fund new investments and grow our portfolio of investments. We intend to access the capital markets periodically to issue debt or equity securities or borrow from financial institutions in order to obtain such additional capital. Unfavorable economic conditions could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. A reduction in the availability of new capital could limit our ability to grow. In addition, we will be required to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders to maintain our qualification as a RIC. As a result, these earnings will not be available to fund new investments. An inability on our part to access the capital markets successfully could limit our ability to grow our business and execute our business strategy fully and could decrease our earnings, if any, which would have an adverse effect on the value of our securities.

You may not receive distributions, or 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. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this annual report on Form 10-K. Due to the asset coverage test applicable to us under the 1940 Act as a BDC, we may be limited in our ability to make distributions. All distributions will be made at the discretion of our board of directors and will depend on our earnings, financial condition, maintenance of RIC status, compliance with applicable BDC, SBA regulations (if applicable) and such other factors as our board of directors may deem relative from time to time. We cannot assure you that we will make distributions to our stockholders in the future.

We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income.

For U.S. federal income tax purposes, we will include in income certain amounts that we have not yet received in cash, such as the accrual of OID. This may arise if we receive warrants in connection with the making of a loan and in other circumstances, or through contracted PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan term. Such OID, which could be significant relative to our overall investment activities, and increases in loan balances as a result of contracted PIK arrangements will be included in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash.

Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to maintain our qualification as a RIC. In such a case, 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 investment originations to meet these distribution requirements. If we are not able to obtain such cash from other sources, we may fail to qualify as a RIC and thus be subject to corporate-level U.S. federal income tax. See “Business— Taxation as a RIC.”

We may in the future choose to pay dividends in our own stock, in which case you may be required to pay tax in excess of the cash you receive.

We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable in cash or in shares of stock at the election of stockholders are treated as taxable dividends. The Internal Revenue Service has issued private rulings indicating that this rule will apply even if the total amount of cash that may be distributed is limited to no more than 20% of the total distribution. Under these rulings, if too many stockholders elect to receive their distributions in cash, each such stockholder would receive a pro rata share of the total cash to be distributed and would receive the remainder of their distribution in shares of stock. If we decide to make any distributions consistent with these rulings that are payable in part in our stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is

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properly designated as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

If we form an SBIC subsidiary, such subsidiary may be unable to make distributions to us that could be necessary for us to maintain RIC status.

In order for us to continue to qualify for RIC tax treatment and to minimize corporate-level U.S. federal income taxes, we are required to distribute substantially all of our net taxable income and net capital gain income, including income of any SBIC subsidiary that we form. If we form an SBIC subsidiary, we expect that we would be partially dependent on the SBIC subsidiary for cash distributions to enable us to meet the RIC distribution requirements. The SBIC subsidiary may be limited by the Small Business Investment Act of 1958, and SBA regulations governing SBICs, from making certain distributions to us that may be necessary to maintain our status as a RIC. We may have to request a waiver of the SBA’s restrictions for the SBIC subsidiary to make certain distributions to maintain our RIC status. We cannot assure you that the SBA will grant such waiver and if the SBIC subsidiary is unable to obtain a waiver, compliance with the SBA regulations may result in loss of RIC tax treatment and a consequent imposition of corporate-level U.S. federal income tax on us.

Regulations governing our operation as a BDC affect our ability to, and the way in which we raise additional capital. As a BDC, 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 BDC to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of our 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 at a time when such sales may be disadvantageous to us in order to repay a portion of our indebtedness. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. If we issue senior securities, we will be exposed to typical risks associated with leverage, including an increased risk of loss.

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 then-current net asset value per share of our common stock if our board of directors determines that such sale is in our best interests. On November 6, 2014, our stockholders voted to allow us to issue common stock at a price below net asset value per share for the period ending on the earlier of the one year anniversary of the date of the Company’s 2014 Annual Meeting of Stockholders and the date of the Company’s 2015 Annual Meeting of Stockholders, which is expected to be held in November 2015. Our stockholders did not specify a maximum discount below net asset value at which we are able to issue our common stock, although the number of shares sold in each offering may not exceed 25% of our outstanding common stock immediately prior to such sale. In addition, we cannot issue shares of our common stock below net asset value unless our board of directors determines that it would be in our and our stockholders’ best interests to do so. Sales of common stock at prices below net asset value per share dilute the interests of existing stockholders, have the effect of reducing our net asset value per share and may reduce our market price per share. In addition, continuous sales of common stock below net asset value may have a negative impact on total returns and could have a negative impact on the market price of our shares of common stock. If we raise additional funds by issuing 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 may experience dilution. In addition, neither Stifel nor the Cyrus Funds are subject to these restrictions and may sell their respective shares of our common stock at a per share price that is below net asset value per share, which may negatively affect the prevailing market prices for our common stock and our ability to raise additional capital.

Pending legislation may allow us to incur additional leverage.

As a BDC, under the 1940 Act we generally are not permitted to incur indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets). Recent legislation introduced in the U.S. House of Representatives, if passed, would modify this section of the 1940 Act and increase the amount of debt that BDCs may incur by reducing the asset coverage percentage from 200% to 150%. As a result, we may be able to incur additional indebtedness in the future and therefore your risk of an investment in us may increase.

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Because we finance our investments with borrowed money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us.

The use of leverage magnifies the potential for gain or loss on amounts invested. The use of leverage is generally considered a speculative investment technique and increases the risks associated with investing in our securities. If we continue to use leverage to partially finance our investments through banks, insurance companies and other lenders, you will experience increased risks of investment in our common stock. Lenders of these funds 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. As of June 30, 2015, substantially all of our assets were pledged as collateral under the Financing Facility. In addition, under the terms of the Financing Facility and any borrowing facility or other debt instrument we may enter into, we are likely to be required to use the net proceeds of any investments that we sell to repay a portion of the amount borrowed under such facility or instrument before applying such net proceeds to any other uses. 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, thereby magnifying losses or eliminating our stake in a leveraged investment. Similarly, any decrease in our revenue or income will cause our net income to decline more sharply than it would have had we not borrowed. Such a decline would also negatively affect our ability to make distributions with respect to our common stock or preferred stock. Our ability to service any debt will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as the base management fee payable to the Adviser will be payable based on the value of our gross assets, including those assets acquired through the use of leverage, the Adviser 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 our use of leverage, including interest expenses and any increase in the base management fee payable to the Adviser.

As a BDC, 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 (other than potential leverage in future SBIC subsidiaries, should we receive an SBIC license, subject to exemptive relief) and any preferred stock that we may issue in the future, of at least 200%. If this ratio declines below 200%, we will not be able to incur additional debt and could be required to sell a portion of our investments to repay some debt when it is otherwise disadvantageous for us to do so. This 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 the 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.

Illustration. The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual results may be higher or lower than those appearing below.

Assumed Return on Our Portfolio⁽¹⁾

(net of expenses)

	(10.0)%			(5.0)%			0.0%			5.0%			10.0%
Corresponding net return to common stockholder		(21.8)	%		(12.6)	%		(3.4)	%		5.8	%		15.8	%

(1) Assumes $362.8 million in total assets, $165.8 million in debt outstanding, $197.0 million in net assets, and an average cost of funds of 4.00%. Actual interest payments may be different.

In addition, our debt facilities may impose financial and operating covenants that restrict our business activities, including limitations that hinder our ability to finance additional loans and investments or to make the distributions required to maintain our qualification as a RIC under the Code.

We may default under the Financing Facility or any future borrowing facility we enter into or be unable to amend, repay or refinance any such facility on commercially reasonable terms, or at all, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In the event we default under the Financing Facility or any other future borrowing facility, our business could be adversely affected as we may be forced to sell a portion of our investments quickly and prematurely at prices that may be disadvantageous to us in order to meet our outstanding payment obligations and/or support working capital requirements under the Financing Facility or such future borrowing facility, any of which would have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, following any such default, the agent for the lenders under the Financing Facility or such future borrowing facility could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed and the timing of such disposition, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.

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Provisions in the Financing Facility or any other future borrowing facility may limit our discretion in operating our business.

The Financing Facility is, and any future borrowing facility may be, backed by all or a portion of our loans and securities on which the lenders will or, in the case of a future facility, may have a security interest. We may pledge up to 100% of our assets and may grant a security interest in all of our assets under the terms of any debt instrument we enter into with lenders. We expect that any security interests we grant will be set forth in a pledge and security agreement and evidenced by the filing of financing statements by the agent for the lenders. In addition, we expect that the custodian for our securities serving as collateral for such loan would include in its electronic systems notices indicating the existence of such security interests and, following notice of occurrence of an event of default, if any, and during its continuance, will only accept transfer instructions with respect to any such securities from the lender or its designee. If we were to default under the terms of any debt instrument, the agent for the applicable lenders would be able to assume control of the timing of disposition of any or all of our assets securing such debt, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, any security interests as well as negative covenants under the Financing Facility or any other borrowing facility may limit our ability to create liens on assets to secure additional debt and may make it difficult for us to restructure or refinance indebtedness at or prior to maturity or obtain additional debt or equity financing. In addition, if our borrowing base under the Financing Facility or any other borrowing facility were to decrease, we would be required to secure additional assets in an amount equal to any borrowing base deficiency. In the event that all of our assets are secured at the time of such a borrowing base deficiency, we could be required to repay advances under the Financing Facility or any other borrowing facility or make deposits to a collection account, either of which could have a material adverse impact on our ability to fund future investments and to make stockholder distributions.

In addition, under the Financing Facility or any future borrowing facility we will be subject to limitations as to how borrowed funds may be used, which may include restrictions on geographic and industry concentrations, loan size, payment frequency and status, average life, collateral interests and investment ratings, as well as regulatory restrictions on leverage, which may affect the amount of funding that may be obtained. There may also be certain requirements relating to portfolio performance, including required minimum portfolio yield and limitations on delinquencies and charge-offs, a violation of which could limit further advances and, in some cases, result in an event of default. An event of default under the Financing Facility or any other borrowing facility could result in an accelerated maturity date for all amounts outstanding thereunder, which could have a material adverse effect on our business and financial condition. This could reduce our revenues and, by delaying any cash payment allowed to us under the Financing Facility or any other borrowing facility until the lenders have been paid in full, reduce our liquidity and cash flow and impair our ability to grow our business and maintain our qualification as a RIC.

Because we borrow money to make our investments, if market interest rates were to increase, our cost of capital could increase, which could reduce our net investment income.

Because 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 would 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 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. There is no limit on our ability to enter derivative transactions.

In addition, a rise in the general level of interest rates typically leads to higher interest rates applicable to our debt investments. Accordingly, an increase in interest rates may result in an increase of the amount of our pre-incentive fee net investment income and, as a result, an increase in incentive fees payable to the Adviser.

We are exposed to risks associated with changes in interest rates including potential effects on our cost of capital and net investment income.

General interest rate fluctuations and changes in credit spreads on floating rate loans may have a substantial negative impact on our investments and investment opportunities and, accordingly, may have a material adverse effect on our rate of return on invested capital. In addition, an increase in interest rates would make it more expensive to use debt to finance our investments. Decreases in credit spreads on debt that pays a floating rate of return would have an impact on the income generation of our floating rate assets. Trading prices for debt that pays a fixed rate of return tend to fall as interest rates rise. Trading prices tend to fluctuate more for fixed rate securities that have longer maturities. Although we have no policy governing the maturities of our investments, under current market conditions we expect that we will invest in a portfolio of debt generally having maturities of up to 6 years. This means that we will be subject to greater risk (other things being equal) than an entity investing solely in shorter-term securities.

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Uncertainty relating to the LIBOR calculation process may adversely affect the value of our portfolio of LIBOR-indexed, floating-rate debt securities.

Concerns have been publicized that some of the member banks surveyed by the British Bankers’ Association, or BBA, in connection with the calculation of LIBOR across a range of maturities and currencies may have been under-reporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivatives positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks have entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations and reviews of the framework for the setting of LIBOR by regulators and governmental authorities in various jurisdictions are ongoing. In this regard, the administration of LIBOR is now the responsibility of NYSE Euronext Rates Administration Limited.

Actions by the LIBOR Administrator, regulators or law enforcement agencies may result in changes to the manner in which LIBOR is determined. Uncertainty as to the nature of such potential changes may adversely affect the market for LIBOR-based securities, including our portfolio of LIBOR-indexed, floating-rate debt securities. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities or the value of our portfolio of LIBOR-indexed, floating-rate debt securities.

If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a BDC or be precluded from investing according to our current business strategy.

As a BDC, we may not acquire any assets other than “qualifying assets” unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets are qualifying assets.

We believe that most of the investments that we may acquire in the future will constitute qualifying assets. However, we may be precluded from investing in what we believe to be attractive investments if such investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions applicable to BDCs. As a result of such violation, specific rules under the 1940 Act could prevent us, for example, from making follow-on investments in existing portfolio companies (which could result in the dilution of our position) or could require us to dispose of investments at inappropriate times in order to come into compliance with the 1940 Act. If we need to dispose of such investments quickly, it could be difficult to dispose of such investments on favorable terms. We may not be able to find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss. Any such outcomes would have a material adverse effect on our business, financial condition, results of operations and cash flows.

If we do not maintain our status as a BDC, we would be subject to regulation as a registered closed-end investment company under the 1940 Act. As a registered closed-end investment company, we would be subject to substantially more regulatory restrictions under the 1940 Act, which would significantly decrease our operating flexibility.

Most of our portfolio investments are recorded at fair value as determined in good faith by our board of directors and, as a result, there may be uncertainty as to the value of our portfolio investments.

Most of our portfolio investments will take the form of securities that are not publicly traded. The fair value of loans, securities and other investments that are not publicly traded may not be readily determinable, and we will value these investments at fair value as determined in good faith by our board of directors, including to reflect significant events affecting the value of our investments. Most, if not all, of our investments (other than cash and cash equivalents) will be classified as Level 3 under the Financial Accountant Standards Board (“FASB”) Accounting Standards Codification Topic 820: Fair Value Measurements and Disclosures (“ASC 820”). This means that our portfolio valuations will be based on unobservable inputs and our own assumptions about how market participants would price the asset or liability in question. Inputs into the determination of fair value of our portfolio investments require significant management judgment or estimation. Even if observable market data are available, such information may be the result of consensus pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information. We have retained the services of independent service providers to review the valuation of these loans and securities. The types of factors that the board of directors may take into account in determining the fair value of our investments generally include, as appropriate, comparison to publicly traded securities including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio company, 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 and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ

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materially from the values that would have been used if a ready market for these loans and 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 loans and securities.

We adjust quarterly the valuation of our portfolio to reflect our board of directors’ determination of the fair value of each investment in our portfolio. Any changes in fair value are recorded in our statement of operations as net change in unrealized appreciation or depreciation.

We may experience fluctuations in our quarterly operating results.

We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the loans and debt securities we acquire, the default rate on such loans and 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. In light of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

We are an “emerging growth company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are and we will remain an “emerging growth company” as defined in the JOBS Act until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the completion of our initial public offering, (ii) in which we have total annual gross revenue of at least $1.0 billion, or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30^th, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. For so long as we remain an “emerging growth company” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We cannot predict if investors will find our common stock less attractive because we will rely on some or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We will take advantage of the extended transition period for complying with new or revised accounting standards, which may make it more difficult for investors and securities analysts to evaluate us since our financial statements may not be comparable to companies that comply with public company effective dates and may result in less investor confidence.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock.

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm (when undertaken, as noted below), may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

We are required to disclose changes made in our internal control and procedures on a quarterly basis and our management is required to assess the effectiveness of these controls annually. However, for as long as we are an “emerging growth company” under the recently enacted JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404. We could be an emerging growth company for up to five years. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation.

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Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when we need it.

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

New or amended laws or regulations governing our operations may adversely affect our business.

We and our portfolio companies will be subject to regulation by laws at the U.S. federal, state and local levels. These laws and regulations, as well as their interpretation, may change from time to time, and new laws, regulations and interpretations may also come into effect. Any such new or changed laws or regulations could have a material adverse effect on our business.

Additionally, changes to the laws and regulations governing our operations related to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth in this annual report on Form 10-K and our filings with the SEC, and may shift our investment focus from the areas of expertise of the Adviser to other types of investments in which the Adviser may have little or no expertise or experience. Any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.

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, except as otherwise provided in the 1940 Act, to modify or waive our investment objective or certain of our operating policies and strategies without prior notice 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 BDC. We cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results and the market price of our common stock. Nevertheless, any such changes could adversely affect our business and impair our ability to make distributions to our stockholders.

If we receive qualification from the SBA to be licensed as an SBIC but we are unable to comply with SBA regulations thereafter, our business plan and investment objective could be adversely affected.

We intend to apply for license to form an SBIC subsidiary. The application is subject to SBA approval and we can make no assurances that the SBA will approve our application. If we receive this qualification, we will become subject to SBA regulations that may constrain our activities. We may need to make allowances in our investment activity to comply with SBA regulations. In addition, SBA regulations may impose parameters on our business operations and investment objectives that are different from those we otherwise would have if we were not subject to these regulations. Failure to comply with the SBA regulations could result in the loss of the SBIC license and the resulting inability to participate in the SBA-sponsored debenture program. The SBA also limits the maximum amount that may be borrowed by any single SBIC. The SBA also prohibits, without prior SBA approval, a “change of control” of an SBIC or transfers that would result in any person (or a group of persons acting in concert) owning 10% or more of a class of capital stock of a licensed SBIC. A “change of control” is any event that would result in the transfer of the power, direct or indirect, to direct the management and policies of an SBIC, whether through ownership, contractual arrangements or otherwise. To the extent that we obtain an SBIC license, this would prohibit a change of control of our SBIC subsidiary without prior SBA approval. If we are unable to comply with SBA regulations, our business plan and growth strategy could be materially adversely affected.

The Adviser can resign as the Adviser or administrator upon 60 days’ notice and we may not be able to find a suitable replacement within that time, or at all, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

The Adviser has the right under the Investment Advisory Agreement to resign as the Adviser at any time upon not less than 60 days’ written notice, whether we have found a replacement or not. Similarly, the Adviser has the right under the Administration Agreement to resign at any time upon not less than 60 days’ written notice, whether we have found a replacement or not. If the Adviser were to resign, we may not be able to find a new investment adviser or administrator 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

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as our ability to pay distributions to our stockholders 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 or administrative activities, as applicable, 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 the Adviser. 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 business, financial condition, results of operations and cash flows.

Cyrus Capital can terminate the Services Agreement with the Adviser under certain conditions and we may not be able to find suitable replacement resources, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

Our Services Agreement with Cyrus Capital is subject to an initial five-year period, which will expire on December 16, 2018. However, Cyrus Capital may terminate the Services Agreement under certain circumstances prior to the expiration of its fifth anniversary whether we have found a replacement for the resources under the agreement or not. If Cyrus Capital were to terminate the Services Agreement, we may not be able to hire internal investment professionals with similar expertise and ability to provide the same or equivalent services on acceptable terms. 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 to our stockholders 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 or administrative activities, as applicable, 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 the investment professionals of Cyrus Capital. Even if we are able to retain comparable professionals, whether internal or external, the integration of such investment professionals and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.

We are highly dependent on information systems, and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to make distributions to our stockholders.

Our business is highly dependent on the communications and information systems of the Adviser, which are provided to the Adviser by Cyrus Capital pursuant to the Services Agreement directly or through third party service providers. Any failure or interruption of such systems, including as a result of the termination of the Services Agreement or an agreement with any such third party service provider, could cause delays or other problems in our activities. This, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to make distributions to our stockholders.

The current state of the economy and financial markets increases the likelihood of adverse effects on our financial position and results of operations.

The broader economic fundamentals of the United States economy remain uncertain. Unemployment levels remain elevated and other economic fundamentals remain depressed. In the event that the United States economic performance contracts, it is likely that the financial results of middle market companies, like those in which we invest, could experience deterioration or limited growth, which could ultimately lead to difficulty in meeting their debt service requirements and an increase in defaults. Consequently, we can provide no assurance that the performance of certain of our portfolio companies will not be negatively impacted by economic or other conditions, which could also have a negative impact on our future results.

The current worldwide financial market situation, as well as various social and political tensions in the United States and around the world, may continue to contribute to increased market volatility, may have long-term effects on the United States and worldwide financial markets, and may cause further economic uncertainties or deterioration in the United States and worldwide. Since 2010, several European Union (“EU”) countries, including Greece, Ireland, Italy, Spain, and Portugal, have faced budget issues, some of which may have negative long-term effects for the economies of those countries and other EU countries. There is continued concern about national-level support for the Euro and the accompanying coordination of fiscal and wage policy among European Economic and Monetary Union member countries. In addition, the fiscal policy of foreign nations, such as China, may have a severe impact on the worldwide and United States financial markets. Moreover, there are concerns that the recent economic slowdown in China could have a negative impact on markets throughout the world. We do not know how long the financial markets will continue to be affected by these events and cannot predict the effects of these or similar events in the future on the United States economy and securities markets or on our investments. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in doing so.

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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 will be required by Maryland law and our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to stockholder 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 that 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 that otherwise might be in their best interest. The cost of any such reclassification would be borne by our common stockholders. The issuance of preferred shares convertible into shares of common stock may 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. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, 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.

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.

Our board of directors is divided into three classes of directors serving staggered terms. A classified board may render a change in control of us or removal of our incumbent management more difficult. The Maryland General Corporation Law and our charter and bylaws contain additional provisions that may discourage, delay or make more difficult a change in control of CM Finance Inc 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 of directors, including approval by a majority of our independent directors. If the resolution exempting business combinations is repealed or our board of directors 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.

Risks Relating to our Investments

Economic recessions or downturns could adversely affect our portfolio companies, leading to defaults on our investments, which would harm our operating results.

Many of the portfolio companies in which we expect to make investments, including those currently included in our portfolio, are likely to be susceptible to economic slowdowns or recessions and may be unable to repay our loans during such periods. In such event, the number of our non-performing assets is likely to increase and the value of our portfolio is likely to decrease during such periods. Adverse economic conditions may decrease the value of collateral securing some of our loans and debt securities and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could 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 prevent us from increasing our investments and harm our operating results.

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 assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the loans and 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.

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We may hold the loans and debt securities of leveraged companies that may, due to the significant operating volatility typical of such companies, enter into bankruptcy proceedings, and we could lose all or part of our investment, which would harm our operating results.

Investment in leveraged companies involves a number of significant risks. Leveraged companies in which we invest may have limited financial resources and may be unable to meet their obligations under their loans and debt securities that we hold. Such developments may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees that we may have obtained in connection with our investment. Smaller leveraged companies also may have less predictable operating results and may require substantial additional capital to support their operations, finance their expansion or maintain their competitive position.

Leveraged companies may also experience bankruptcy or similar financial distress. The bankruptcy process has a number of significant inherent risks. Many events in a bankruptcy proceeding are the product of contested matters and adversarial proceedings and are beyond the control of the creditors. A bankruptcy filing by a portfolio company may adversely and permanently affect that company. If the proceeding is converted to a liquidation, the value of the portfolio company may not equal the liquidation value that was believed to exist at the time of the investment. The duration of a bankruptcy proceeding is also difficult to predict, and a creditor’s return on investment can be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes effective. The administrative costs in connection with a bankruptcy proceeding are frequently high and would be paid out of the debtor’s estate prior to any return to creditors. Because the standards for classification of claims under bankruptcy law are vague, our influence with respect to the class of securities or other obligations we own may be lost by increases in the number and amount of claims in the same class or by different classification and treatment. In the early stages of the bankruptcy process, it is often difficult to estimate the extent of, or even to identify, any contingent claims that might be made. In addition, certain claims that have priority by law (for example, claims for taxes) may be substantial.

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 assets. This could trigger cross-defaults under other agreements and jeopardize such portfolio company’s ability to meet its obligations under the loans or debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.

Credit risk is the potential loss we may incur from a failure of a company to make payments according to the terms of a contract. We are subject to credit risk because of our strategy of investing in the debt of leveraged companies and our involvement in derivative instruments. Our exposure to credit risk on our investments is limited to the fair value of the investments. Our derivative contracts are executed pursuant to an International Swaps and Derivatives Association master agreement that we currently have in place with UBS with respect to the Financing Facility. Any material exposure due to counter-party risk under the Financing Facility could have a material adverse effect on our operating results.

There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.

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 may have actually provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize our debt holding and subordinate all or a portion of our claim to that of other creditors. In addition, lenders can be subject to lender liability claims for actions taken by them where they become too involved in the borrower’s business or exercise control over the borrower. It is possible that we could become subject to a lender’s liability claim, including as a result of actions taken if we actually render significant managerial assistance.

Our investments in private and middle-market portfolio companies are risky, and we could lose all or part of our investment.

Investment in private and middle-market companies involves a number of significant risks. Generally, little public information exists about these companies, and we will rely on the ability of the Adviser’s investment professionals to obtain adequate information to evaluate the potential returns and risks 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. Middle-market companies may have limited financial resources and may be unable to meet their obligations under their loans and 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 our realizing any guarantees we may have obtained in connection with our investment. In addition, such companies 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. Additionally, middle-market companies are more likely to depend on the management talents and efforts of a small group of persons. Therefore, the death,

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disability, resignation or termination of one or more of these persons could have a material adverse impact on one or more of the portfolio companies we invest in and, in turn, on us. Middle-market companies also may be parties to litigation and may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence. In addition, our executive officers, directors and investment adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in portfolio companies.

Our investments may include PIK interest.

To the extent that we invest in loans with a PIK interest component and the accretion of PIK interest constitutes a portion of our income, we will be exposed to risks associated with the requirement to include such non-cash income in taxable and accounting income prior to receipt of cash, including the following:

• loans with a PIK interest component may have higher interest rates that reflect the payment deferral and increased credit risk associated with these instruments, and PIK instruments generally represent a significantly higher credit risk than coupon loans;

• loans with a PIK interest component may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral;

• the deferral of PIK interest increases the loan-to-value ratio, which is a fundamental measure of loan risk; and

• even if the accounting conditions for PIK interest accrual are met, the borrower could still default when the borrower’s actual payment is due at the maturity of the loan.

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 transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. Moreover, 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.

The success of our hedging transactions will depend on our ability to correctly predict movements in currencies and interest rates. Therefore, while we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. 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.

The lack of liquidity in our investments may adversely affect our business.

All of our assets may be invested in illiquid loans and securities, and a substantial portion of our investments in leveraged companies will be subject to legal and other restrictions on resale or will otherwise be less liquid than more broadly traded public securities. The illiquidity of these 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. Also, as noted above, we may be limited or prohibited in our ability to sell or otherwise exit certain positions in our initial portfolio as such a transaction could be considered a joint transaction prohibited by the 1940 Act.

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Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments, reducing our net asset value through increased net unrealized depreciation.

As a BDC, 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 our board of directors. As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments:

• available current market data, including relevant and applicable market trading and transaction comparables;

• applicable market yields and multiples;

• security covenants;

• call protection provisions;

• information rights;

• the nature and realizable value of any collateral;

• the portfolio company’s ability to make payments, its earnings and discounted cash flows and the markets in which it does business;

• comparisons of financial ratios of peer companies that are public;

• comparable merger and acquisition transactions; and

• principal market and enterprise values.

When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our valuation. We record decreases in the market values or fair values of our investments as unrealized depreciation. Declines in prices and liquidity in the corporate debt markets may result in significant net unrealized depreciation in our portfolio. The effect of all of these factors on our portfolio may reduce our net asset value by increasing net unrealized depreciation in our portfolio. Depending on market conditions, we could incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.

We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. Beyond the asset diversification requirements associated with our qualification as a RIC under the Code, we do not have fixed guidelines for diversification. To the extent that we assume large positions in the securities of a small number of issuers or our investments are concentrated in relatively few industries, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market’s assessment of the issuer. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company.

Our portfolio may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated.

Our portfolio may be concentrated in a limited number of industries. A downturn in any particular industry in which we are invested could significantly impact the aggregate returns we realize.

As of June 30, 2015, our investments in the oil and gas, oilfield and pipeline industries represented approximately 18.21% of the fair value of our portfolio, our investments in the telecommunications industry represented approximately 14.92% of the fair value of our portfolio, and our investments in the healthcare-products/services industry represented approximately 12.58% of the fair value of our portfolio. If an industry in which we have significant investments suffers from adverse business or economic conditions, as these industries have to varying degrees, a material portion of our investment portfolio could be affected adversely, which, in turn, could adversely affect our financial position and results of operations.

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Our investments in the oil and gas industry face considerable uncertainties including substantial regulatory challenges.

Our investments in portfolio companies that operate in the oil and gas, oilfield and pipeline industries represent approximately 18.21% of our total portfolio as of June 30, 2015. The revenues, income (or losses) and valuations of oil and gas companies can fluctuate suddenly and dramatically due to any one or more of the following factors:

Commodity Pricing Risk. In general, commodity prices directly affect oil and gas companies, especially for those who own the underlying commodity. In addition, the volatility of commodity prices can affect other oil and gas companies due to the impact of prices on the volume of commodities produced, transported, processed, stored or distributed and on the cost of fuel for power generation companies. The volatility of commodity prices can also affect oil and gas companies’ ability to access the capital markets in light of market perception that their performance may be directly tied to commodity prices. Historically, energy commodity prices have been cyclical and exhibited significant volatility as evident in the recent and sudden decline in oil prices during the second half of 2014.

Regulatory Risk. Changes in the regulatory environment could adversely affect the profitability of oil and gas companies. Federal, state and local governments heavily regulate the businesses of oil and gas companies in diverse matters, such as the way in which assets are constructed, maintained and operated and the prices oil and gas companies may charge for their products and services. Such regulation can change over time in scope and intensity.

Production Risk. The volume of crude oil, natural gas or other energy commodities available for producing, transporting, processing, storing, distributing or generating power may materially impact the profitability of energy companies. A significant decrease in the production of natural gas, crude oil, coal or other energy commodities, due to the decline of production from existing facilities, import supply disruption, depressed commodity prices, political events, OPEC actions or otherwise, could reduce revenue and operating income or increase operating costs of energy companies and, therefore, their ability to pay debt or dividends.

Demand Risk. A sustained decline in demand for crude oil, natural gas and refined petroleum products could materially affect revenues and cash flows of energy companies. Factors that could lead to a decrease in market demand include a recession or other adverse economic conditions, increases in the market price of the underlying commodity, higher taxes or other regulatory actions that increase costs, or shifts in consumer demand for such products.

Depletion and Exploration Risk. Oil and gas companies’ commodities naturally deplete over time. Depletion could have a material adverse impact on such company’s ability to maintain its revenue. Further, estimates of reserves may not be accurate and, even if accurate, reserves may not be produced profitably. In addition, exploration of energy resources, especially of oil and natural gas, is inherently risky and requires large amounts of capital.

Weather Risk. Unseasonable extreme weather patterns could result in significant volatility in demand for energy and power or may directly affect the operations of individual companies. This weather-related risk may create fluctuations in earnings of energy companies.

Operational Risk. Oil and gas companies are subject to various operational risks, such as failed drilling or well development, unscheduled outages, underestimated cost projections, unanticipated operation and maintenance expenses, failure to obtain the necessary permits to operate and failure of third-party contractors to perform their contractual obligations.

Competition Risk. The oil and gas companies in which we may invest will face substantial competition in acquiring properties, enhancing and developing their assets, marketing their commodities, securing trained personnel and operating their properties. Many of their competitors may have financial and other resources that substantially exceed their resources.

Valuation Risk. The valuation of our holdings in oil and gas portfolio companies is subject to uncertainties inherent in estimating quantities of reserves of oil, natural gas and coal and in projecting future rates of production and the timing of development expenditures, which are dependent upon many factors beyond our control. The estimates rely on various assumptions, including, but not limited to, commodity prices, operating expenses, capital expenditures and the availability of funds, and are therefore inherently imprecise indications of future net cash flows. Actual future production, cash flows, taxes, operating expenses, development expenditures and quantities of recoverable reserves may vary substantially from those assumed in the estimates. Any significant variance in these assumptions could materially affect the value of our investments in oil and gas companies.

Climate Change. There may be evidence of global climate change. Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change. For example, the needs of customers of oil and gas companies vary with weather conditions, primarily temperature and humidity. To the extent climate changes affect weather conditions, energy use could increase or decrease depending on the duration and magnitude of any changes. Increased oil and gas use

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due to weather changes may require additional investments by our portfolio companies in more pipelines and other infrastructure to serve increased demand. A decrease in oil and gas use due to weather changes may affect our portfolio companies’ financial condition through decreased revenues. Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stresses, including service interruptions. Potential lawsuits against or taxes or other regulatory costs imposed on greenhouse gas emitters could also affect oil and gas companies, based on links drawn between greenhouse gas emissions and climate change.

Our investments in the telecommunications industry face considerable uncertainties including substantial regulatory challenges.

Our investments in portfolio companies that operate in the telecommunications industry represent approximately 14.92% of our total portfolio as of June 30, 2015. Portfolio companies in the telecommunications sector are subject to many risks, including the negative impact of regulation, a competitive marketplace, difficulty in obtaining financing, rapid obsolescence, and agreements linking future rate increases to inflation or other factors not directly related to the active operating profits of the portfolio company. Adverse economic, business, or regulatory developments affecting the telecommunications sector could have a negative impact on the value of our investments in portfolio companies operating in this industry, and therefore could negatively impact our business and results of operations.

Our investments in the healthcare industry face considerable uncertainties including substantial regulatory challenges.

Our investments in portfolio companies that operate in the healthcare industry represent approximately 12.58% of our total portfolio as of June 30, 2015. Our investments in the healthcare sector are subject to substantial risks. The laws and rules governing the business of healthcare companies and interpretations of those laws and rules are subject to frequent change. Broad latitude is given to the agencies administering those regulations. Existing or future laws and rules could force our portfolio companies engaged in healthcare to change how they do business, restrict revenue, increase costs, change reserve levels and change business practices.

Healthcare companies often must obtain and maintain regulatory approvals to market many of their products, change prices for certain regulated products and consummate some of their acquisitions and divestitures. Delays in obtaining or failing to obtain or maintain these approvals could reduce revenue or increase costs. Policy changes on the local, state and federal level, such as the expansion of the government’s role in the healthcare arena and alternative assessments and tax increases specific to the healthcare industry or healthcare products as part of federal health care reform initiatives, could fundamentally change the dynamics of the healthcare industry.

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, including exercising warrants, options or convertible securities that were acquired in the original or subsequent financing; in seeking to:

• increase or maintain in whole or in part our position as a creditor or our equity ownership percentage in a portfolio company;

• preserve or enhance the value of our investment.

We have discretion to make follow-on investments, subject to the availability of capital resources. Failure on our part 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 level of risk, because we prefer other opportunities or because we are inhibited by compliance with BDC requirements of the 1940 Act or the desire to maintain our qualification as a RIC.

Because we generally do not hold controlling equity interests in our portfolio companies, we may not be able 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.

We do not hold controlling equity positions in any of the portfolio companies included in our portfolio and, although we may do so in the future, we do not currently intend to hold controlling equity positions in our portfolio companies. As a result, we will be 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 expect to 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.

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Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and ability to make stockholder distributions and result in a decline in the market price of our shares.

We are subject to the risk that the debt investments we make in portfolio companies may be repaid prior to maturity. We expect that our investments will generally allow for repayment at any time subject to certain penalties. When this occurs, we intend to generally reinvest these proceeds in temporary investments, pending their future investment in accordance with our investment strategy. These temporary investments will typically have substantially lower yields than the debt being prepaid, and we could experience significant delays in reinvesting these amounts. Any future investment may also be at lower yields than the debt that was repaid. As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elects to prepay amounts owed to us. Additionally, prepayments could negatively impact our ability to make, or the amount of, stockholder distributions with respect to our common stock, which could result in a decline in the market price of our shares.

Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.

We intend to invest a portion of our capital in second lien and subordinated loans issued by our portfolio companies. The portfolio companies usually have, or may be permitted to incur, other debt that ranks equally with, or senior to, the loans 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 loans 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 senior creditors, a portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with loans in which we invest, we would have to share any distributions on an equal and ratable basis with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

Additionally, certain loans that we may make to portfolio companies may be secured on a second priority basis by the same collateral securing senior secured debt of such companies. The first priority liens on the collateral will secure the portfolio company’s obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by the portfolio company under the agreements governing the loans. The holders of obligations secured by first priority liens on the collateral will generally control the liquidation of, and be entitled to receive proceeds from, any realization of the collateral to repay their obligations in full before us. In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral. If such proceeds were not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the portfolio company’s remaining assets, if any.

We may also make unsecured loans to portfolio companies, meaning that such loans will not benefit from any interest in collateral of such companies. Liens on such portfolio companies’ collateral, if any, will secure the portfolio company’s obligations under its outstanding secured debt and may secure certain future debt that is permitted to be incurred by the portfolio company under its secured loan agreements. The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before us. In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured loan obligations after payment in full of all secured loan obligations. If such proceeds were not sufficient to repay the outstanding secured loan obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the portfolio company’s remaining assets, if any.

The rights we may have with respect to the collateral securing the loans we make to our portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements that we enter into with the holders of such senior debt. Under a typical intercreditor agreement, at any time that obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first priority liens:

• the ability to cause the commencement of enforcement proceedings against the collateral;

• the ability to control the conduct of such proceedings;

• the approval of amendments to collateral documents;

• releases of liens on the collateral; and

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• waivers of past defaults under collateral documents.

We may not have the ability to control or direct such actions, even if our rights are adversely affected.

The disposition of our investments may result in contingent liabilities.

We currently expect that substantially all of our investments will involve loans and private securities. In connection with the disposition of such an investment, we may be required to make representations about the business and financial affairs of the portfolio company typical of those made in connection with the sale of a business. We may also be required to indemnify the purchasers of such investment to the extent that any such representations turn out to be inaccurate or with respect to potential liabilities. These arrangements may result in contingent liabilities that ultimately result in funding obligations that we must satisfy through our return of distributions previously made to us.

We may not realize gains from our equity investments.

When we invest in loans and debt securities, we may acquire warrants or other equity securities of portfolio companies as well. We may also invest in equity securities directly. To the extent we hold equity investments, we will attempt to dispose of them and realize gains upon our disposition of them. However, the equity interests we receive may not appreciate in value and, may decline in value. As a result, 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.

Risks Relating to Our Common Stock

Shares of closed-end investment companies, including BDCs, may trade at a discount to their net asset value.

Shares of closed-end investment companies, including BDCs, may trade at a discount from net asset value. This characteristic of closed-end investment companies and BDCs is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our common stock will trade at, above or below net asset value. On November 6, 2014, our stockholders voted to allow us to issue common stock at a price below net asset value per share for the period ending on the earlier of the one year anniversary of the date of the Company’s 2014 Annual Meeting of Stockholders and the date of the Company’s 2015 Annual Meeting of Stockholders, which is expected to be held in November 2015. Our stockholders did not specify a maximum discount below net asset value at which we are able to issue our common stock, although the number of shares sold in each offering may not exceed 25% of our outstanding common stock immediately prior to such sale. In addition, we cannot issue shares of our common stock below net asset value unless our board of directors determines that it would be in our and our stockholders’ best interests to do so. Sales of common stock at prices below net asset value per share dilute the interests of existing stockholders, have the effect of reducing our net asset value per share and may reduce our market price per share. In addition, continuous sales of common stock below net asset value may have a negative impact on total returns and could have a negative impact on the market price of our shares of common stock. See “—Existing stockholders may incur dilution if, in the future, we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock” for a discussion of a proposal approved by our stockholders that permit us to issue shares of our common stock below net asset value.

There is a risk that you may not receive distributions or that our distributions may not grow over time and a portion of our distributions may be a return of capital.

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. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this annual report on Form 10-K. Due to the asset coverage test applicable to us under the 1940 Act as a BDC, we may be limited in our ability to make distributions.

When we make distributions, we will be required to determine the extent to which such distributions are paid out of current or accumulated earnings and profits. Distributions in excess of current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of an investor’s basis in our stock and, assuming that an investor holds our stock as a capital asset, thereafter as a capital gain.

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Stockholders may experience dilution in their ownership percentage if they do not participate in our dividend reinvestment plan.

All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally automatically reinvested in shares of our common stock. As a result, stockholders that do not participate in the dividend reinvestment plan may experience dilution over time. Stockholders who receive distributions in shares of common stock may experience accretion to the net asset value of their shares if our shares are trading at a premium and dilution if our shares are trading at a discount. The level of accretion or discount would depend on various factors, including the proportion of our stockholders who participate in the plan, the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder.

Existing stockholders may incur dilution if, in the future, we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock.

The 1940 Act prohibits us from selling shares of our common stock at a price below the current net asset value per share of such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below net asset value provided that our board of directors makes certain determinations. In this regard, on November 6, 2014, our common stockholders voted to allow us to issue common stock at a price below net asset value per share for the period ending on the earlier of the one year anniversary of the date of the Company’s 2014 Annual Meeting of Stockholders and the date of the Company’s 2015 Annual Meeting of Stockholders, which is expected to be held in November 2015. Continued access to this exception will require approval of similar proposals at future stockholder meetings. Any decision to sell shares of our common stock below the then current net asset value per share of our common stock would be subject to the determination by our board of directors that such issuance is in our and our stockholders’ best interests.

If we were to sell shares of our common stock below net asset value per share, such sales would result in an immediate dilution to the net asset value per share. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and a proportionately greater decrease in a stockholder’s interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance.

Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted; however, the example below illustrates the effect of dilution to existing stockholders resulting from the sale of common stock at prices below the net asset value of such shares. Please see “Sales of Common Stock Below Net Asset Value” for a more complete discussion of the potentially dilutive impacts of an offering at a price less than net asset value per share.

Illustration: Example of Dilutive Effect of the Issuance of Shares Below Net Asset Value. Assume that Company XYZ has 10,000,000 total shares outstanding, $150,000,000 in total assets and $50,000,000 in total liabilities. The net asset value per share of the common stock of Company XYZ is $10.00. The following table illustrates the reduction to net asset value, or net asset value, and the dilution experienced by Stockholder A following the sale of 40,000 shares of the common stock of Company XYZ at $9.50 per share, a price below its net asset value per share.

	Prior to Sale Below NAV			Following Sale Below NAV			Percentage Change
Reduction to NAV
Total Shares Outstanding		10,000,000			10,040,000			4.0	%
NAV per share	$	10.00		$	9.98			(0.2	)%
Dilution to Existing Stockholder
Shares Held by Stockholder A		10,000			10,000	(1)		0.0	%
Percentage Held by Stockholder A		1.00	%		0.96	%		(3.8	)%
Total Interest of Stockholder A in NAV	$	100,000		$	99,808			(0.2	)%

(1) Assumes that Stockholder A does not purchase additional shares in the sale of shares below NAV.

Our shares might trade at premiums that are unsustainable or at discounts from net asset value.

Shares of BDCs like us may, during some periods, trade at prices higher than their net asset value per share and, during other periods, as frequently occurs with closed-end investment companies, trade at prices lower than their net asset value per share. The perceived value of our investment portfolio may be affected by a number of factors including perceived prospects for individual companies we invest in, market conditions for common stock generally, for initial public offerings and other exit events for venture capital backed companies, and the mix of companies in our investment portfolio over time. Negative or unforeseen developments affecting the perceived value of companies in our investment portfolio could result in a decline in the trading price of our common stock relative to our net asset value per share.

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The possibility that our shares will trade at a discount from net asset value or at premiums that are unsustainable are risks separate and distinct from the risk that our net asset value per share will decrease. The risk of purchasing shares of a BDC that might trade at a discount or unsustainable premium is more pronounced for investors who wish to sell their shares in a relatively short period of time because, for those investors, realization of a gain or loss on their investments is likely to be more dependent upon changes in premium or discount levels than upon increases or decreases in net asset value per share.

Investing in our common stock may involve an above average degree of risk.

The investments we make in accordance with our investment objective may result in a higher amount of risk, and higher volatility or loss of principal, than alternative investment options. Our investments in portfolio companies may be speculative and, therefore, an investment in our common stock may not be suitable for someone with lower risk tolerance.

The market price of our common stock may fluctuate significantly.

The market price and liquidity of the market for shares of our common stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include:

• significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which is not necessarily related to the operating performance of these companies;

• changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs;

• loss of our qualification as a RIC or BDC;

• changes in earnings or variations in operating results;

• changes in the value of our portfolio of investments;

• increases in the interest rates we pay;

• changes in accounting guidelines governing valuation of our investments;

• any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;

• departure of the Adviser’s key personnel;

• change in the Adviser’s relationship with Cyrus Capital under the Services Agreement;

• change in the Adviser’s relationship with Stifel under the Stifel arrangement;

• sales of our shares by the Cyrus Funds;

• sales of our shares by Stifel;

• operating performance of companies comparable to us; and

• general economic trends and other external factors.

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.

Stifel owns approximately 16% of our total outstanding common stock, and the Cyrus Funds own, in the aggregate, approximately 28% of our total outstanding common stock. The shares issued by us to Stifel and the Cyrus Funds in connection with the CM Finance Merger are generally freely tradable in the public market, subject to the volume limitations, applicable holding periods and other provisions of Rule 144 under the Securities Act. Sales of substantial amounts of our common stock, the availability of such common stock for sale or the registration of such common stock for sale and the ability of our stockholders, including Stifel and the Cyrus Funds to sell their respective shares at a price per share that is below our then current net asset value per share 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 and negatively impact the market of our common stock.

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Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

We do not own any real estate. Our principal executive offices are currently located at 601 Lexington Avenue, 26^th Floor, New York, New York 10022. All locations are provided to us by the Adviser pursuant to the Administration Agreement and indirectly by Cyrus Capital through the Services Agreement. We believe that our office facilities are and will be suitable and adequate for our business as we contemplate conducting it.

Item 3. Legal Proceedings

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we 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.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Price Range of Common Stock

Our common stock is traded on the NASDAQ Global Select Market under the symbol “CMFN.” The following table sets forth the range of high and low sales prices of our common stock as reported on the NASDAQ Global Select Market for each fiscal quarter since our initial public offering on February 5, 2014:

	Price Range
Fiscal Year Ended	High		Low
June 30, 2016
First quarter (through September 4, 2015)	$	13.74	$	10.90
June 30, 2015
Fourth quarter		14.25		13.24
Third quarter		14.00		11.00
Second quarter		13.64		10.03
First quarter		14.82		13.02
June 30, 2014
Fourth quarter		15.45		12.86
Third quarter (from February 6, 2014)(4)		16.09		15.02

The last reported sale price for our common stock on the NASDAQ Global Select Market on September 4, 2015 was $11.26 per share. As of September 3, 2015, we had 28 shareholders of record.

Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount from net asset value per share or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset value per share will decrease. It is not possible to predict whether the common stock will trade at, above, or below net asset value per share.

Dividends

Our dividends, if any, are determined by our board of directors. We intend to elect to be treated for federal income tax purposes as a RIC under Subchapter M of the Code. If we qualify as a RIC, we will not be taxed on our investment company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to stockholders on a timely basis.

To qualify for RIC tax treatment, we must, among other things, distribute 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. Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% excise tax on such income. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. We may, in the future, make actual distributions to our stockholders of our net capital gains. 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 may 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.

We have adopted an “opt out” dividend reinvestment plan (“DRIP”) for our common stockholders. As a result, if we make cash distributions, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions.

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The following table reflects the distributions per share that our board of directors has declared on our common stock since our IPO in February 2015:

Fiscal Year Ended	Date Declared	Record Date	Payment Date	Amount Per Share
June 30, 2016
First Quarter	June 10, 2015	September 18, 2015	October 2, 2015	$	0.3469
	June 10, 2015	September 15, 2015	September 1, 2015	$	0.43
June 30, 2015
Fourth Quarter	May 6, 2015	June 18, 2015	July 5, 2015	$	0.3469
Third Quarter	January 28, 2015	March 18, 2015	April 2, 2015	$	0.3469
Second Quarter	November 6, 2014	December 18, 2014	January 5, 2015	$	0.3375
First Quarter	September 4, 2014	September 18, 2014	October 1, 2014	$	0.3375
June 30, 2014
Fourth Quarter	May 14, 2014	June 16, 2014	July 1, 2014	$	0.3375
Third Quarter	March 14, 2014	March 24, 2014	March 31, 2014	$	0.1812
Total				$	1.5406

Recent Sales of Unregistered Securities

None.

Use of Proceeds from Recent Sales of Registered Securities

None.

Purchases of Equity Securities

None.

Stock Performance Graph

This graph compares the return on our common stock with that of the Russell 2000 Financial Services Index, the NASDAQ Financial Index and a customized peer group of six companies that includes Alcentra Capital Corp, Garrison Capital Inc., OFS Capital Corp., Stellus Capital Investment Corp, THL Credit, Inc., and WhiteHorse Finance Inc, for the period from February 6, 2014 (initial public offering) through June 30, 2015. The graph assumes that, on February 6, 2014, an investment of $100 (with reinvestment of all dividends) was made in our common stock (at the IPO price of $15.0 per share), in each index and in the peer group. The graph measures total stockholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are invested in like securities.

The graph and other information furnished under this Part II Item 5 of this Form 10- K shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the 1934 Act. The stock price performance included in the above graph is not necessarily indicative of future stock price performance.

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Item 6. Selected Financial Data

The following selected financial data for the years ended June 30, 2015, June 30, 2014 and June 30, 2013, and the partial year ended 2012, is derived from our financial statements which have been audited by Ernst and Young, LLP, our independent registered public accounting firm. The data should be read in conjunction with our financial statements and related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report.

Statement of Operations Data:	For the year ended June 30, 2015			For the year ended June 30, 2014			For the year ended June 30, 2013			For the period from March 7, 2012 to June 30, 2012
Total investment income	$	36,917,105		$	21,134,061		$	6,772,816		$	501,856
Total expenses, net of fee waiver	$	16,699,402		$	5,135,934		$	630,686		$	197,817
Net investment income	$	20,217,703		$	15,998,127		$	6,142,130		$	304,039
Net increase in net assets resulting from operations	$	15,433,288		$	16,176,034		$	7,996,171		$	297,629
Per Share Data (1):
Net asset value	$	14.41		$	14.65			N.A			N.A.
Net investment income	$	1.48		$	0.47			N.A			N.A.
Net increase in net assets resulting from operations	$	1.13		$	0.51			N.A			N.A.
Distributions declared	$	1.37		$	0.52			N.A			N.A.
Balance Sheet Data:	At June 30, 2015			At June 30, 2014			At June 30, 3013			At June 30, 2012
Investments at fair value	$	330,323,856		$	273,710,465		$	119,209,284		$	21,571,479
Cash and cash equivalents	$	21,535,492		$	24,698,073		$	—		$	—
Total assets	$	362,789,876		$	308,759,998		$	186,938,136		$	21,867,622
Total liabilities	$	165,839,027		$	108,543,177		$	99,687,499		$	3,725,955
Total net assets	$	196,950,849		$	200,216,821		$	87,250,637		$	18,141,667
Other Data:
Number of portfolio companies at period end		26			24			11			3
Weighted average yield on debt investments (at cost) at period end		10.91	%		10.82	%		10.72	%		11.26	%

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Some of the statements in this annual report on Form 10-K constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this annual report on Form 10-K involve risks and uncertainties, including statements as to:

• our future operating results;

• our business prospects and the prospects of our portfolio companies;

• the effect of investments that we expect to make;

• our contractual arrangements and relationships with Stifel Venture Corp. (“Stifel”) and certain funds managed by Cyrus Capital Partners, L.P. (“Cyrus Capital”);

• our contractual arrangements and relationships with lenders and other third parties;

• actual and potential conflicts of interest with the Adviser;

• the dependence of our future success on the general economy, interest rates and the effects of each on the industries in which we invest;

• the ability of our portfolio companies to achieve their objectives or service their debt obligations to us;

• the use of borrowed money to finance a portion of our investments;

• the adequacy of our financing sources and working capital;

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

• the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;

• the ability of the Adviser to attract and retain highly talented professionals;

• our ability to qualify and maintain our qualification as a RIC and as a BDC;

• our ability to obtain exemptive relief from the SEC;

• our ability to obtain an SBIC license; and

• the effect of changes to tax legislation and our tax position and other legislative and regulatory changes.

Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words.

We have based the forward-looking statements included in this annual report on Form 10-K on information available to us on the date of this report on Form 10-K. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or regulation. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Overview

CM Finance Inc (“CMFN,” the “Company”, “us”, “we” or “our”), a Maryland corporation formed in May 2013, is a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), and intends to elect to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code, (the “Code”), for U.S. federal income tax purposes.

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Our primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing directly in debt and related equity of privately held lower middle market companies to help these companies fund acquisitions, growth or refinancing. We invest primarily in middle-market companies in the form of unitranche loans, standalone first and second lien and mezzanine loans. We may also invest in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments.

On February 5, 2014, CM Finance Inc priced its initial public offering (the “Offering”), selling 7,666,666 shares of its common stock, par value $0.001, including the underwriters’ over-allotment, at a price of $15.00 per share with net proceeds of approximately $111.5 million.

CM Finance LLC, a Maryland limited liability company, commenced operations in March 2012. Immediately prior to the Offering, CM Finance LLC was merged with and into CM Finance Inc (the “Merger”). In connection with the Merger, CM Finance Inc issued 6,000,000 shares of common stock and $39.8 million in debt to the pre-existing CM Finance LLC investors, consisting of funds (the “Original Investors” or “Cyrus Funds”) managed by Cyrus Capital. CM Finance Inc had no assets or operations prior to completion of the Merger and, as a result, the books and records of CM Finance LLC became the books and records of CM Finance Inc, as the surviving entity. Immediately after the Merger, CM Finance Inc issued 2,181,818 shares of its common stock to Stifel Venture Corp. in exchange for $32.7 million in cash. CM Finance Inc used all of the proceeds of the sale of shares to Stifel Venture Corp., to repurchase 2,181,818 shares of common stock from the Original Investors. Immediately after the completion of the Offering, the Company had 13,666,666 shares outstanding. The Company also used a portion of the net proceeds of the Offering to repay 100% of the debt issued to the Original Investors in connection with the Merger.

Upon its election to be regulated as a BDC on February 5, 2014, the Company entered into an investment advisory agreement (the “Advisory Agreement”) and an administrative agreement with CM Investment Partners LLC (the “Adviser”) as its investment adviser and administrator, respectively.

The Company consolidates the operations of its wholly-owned subsidiaries, CM Finance SPV, Ltd. (“SPV”), a special purpose vehicle used to finance certain investments, and CM Portfolio Companies LLC, a taxable subsidiary formed to hold equity securities of portfolio companies organized as pass-through entities while continuing to satisfy the requirements for a RIC under the Code.

Critical accounting policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. Management considers the following critical accounting policies important to understanding the financial statements. In addition to the discussion below, our critical accounting policies are further described in the notes to our consolidated financial statements.

Valuation of portfolio investments

We value our portfolio investments at fair value based upon the principles and methods of valuation set forth in policies adopted by our board of directors. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (a) are independent of us, (b) are knowledgeable, having a reasonable understanding about the asset based on all available information (including information that might be obtained through due diligence efforts that are usual and customary), (c) are able to transact for the asset, and (d) are willing to transact for the asset or liability (that is, they are motivated but not forced or otherwise compelled to do so).

Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. We generally obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker dealers or market makers.

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Debt and equity securities for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued at fair value as determined in good faith by our board of directors. Because a readily available market value for many of the investments in our portfolio is often not available, we value many of our portfolio investments at fair value as determined in good faith by our board of directors using a consistently applied valuation process in accordance with a documented valuation policy that has been reviewed and approved by our board of directors. Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that we may ultimately realize. In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of our investments than on the fair values of our investments for which market quotations are not readily available. Market quotations may also be deemed not to represent fair value in certain circumstances where we believe that facts and circumstances applicable to an issuer, a seller or purchaser, or the market for a particular security causes current market quotations not to reflect the fair value of the security. Examples of these events could include cases where a security trades infrequently, causing a quoted purchase or sale price to become stale, where there is a “forced” sale by a distressed seller, where market quotations vary substantially among market makers, or where there is a wide bid-ask spread or significant increase in the bid ask spread.

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

• our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Adviser responsible for the portfolio investment;

• preliminary valuation conclusions are then documented and discussed our senior management and the Adviser;

• on a periodic basis, at least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm engaged by our board of directors;

• the valuation committee of our board of directors then reviews these preliminary valuations and makes a recommendation to our board of directors regarding our investments; and

• the board of directors then discusses these preliminary valuations and determines the fair value of each investment in our portfolio in good faith, based on the input of the Adviser, the independent valuation firm and the valuation committee.

Those investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in determining the fair value of our investments include, as relevant and among other factors: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, our principal market (as the reporting entity) and enterprise values.

When valuing all of our investments, we strive to maximize the use of observable inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances.

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Our investments are categorized based on the types of inputs used in their valuation. The level in the GAAP valuation hierarchy in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety. Investments are classified by GAAP into the three broad levels as follows:

Level I	Investments valued using unadjusted quoted prices in active markets for identical assets.
Level II	Investments valued using other unadjusted observable market inputs, e.g. quoted prices in markets that are not active or quotes for comparable instruments.
Level III	Investments that are valued using quotes and other observable market data to the extent available, but which also take into consideration one or more unobservable inputs that are significant to the valuation taken as a whole.

As of June 30, 2015 and June 30, 2014, all of our investments were classified as Level 3 investments, determined based on valuations by our board of directors.

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 the consolidated financial statements.

Revenue recognition

Our revenue recognition policies are as follows:

Net realized gains (losses) on investments: Gains or losses on the sale of investments are calculated 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, commitment, and amendment fees, purchase and original issue discounts associated with loans to portfolio companies are accreted into interest income over the respective terms of the applicable loans. Accretion of discounts or premiums is calculated by the effective interest or straight-line method, as applicable, as of the purchase date and adjusted only for material amendments or prepayments. Upon the prepayment of a loan or debt security, any prepayment penalties and unamortized fees and discounts are recorded as interest income.

Structuring fees and similar fees are recognized as income as earned, usually when received. Structuring fees, excess deal deposits, net profits interests and overriding royalty interests are included in other fee income.

The Company may hold debt investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision. The PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is recorded on the accrual basis to the extent such amounts are expected to be collected. PIK interest is not accrued if we do not expect the issuer to be able to pay all principal and interest when due. As of June 30, 2015 and June 30, 2014, there were no investments on which we had ceased the accrual of cash or PIK interest income.

Non-accrual: Loans are placed on non-accrual status when principal or interest payments are past due 90 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 about ultimate collectability of principal. 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. As of June 30, 2015 and June 30, 2014, there were no loans placed on non-accrual status.

Financing Facility

On May 23, 2013, as amended on June 6, 2013, December 4, 2013, September 26, 2014 and July 20, 2015, we, through CM Finance SPV Ltd. (“SPV”), our wholly owned subsidiary, entered into a financing facility (the “Financing Facility”) with UBS AG, London Branch (together with its affiliates, “UBS”). The Financing Facility includes a $102.0 million term securitized financing facility (the “Term Financing”), which expires on December 5, 2018 and a $50.0 million revolving financing (the “Revolving Financing”), which expires on December 5, 2016. As of June 30, 2015, the Term Financing bears interest at LIBOR plus 2.75% and the Revolving Financing at a fixed rate of 2.00% on the drawn portion and at 0.50% per annum on the undrawn portion. As of June 30, 2015 and 2014, we had $102.0 million and $76.5 million outstanding under the Term Financing, respectively and $9.1 million and $48.8 million outstanding under the Revolving Facility, respectively.

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Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount we have available to invest as well as the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity, the general economic environment and the competitive environment for the types of investments we make.

To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. As a RIC, we generally will not have to pay corporate-level taxes on any income we distribute to our shareholders.

As a BDC, we are required to comply with certain regulatory requirements. For instance, as a BDC, we may not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Under the relevant SEC rules, the term “eligible portfolio company” includes all private companies, companies whose securities are not listed on a national securities exchange, and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250 million. In each case, the company must be organized in the United States.

Revenues

We generate revenues primarily in the form of interest on the debt we hold. We also generate revenue from royalty income, dividends on our equity interests and capital gains on the sale of warrants and other debt or equity interests that we acquire. Our investments in fixed income instruments generally have an expected maturity of three to five years, although we have no lower or upper constraint on maturity. Interest on our debt investments is generally payable quarterly or semi-annually. Payments of principal of our debt investments may be amortized over the stated term of the investment, deferred for several years or due entirely at maturity. In some cases, our debt investments and preferred stock investments may defer payments of cash interest or dividends or PIK interest. Any outstanding principal amount of our debt investments and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of prepayment fees, commitment, origination, structuring or due diligence fees, fees for providing significant managerial assistance, consulting fees and other investment related income.

Expenses

Our primary operating expenses include the payment of a base management fee and, depending on our operating results, incentive fees, expenses reimbursable under the Advisory Agreement (the “Investment Advisory Agreement”) between us and the Adviser, and administration fees and the allocable portion of overhead under the administration agreement (“Administration Agreement”) between us and the Adviser. The base management fee and incentive compensation remunerates the Adviser for work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other out-of-pocket costs and expenses of our operations and transactions, including, without limitation, those relating to:

• our organization, the formation transactions and our initial public offering;

• calculating our net asset value (including the cost and expenses of any independent valuation firm);

• fees and expenses payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or otherwise relating to, or associated with, evaluating and making investments;

• interest payable on debt, if any, incurred to finance our investments and expenses related to unsuccessful portfolio acquisition efforts;

• offerings of our common stock and other securities;

• administration fees and expenses, if any, payable under the Administration Agreement (including our allocable portion of the Adviser’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our chief compliance officer, chief financial officer and their respective staffs);

• transfer agent, dividend agent and custodial fees and expenses;

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• costs associated with our reporting and compliance obligations under the 1940 Act, the Securities Exchange Act of 1934 (the “Exchange Act”), and other applicable federal and state securities laws, and stock exchange listing fees;

• fees and expenses associated with independent audits and outside legal costs;

• federal, state and local taxes;

• independent directors’ fees and expenses;

• costs of any reports, proxy statements or other notices to or communications and meetings with shareholders;

• costs associated with investor relations;

• costs and fees associated with any fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;

• direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff; and

• all other expenses incurred by us or the Adviser in connection with administering our business.

Portfolio and investment activity

Portfolio composition

We invest primarily in middle-market companies in the form of mezzanine, unitranche loans and standalone first and second lien loans. We may also invest in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments.

At June 30, 2015, our investment portfolio of $330.3 million (at fair value) consisted of investments in 26 portfolio companies, of which 49.7% were first lien investments, 47.1% were second lien investments, 2.4% were unsecured investments and 0.8% were equity and warrant positions. At June 30, 2015, our average and largest portfolio company investment at fair value was $12.7 million and $29.4 million, respectively.

As of June 30, 2015 and June 30, 2014, respectively, our weighted average total yield of debt and income producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 10.91% and 10.82%, respectively, and our weighted average total yield of debt and income producing securities at fair value (which includes interest income and amortization of fees and discounts) was 11.95% and 10.44%, respectively.

The industry composition of our portfolio at fair value at June 30, 2015 was as follows:

	Percentage of Total Portfolio
Telecommunications		14.92	%
Healthcare-Products/Services		12.58
Entertainment and Leisure		8.91
Oil and Gas		8.59
Industrial		7.56
Oilfield Services		6.78
Automobiles and Components		6.08
Construction & Building		5.86
Media		5.84
Trucking and Leasing		5.83
Utilities		4.45
Cable		3.39
Pipelines		2.84
Services		2.58
Chemicals		2.51
Food & Beverage		1.28
Total		100.00	%

59

During the twelve months ended June 30, 2015, we added 18 new investments and funded one pre-existing commitment, totaling approximately $198.0 million. Ten of these investments were in new portfolio companies. Of these new investments, 62.1% consisted of first lien investments, 31.4% second lien investments, 5.1% unsecured investments and 1.4% in warrants.

At June 30, 2014, our investment portfolio of $273.7 million (at fair value) consisted of investments in 24 portfolio companies, of which 40.9% were first lien investments, 48.8% were second lien investments, 9.5% were senior secured notes, and 0.8% were warrant positions. At June 30, 2014, our average and largest portfolio company investment at fair value was $11.4 million and $20.0 million, respectively.

At June 30, 2015, 87.6% of our debt investments bore interest based on floating rates based on indices such as LIBOR (in certain cases, subject to interest rate floors), and 12.4% bore interest at fixed rates. At June 30, 2014, 89.0% of our debt investments bore interest based on floating rates based on indices such as LIBOR (in certain cases, subject to interest rate floors), and 11.0% bore interest at fixed rates.

Our investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which require us to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements. As of June 30, 2015, we had one such investments with aggregate unfunded commitments of $250,000. As of June 30, 2014, we had two such investments with aggregate unfunded commitments of $1.4 million.

The industry composition of our portfolio at fair value at June 30, 2014 was as follows:

	Percentage of Total Portfolio
Telecommunications		19.35	%
Healthcare-Products/Services		17.83
Oil and Gas		16.39
Entertainment and Leisure		5.40
Industrial		5.40
Retail		5.17
Automobiles and Components		4.73
Airlines		4.55
Pipelines		3.65
Services		3.14
Oilfield Services		3.13
Diversified Financial Services		2.18
Construction & Building		1.81
Commercial Services		1.80
Total		100.0	%

Asset Quality

In addition to various risk management and monitoring tools, we use the Adviser’s investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. This investment rating system uses a five-level numeric rating scale. The following is a description of the conditions associated with each investment rating:

Investment Rating 1	Investments that are performing above expectations, and whose risks remain favorable compared to the expected risk at the time of the original investment.
Investment Rating 2	Investments that are performing within expectations and whose risks remain neutral compared to the expected risk at the time of the original investment. All new loans will initially be rated 2.
Investment Rating 3	Investments that are performing below expectations and that require closer monitoring, but where no loss of return or principal is expected. Portfolio companies with a rating of 3 may be out of compliance with their financial covenants.
Investment Rating 4	Investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are often in workout. Investments with a rating of 4 will be those for which some loss of return but no loss of principal is expected.

60

Investment Rating 5 Investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are almost always in workout. Investments with a rating of 5 will be those for which some loss of return and principal is expected.

If the Adviser determines that an investment is underperforming, or circumstances suggest that the risk associated with a particular investment has significantly increased, the Adviser will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending events and suggesting recommended actions. While the investment rating system identifies the relative risk for each investment, the rating alone does not dictate the scope and/or frequency of any monitoring that will be performed. The frequency of the Adviser’s monitoring of an investment will be determined by a number of factors, including, but not limited to, the trends in the financial performance of the portfolio company, the investment structure and the type of collateral securing the investment.

The following table shows the investment rankings of the debt investments in our portfolio:

	As of June 30, 2015							As of June 30, 2014
	Fair Value		% of Portfolio			Number of Investments		Fair Value		% of Portfolio			Number of Investments
1	$	—		—	%		—	$	4,925,000		1.8	%		1
2		307,288,963		93.2			23		255,227,578		94.0			22
3		15,681,780		4.8			1		11,496,010		4.2			1
4		6,798,345		2.0			1		—		—			—
5		—		—			—		—		—			—
Total	$	329,769,088		100.0	%		25	$	271,648,588		100.0	%		24

Results of Operations

Comparison of the twelve months ended June 30, 2015 and June 30, 2014

Investment income

Investment income, attributable primarily to interest and fees on our debt investments, for the twelve months ended June 30, 2015 increased to $36.9 million from $21.1 million for the twelve months ended June 30, 2014, primarily due to the growth of our investment portfolio from the comparable period.

Expenses

Total expenses for the twelve months ended June 30, 2015 increased to $16.7 million from $5.1 million for the twelve months ended June 30, 2014, due primarily to base and incentive management fees payable to our Adviser, interest expense on the additional borrowings under our Financing Facility and increased operating expenses due to growth in our investment portfolio and operating as a public company.

Net investment income

Net investment income increased to $20.2 million for the twelve months ended June 30, 2015 from $16.0 million for the twelve months ended June 30, 2014, primarily due to an increase in investment income resulting from the increase in invested assets over the prior period.

Net realized gain or loss

The net realized gain on investments totaled $3.0 million for the twelve months ended June 30, 2015, primarily due to the gain on sale of common stock in Virgin America partially offset by loss on sale of our investment in Bennu Oil & Gas, LLC.

The net realized loss on investments totaled $0.8 million for the twelve months ended June 30, 2014, due to gains or losses on sales activity during the period.

Net change in unrealized (depreciation) appreciation on investments

We recorded a net change in unrealized depreciation of $8.0 million for the twelve months ended June 30, 2015, primarily due to decline in fair value of our investments in AAR Intermediate Holdings, LLC, Caelus Energy and PR Wireless.

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During the twelve months ended June 30, 2014, we recorded an unrealized gain of $1.0 million due to increase in the fair value of several portfolio company investments.

Comparison of the twelve months ended June 30, 2014 and June 30, 2013

Investment income

Investment income, attributable to interest and fees on our debt investments, for the twelve months ended June 30, 2014 increased to $21.1 million from $6.8 million for the twelve months ended June 30, 2013, primarily due to the growth of our investment portfolio from the comparable period.

Expenses

Total expenses for the twelve months ended June 30, 2014 increased to $5.1 million from $630,686 for the twelve months ended June 30, 2013, due primarily to the interest expense on the Financing Facility and increased operating expenses due to growth in our investment portfolio and operating as a public company.

Net investment income

Net investment income increased to $16.0 million for the twelve months ended June 30, 2014 from $6.1 million for the twelve months ended June 30, 2013, primarily due to an increase in investment income resulting from the increase in invested assets over the prior year period.

Net realized gain or loss

The net realized loss on investments totaled $783,978 for the twelve months ended June 30, 2014, compared to a net realized gain of $781,262 for the twelve months ended June 30, 2013, due to gains or losses on sales activity during the periods.

Net change in unrealized (depreciation) appreciation on investments

We recorded a net change in unrealized appreciation of $961,885 for the twelve months ended June 30, 2014, compared to net unrealized appreciation of $1.1 million for the twelve months ended June 30, 2013, which reflects the net change in the fair value of our investment portfolio relative to its cost basis over this period.

Liquidity and capital resources

Cash flows

For the twelve months ended June 30, 2015, our cash balance decreased by $3.2 million. During that period, we used $48.1 million in cash toward operating activities, primarily due to investments in portfolio companies of $196.8 million, paid $13.7 million for unsettled transactions, partially offset by $138.9 million in repayments and sales of investments in portfolio companies. During the same period, we generated $45.0 million from financing activities, consisting primarily of proceeds from borrowings under our Financing Facility partially offset by distributions to our shareholders.

Capital Resources

As of June 30, 2015, we had $21.5 million of cash as well as $3.4 million in restricted cash and $1.2 million of capacity under the Revolving Financing. We intend to generate additional cash primarily from future offerings of securities, future borrowings under the Revolving Financing as well as cash flows from operations, including income earned from investments in our portfolio companies and, to a lesser extent, from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less. Our primary liquidity needs include interest and principal repayments on our Financing Facility, our unfunded loan commitments, investments in portfolio companies, dividend distributions to our shareholders and operating expenses.

As discussed below in further detail, we have elected to be treated as a RIC. To maintain our RIC status, we generally must distribute substantially all of our net taxable income to shareholders in the form of dividends. Our net taxable income does not necessarily equal our net income as calculated in accordance with GAAP.

62

Regulated Investment Company Status and Distributions

We have elected to be treated as a RIC under Subchapter M of the Code. If we qualify as a RIC, we will not be taxed on our investment company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to shareholders on a timely basis.

Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation until realized. Dividends declared and paid by us in a year may differ from taxable income for that year as such dividends may include the distribution of current year taxable income or the distribution of prior year taxable income carried forward into and distributed in the current year. Distributions also may include returns of capital.

To qualify for RIC tax treatment, we must, among other things, distribute to our shareholders, with respect to each taxable year, at least 90% of our investment company net taxable income (i.e., our net ordinary income and our realized net short-term capital gains in excess of realized net long-term capital losses, if any). We will also be subject to a federal excise tax, based on distributive requirements of our taxable income on a calendar year basis.

We intend to distribute to our shareholders between 90% and 100% of our annual taxable income (which includes our taxable interest and fee income). However, the covenants contained in the Financing Facility may prohibit us from making distributions to our shareholders, and, as a result, could hinder our ability to satisfy the distribution requirement. In addition, we may retain for investment some or all of our net taxable capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) and treat such amounts as deemed distributions to our shareholders. If we do this, our shareholders will be treated as if they received actual distributions of the capital gains we retained and then reinvested the net after-tax proceeds in our common stock. Our shareholders also may be eligible to claim tax credits (or, in certain circumstances, tax refunds) equal to their allocable share of the tax we paid on the capital gains deemed distributed to them. To the extent our taxable earnings for a fiscal taxable year fall below the total amount of our dividends for that fiscal year, a portion of those dividend distributions may be deemed a return of capital to our shareholders.

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage test for borrowings applicable to us as a BDC under the 1940 Act and due to provisions in Financing Facility. We cannot assure shareholders that they will receive any distributions or distributions at a particular level.

In accordance with certain applicable Treasury regulations and private letter rulings issued by the Internal Revenue Service, a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all shareholders must be at least 20% of the aggregate declared distribution. If too many shareholders elect to receive cash, each stockholder electing to receive cash must receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 20% of his or her entire distribution in cash. If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. We have no current intention of paying dividends in shares of our stock in accordance with these Treasury regulations or private letter rulings.

Investment Advisory Agreement

On February 5, 2014, upon our election to be regulated as a BDC, we entered into the Advisory Agreement with the Adviser. Pursuant to this agreement, we have agreed to pay to the Adviser a base management fee of 1.75% of gross assets, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents and fair value of derivatives associated with our financing, and an incentive fee consisting of two parts.

The first part of the incentive fee, which is calculated and payable quarterly in arrears, equals 20.0% of the “pre-incentive fee net investment income” (as defined in the agreement) for the immediately preceding quarter, subject to a hurdle rate of 2.0% per quarter (8.0% annualized), and is subject to a “catch-up” feature. The incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of the Company’s pre-incentive fee net investment income will be payable except to the extent 20.0% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding quarters exceeds the cumulative incentive fees accrued and/or paid for the 11 preceding quarters. The net pre-incentive fee 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 1.75% base management fee.

63

The second part of the incentive fee is calculated and payable in arrears as of the end of each calendar year and equals 20.0% of the aggregate cumulative realized capital gains from inception through the end of each calendar year, computed net of aggregate cumulative realized capital losses and aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid capital gain incentive fees.

The Adviser has agreed to permanently waive: (i) all or portions of base management fees through December 31, 2014, to the extent required to support an annualized dividend yield of 9.0% per annum based on the price per share of our common stock in the Offering, and (ii) all or portions of the incentive fee for calendar years 2014, 2015 and 2016, to the extent required to support an annualized dividend yield of 9.0%, 9.25% and 9.375% per annum, respectively, based on the price per share of our common stock in of the Offering.

For the twelve months ended June 30, 2015, the Company incurred $4,711,675 of incentive fees related to pre-incentive fee net investment income, of which $1,174,655 was waived. As of June 30, 2015, $1,438,910 of such incentive fees are currently payable to the Adviser and $284,350 of pre-incentive fees incurred by the Company were generated from deferred interest (i.e. PIK and certain discount accretion) and are not payable until such amounts are received in cash. No incentive fees were earned, waived or payable prior to June 30, 2014.

The realized gains incentive fee consists of fees related to both realized gains and unrealized gains (described in more detail below).

As of June 30, 2015, there was no realized gains incentive fee payable to the Adviser under the Advisory Agreement.

With respect to the incentive fee expense accrual relating to the unrealized gains incentive fee, GAAP requires that the realized gains incentive fee accrual consider the cumulative aggregate unrealized appreciation in the calculation, as a realized gains incentive fee would be payable if such unrealized appreciation were realized, even though such unrealized appreciation is not permitted to be considered in calculating the fee actually payable under the Advisory Agreement.

The Advisory 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 under the Advisory Agreement, the Adviser and its officers, managers, partners, agents, employees, controlling persons and members, and any other person or entity affiliated with it, are entitled to indemnification from the Company 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 Advisory Agreement or otherwise as the Adviser. Prior to the Company’s election to be regulated as a BDC on February 5, 2014, no base or incentive management fees were due and payable.

Off-Balance Sheet Arrangements

We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As of June 30, 2015, our off-balance sheet arrangements consisted of $250,000 in unfunded commitments to one portfolio company. As of June 30, 2014, our off-balance sheet arrangements consisted of $1.4 million of unfunded commitments to two of our portfolio companies.

Item 7A. Quantitative and Qualitative Disclosure about Market Risk

We are subject to financial market risks, including changes in interest rates. At June 30, 2015, 87.6% of our debt investments bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to six months. Floating rate investments subject to a floor generally reset by reference to the current market index after one to six months only if the index exceeds the floor.

Generally, we believe higher yielding assets such as those in our investment portfolio do not necessarily follow a linear interest rate relationship and are less sensitive in price to interest rate changes than many other debt investments. Our investments in fixed rate assets are generally exposed to changes in value due to interest rate fluctuations, and our floating rate assets are generally exposed to cash flow variability from fluctuation in rates. Consequently, our net interest income (interest income less interest expense) is exposed to risks related to interest rate fluctuations. Based on our in-place portfolio with certain interest rate floors and our financing at June 30, 2015, a 1.00% increase in interest rates would decrease our net interest income by approximately 0.6% and a 2.00% increase in interest rates would increase our net interest income by approximately 5.9%. Variable-rate instruments subject to a floor generally reset periodically to the applicable floor and, in the case of investments in our portfolio, quarterly to a floor based on LIBOR, only if the floor exceeds the index. Under these loans, we do not benefit from increases in interest rates until such rates exceed the floor and thereafter benefit from market rates above any such floor.

64

Although management believes that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit markets, the size, credit quality or composition of the assets in our portfolio and other business developments, including borrowing, that could affect the net increase in net assets resulting from operations, or net income. It also does not adjust for the effect of the time lag between a change in the relevant interest rate index and the rate adjustment under the applicable loan. Accordingly, we can offer no assurances that actual results would not differ materially from the statement above.

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm	66
Consolidated Statements of Assets and Liabilities as of June 30, 2015 and June 30, 2014	67
Consolidated Statements of Operations for the twelve months ended June 30, 2015, June  30, 2014 and June 30, 2013	68
Consolidated Statements of Changes in Net Assets for the twelve months ended June 30, 2015,  June 30, 2014 and June 30, 2013 and for the period from Inception (March 7, 2012) through June 30, 2012	69
Statements of Cash Flows for the twelve months ended June 30, 2015, June 30, 2014 and June  30, 2013	70
Schedule of Investments as of June 30, 2015	71
Schedule of Investments as of June 30, 2014	73
Notes to Financial Statements	75

65

Report of Independent Registered Public

Accounting Firm

The Board of Directors and Stockholders of

CM Finance Inc

We have audited the accompanying consolidated statements of assets and liabilities of CM Finance Inc (the “Company”), including the consolidated schedule of investments as of June 30, 2015 and 2014, and the related consolidated statements of operations, changes in net assets and cash flows for each of the years in the three year period ended June 30, 2015. 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 consolidated financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2015 and 2014, by correspondence with the custodian and brokers. 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 consolidated financial position of the Company at June 30, 2015 and 2014, and the consolidated results of their operations, changes in their net assets and their cash flows for each of the years in the three year period ended June 30, 2015 in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

September 8, 2015

New York, NY

66

CM Finance Inc and subsidiaries

Consolidated Statements of Assets and Liabilities

	June 30, 2015			June 30, 2014
Assets
Non-controlled, non-affiliated investments, at fair value (amortized cost of $336,092,639 and $271,682,258, respectively)	$	330,323,856		$	273,710,465
Derivatives, at fair value (cost $0 and $0, respectively)		1,845,768			563,866
Cash		21,535,492			24,698,073
Cash, restricted		3,433,704			7,139,313
Interest receivable		2,900,804			1,458,043
Deferred debt issuance costs		2,331,035			459,676
Deferred offering costs		186,513			—
Prepaid expenses and other assets		232,704			730,562
Total Assets	$	362,789,876		$	308,759,998
Liabilities
Notes Payable:
Term loan	$	102,000,000		$	76,500,000
Revolving credit facility		48,847,459			9,091,314
Payable for investments purchased		2,988,655			16,660,000
Distributions payable		4,741,174			4,612,500
Derivatives, at fair value (cost $0 and $0, respectively)		1,845,768			563,866
Base management fees payable		1,420,978			313,237
Income-based incentive fees payable		1,723,260			—
Deferred financing costs payable		1,525,000			—
Interest payable		168,658			108,117
Accrued expenses and other liabilities		578,075			694,143
Total Liabilities		165,839,027			108,543,177
Commitments and Contingencies (Note 6)
Net Assets
Common Stock, par value $0.001 per share (100,000,000 shares authorized, 13,667,267 and 13,666,666 shares issued and outstanding, respectively)		13,667			13,667
Additional paid-in capital		199,418,478			198,810,786
Accumulated net realized gain		3,700,400			—
Distributions in excess of net investment income		(412,913	)		(635,839	)
Net unrealized appreciation (depreciation) on investments		(5,768,783	)		2,028,207
Total Net Assets		196,950,849			200,216,821
Total Liabilities and Net Assets	$	362,789,876		$	308,759,998
Net Asset Value Per Share	$	14.41		$	14.65

See notes to consolidated financial statements.

67

CM Finance Inc and subsidiaries

Consolidated Statements of Operations

	For the twelve months ended June 30,
	2015			2014			2013
Investment Income:
Interest income	$	35,165,863		$	18,808,795		$	5,890,673
Payment in-kind interest income		1,121,036			1,723,676			641,008
Other fee income		630,206			601,590			241,135
Total investment income		36,917,105			21,134,061			6,772,816
Expenses:
Interest expense		3,527,014			2,466,792			149,198
Amortization of deferred debt issuance costs		1,194,662			461,380			10,924
Base management fees		5,169,039			1,461,770			—
Income-based incentive fees		4,711,675			—			—
Custodian and administrator fees		303,913			88,707			—
Directors’ fees		426,255			201,500			—
Professional fees		1,214,546			561,961			250,000
Allocation of administrative costs from advisor		591,233			267,809			—
Insurance expense		396,885			176,953			—
Other expenses		338,835			597,595			220,564
Total expenses		17,874,057			6,284,467			630,686
Waiver of base management fees from Investment Manager		—			(1,148,533	)		—
Waiver of income-based incentive fees		(1,174,655	)		—			—
Net expenses		16,699,402			5,135,934			630,686
Net investment income (1)		20,217,703			15,998,127			6,142,130
Net realized and unrealized gains (losses) on investment transactions:
Net realized gains (losses) on investments attributable to CM Finance LLC		—			(946,608	)		781,262
Net realized gains (losses) on investments attributable to CM Finance Inc		3,012,575			162,630			—
Net change in unrealized appreciation (depreciation) on investments attributable to CM Finance LLC		—			549,814			1,072,779
Net change in unrealized appreciation (depreciation) on investments attributable to CM Finance Inc		(7,796,990	)		412,071			—
Net realized and unrealized gains (losses)		(4,784,415	)		177,907			1,854,041
Net increase in net assets resulting from operations	$	15,433,288		$	16,176,034		$	7,996,171
Net increase in net assets resulting from operations attributable to CM Finance LLC	$	N.A.		$	9,219,852		$	7,996,171
Net increase in net assets resulting from operations attributable to CM Finance Inc	$	15,433,288		$	6,956,182		$	N.A.
CM Finance Inc:
Basic and diluted:
Net investment income per share	$	1.48		$	0.47		$	N.A.
Earnings per share	$	1.13		$	0.51		$	N.A.
Weighted Average Shares of Common Stock Outstanding		13,666,812			13,666,666			N.A.

(1) Net investment income attribution:

	For the twelve months ended June 30,
	2015		2014		2013
Net investment income attributable to CM Finance LLC	$	N.A.	$	9,616,646	$	6,142,130
Net investment income attributable to CM Finance Inc	$	20,217,703	$	6,381,481	$	N.A.

See notes to consolidated financial statements.

68

CM Finance Inc and subsidiaries

Consolidated Statements of Changes in Net Assets

	For the twelve months ended June 30,
	2015			2014			2013
CM Finance LLC:
Members capital at beginning of year	$	—		$	87,250,637		$	18,141,667
Contributions from members		—			48,606,009			84,453,413
Distributions to members		—			(55,076,498	)		(23,340,614	)
Net investment income		—			9,616,646			6,142,130
Net realized gains (losses) on investments		—			(946,608	)		781,262
Net change in unrealized appreciation (depreciation) on investments		—			549,814			1,072,779
Members’ capital, at end of year		—			90,000,000			87,250,637
CM Finance Inc:
Net assets at beginning of year		200,216,821			—			—
Capital transactions
Proceeds from shares sold		—			111,549,990			—
Reinvestments of shareholder distributions		7,881			—			—
Common stock offering costs		—			(1,200,000	)		—
Net increase in net assets resulting from capital transactions		7,881			110,349,990			—
Total capital - CM Finance Inc (BDC Conversion)		—			200,349,990			—
Increase (decrease) in net assets resulting from operations
Net investment income		20,217,703			6,381,481			—
Net realized gain on investments		3,012,575			162,630			—
Net change in unrealized appreciation (depreciation) on investments and unfunded commitments		(7,796,990	)		412,071			—
Net increase in net assets from operations		15,433,288			6,956,182			—
Distributions from net investment income		(18,707,141	)		(7,089,351	)		—
Total decrease in net assets		(3,265,972	)		(133,169	)		—
Net assets at end of year (including undistributed (distributions in excess of) net investment income of $(412,913), $(635,839), $0)	$	196,950,849		$	200,216,821		$	—
Distributions declared per common share	$	1.3688		$	0.5187		$	—

See notes to consolidated financial statements.

69

CM Finance Inc and subsidiaries

Consolidated Statements of Cash Flows

	For the twelve months ended June 30,
	2015			2014			2013
Cash Flows from Operating Activities
Net increase in net assets resulting from operations attributable to CM Finance LLC	$	—		$	9,219,852		$	7,996,171
Net increase in net assets resulting from operations attributable to CM Finance Inc		15,433,288			6,956,182			—
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Origination and purchases of investments		(196,764,500	)		(277,126,747	)		(133,314,667	)
Payment in kind interest		(1,121,036	)		(1,723,676	)		(641,008	)
Sales and repayments of investments		138,921,883			125,129,039			38,236,069
Net realized loss (gain) on investments in securities attributable to CM Finance LLC		—			946,608			(781,262	)
Net realized loss (gain) on investments in securities attributable to CM Finance Inc		(3,012,575	)		(162,630	)		—
Net change in unrealized (appreciation) depreciation on investments attributable to CM Finance LLC		—			(549,814	)		(1,072,779	)
Net change in unrealized (appreciation) depreciation on investments attributable to CM Finance Inc		7,796,990			(412,071	)		—
Amortization of discount/premium on investments		(2,434,153	)		(601,890	)		(64,158	)
Amortization of deferred debt issuance costs		1,194,662			461,380			10,924
Net (increase) decrease in operating assets:
Cash, restricted		3,705,609			35,462,025			(42,601,338	)
Due from broker		—			22,975,552			(22,975,552	)
Interest receivable		(1,442,761	)		(446,001	)		(715,899	)
Deferred debt issuance costs		—			(625,000	)		(306,980	)
Prepaid expenses and other assets		497,858			(730,562	)		—
Net increase (decrease) in operating liabilities:
Due to broker		—			—			(3,528,138	)
Payable for investments purchased		(13,671,345	)		16,660,000			—
Interest payable		60,541			(41,081	)		149,198
Accrued expenses and other liabilities		(116,068	)		476,533			(3,380	)
Base management fees payable		1,107,741			313,237			—
Income-based incentive fees payable		1,723,260			—			—
Net Cash Used in Operating Activities		(48,120,606	)		(63,819,064	)		(159,612,799	)
Cash Flows from Financing Activities
Proceeds from shares sold		—			111,549,990			—
Payment for deferred financing costs		(1,541,021	)		(1,176,827	)		—
Deferred offering costs		(186,513	)		—			—
Contributions from members of CM Finance LLC		—			48,606,009			84,453,413
Distributions to members of CM Finance LLC		—			(77,076,498	)		(1,340,614	)
Distributions to shareholders		(18,570,586	)		(2,476,851	)		—
Proceeds from borrowing on term loan		25,500,000			—			76,500,000
Proceeds from borrowing on revolving credit facility		126,814,320			49,121,937			—
Repayments of borrowing on revolving credit facility		(87,058,175	)		(40,030,623	)		—
Net Cash Provided by Financing Activities		44,958,025			88,517,137			159,612,799
Net Change in Cash		(3,162,581	)		24,698,073			—
Cash
Beginning of year		24,698,073			—			—
End of year	$	21,535,492		$	24,698,073		$	—
Supplemental and non-cash financing cash flow information:
Cash paid for interest	$	3,466,473		$	2,425,711		$	—
Shares issued pursuant to Dividend Reinvestment Plan		7,881			—			—

See notes to consolidated financial statements.

70

CM Finance Inc and subsidiaries

Consolidated Schedule of Investments

June 30, 2015

Investments(1)	Industry	Interest Rate	Base Floor Rate			Maturity Date	Principal Amount/ Shares(2)		Amortized Cost		Fair Value		% of Net Assets
Non-Controlled/Non-Affiliates
Senior Secured First Lien Debt Investments
A.S.V., Inc.	Construction & Building	1M L + 9.50%(3)		1.00	%	12/19/2019	$	19,750,000	$	19,377,992	$	19,355,000		9.83	%
AAR Intermediate Holdings, LLC	Oilfield Services	1M L + 12.00%(3)		1.00	%	3/30/2019		18,449,153		17,154,380		15,681,780		7.96	%
AM General, LLC	Automobiles and Components	3M L + 9.00%(3)		1.25	%	3/22/2018		8,690,025		8,608,666		7,994,823		4.06	%
American Gaming Systems, Inc.	Entertainment and Leisure	3M L + 8.25%(3)		1.00	%	12/21/2020		29,737,025		29,268,948		29,439,655		14.95	%
Butler Burgher Group LLC(4)	Services	1M L + 13.25%(3)		0.25	%	6/30/2017		8,099,265		7,995,819		8,504,227		4.32	%
Crestwood Holdings, LLC	Pipelines	3M L + 6.00%(3)		1.00	%	6/19/2019		9,490,434		9,459,199		9,371,804		4.76	%
JAC Holdings Corp.	Automobiles and Components	11.50%(3)		—		10/1/2019		11,750,000		11,970,461		12,102,500		6.15	%
Lightsquared, Inc.	Telecommunications	9.00% PIK(2)		—		12/30/2015		10,322,384		10,289,742		10,322,384		5.24	%
Nathan’s Famous, Inc.	Food & Beverage	10.00%(3)				2/27/2020		4,000,000		4,000,000		4,240,000		2.15	%
New Standard Energy Texas LLC	Oil and Gas	13.00%(5)		—		11/28/2016		7,553,718		7,393,106		6,798,346		3.45	%
PR Wireless, Inc.	Telecommunications	3M L + 9.00%(3)		1.00	%	6/27/2020		16,830,000		15,345,653		15,567,750		7.90	%
U.S. Well Services, LLC	Oilfield Services	1M L + 11.50%		0.50	%	5/2/2019		6,552,623		6,440,615		6,421,571		3.26	%
YRC Worldwide, Inc.(6)	Trucking and Leasing	3M L + 7.25%(3)		1.00	%	1/1/2020		19,762,342		19,645,621		19,268,283		9.78	%
Total Senior Secured First Lien Debt Investments								170,986,969		166,950,202		165,068,123		83.81	%
Senior Secured Second Lien Debt Investments
AP NMT Acquisition BV(6)(7)	Media	3M L + 9.00%(3)		1.00	%	8/13/2022		20,000,000		18,771,381		19,300,000		9.80	%
Bird Electric Enterprises, LLC	Utilities	3M L + 12.00%(3)		—		10/9/2020		15,000,000		14,724,441		14,700,000		7.46	%
Caelus Energy Alaska 03 LLC	Oil and Gas	3M L + 7.50%(3)		1.25	%	4/15/2020		26,000,000		23,519,966		21,580,000		10.96	%
Maxim Crane	Industrial	3M L + 9.25%		1.00	%	11/26/2018		10,000,000		10,074,647		10,075,000		5.12	%
North American Lifting Holdings, Inc.	Industrial	3M L + 9.00%(3)		1.00	%	11/27/2021		16,200,000		15,233,148		14,904,000		7.57	%
Physiotherapy Associates	Healthcare-Products/ Services	3M L + 8.50%(3)		1.00	%	6/4/2022		5,000,000		4,950,349		4,950,000		2.51	%
RCHP, Inc.	Healthcare-Products/ Services	3M L + 9.50%(3)		1.00	%	10/23/2019		15,000,000		14,808,454		15,150,000		7.69	%
Telecommunications Management, LLC	Cable	3M L + 8.00%(3)		1.00	%	10/30/2020		11,539,815		11,475,256		11,193,621		5.68	%
Telular Corp.	Telecommunications	3M L + 8.00%(3)		1.25	%	6/24/2020		7,500,000		7,420,438		7,481,250		3.80	%
TNS, Inc.	Telecommunications	3M L + 8.00%(3)		1.00	%	8/14/2020		15,725,000		15,729,588		15,646,375		7.94	%
Trident USA Health Services, LLC	Healthcare-Products/ Services	3M L + 9.00%(3)		1.25	%	7/31/2020		21,878,285		21,769,681		21,440,720		10.89	%
Total Senior Secured Second Lien Debt Investments								163,843,100		158,477,349		156,420,966		79.42	%
Unsecured Debt
Nexeo Solutions Holdings, LLC	Chemicals	8.38%				3/1/2018		9,000,000		7,880,021		8,280,000		4.21	%
Total Unsecured Debt								9,000,000		7,880,021		8,280,000		4.21	%

See notes to consolidated financial statements.

71

CM Finance Inc and subsidiaries

Consolidated Schedule of Investments (continued)

June 30, 2015

Investments(1)	Industry	Maturity Date		Principal Amount/ Shares(2)		Amortized Cost		Fair Value		% of Net Assets
Non-Controlled/Non-Affiliates
Equity, Warrants and Other Investments
AAR Intermediate Holdings, LLC (Warrants)(6)(8)	Oilfield Services		9/30/2024		1,251,058		1,251,058		300,000		0.15	%
Endeavour International Holding B.V., $3.01 strike (Warrants)(6)(8)	Oil and Gas		11/3/2017		160,000		160,000		1		—
PR Wireless, Inc., $0.01 strike (Warrants)(8)	Telecommunications		6/24/2024		201		1,374,009		254,766		0.13	%
Total Equity, Warrants and Other Investments					1,411,259		2,785,067		554,767		0.28	%
Total Non-Controlled/Non-Affiliates				$	345,241,328	$	336,092,639	$	330,323,856		167.72	%

Liabilities in excess of other assets										(133,373,007	)		(67.72	%)
Net Assets									$	196,950,849			100.00	%
	Industry	Interest Rate	Maturity Date		Notional Amount		Amortized Cost		Fair Value			% of Net Assets
Derivatives
Assets
Embedded derivative - Notes Payable(9)	Diversified Financial Services					102,000,000		—		1,263,087			0.64	%
Embedded derivative - Notes Payable(9)	Diversified Financial Services					50,000,000		—		582,681			0.30	%
Total Assets						152,000,000		—		1,845,768			0.94	%
Liabilities
Total Return Swap(9)	Diversified Financial Services	L + 2.75%		12/5/2017		102,000,000		—		(1,263,087	)		(0.64	%)
Total Return Swap(9)	Diversified Financial Services	0.50%		12/4/2016		50,000,000		—		(582,681	)		(0.30	%)
Total Liabilities						152,000,000		—		(1,845,768	)		(0.94	%)
Total Derivatives					$	304,000,000	$	—	$	—			—

(1) All investments are in non-controlled and non-affiliated issuers. All investments are valued in good faith by the board of directors.

(2) Principal amount includes capitalized PIK interest and is net of repayments and unfunded commitments.

(3) Held by the Company indirectly through CM Finance SPV, Ltd. and pledged as collateral for the Total Return Swaps.

(4) Does not include $250,000 of unfunded commitment.

(5) In addition to interest, the borrower pays an overriding royalty interest of 1.25% of gross sales proceeds, subject to certain maximum amounts.

(6) The investment is not a qualifying asset under Section 55 of the Investment Company Act of 1940, as amended. Non-qualifying assets represent 11.2% of assets.

(7) A portfolio company domiciled in a foreign country. The jurisdiction of the security issuer may be a different country than the domicile of the portfolio company.

(8) Security is non-income producing.

(9) Refer to Note 5 for more detail on the Total Return Swaps and the Embedded derivatives—Notes Payable.

1M L -	1 month LIBOR (0.19% as of June 30, 2015)
3M L -	3 month LIBOR (0.28% as of June 30, 2015)
PIK -	Payment-In-Kind

See notes to consolidated financial statements.

72

CM Finance Inc and subsidiary

Consolidated Schedule of Investments

June 30, 2014

Investments(1)	Industry	Interest Rate	Base Floor Rate			Maturity Date	Principal Amount/ Shares (2)		Amortized Cost		Fair Value		% of Net Assets
Non-Controlled/Non-Affiliates
Senior Secured First Lien Term Loans
Active Media Services, Inc.	Commercial Services	1M L + 9.00% (3)		—		2/1/2018	$	5,000,000	$	4,888,563	$	4,925,000		2.46	%
AM General, LLC	Automobiles and Components	3M L + 9.00% (3)		1.25	%	3/22/2018		14,400,000		14,234,958		12,960,000		6.47	%
American Gaming Systems, Inc.	Entertainment and Leisure	3M L + 8.25% (3)		1.00	%	12/21/2020		14,925,000		14,511,107		14,775,750		7.38	%
Butler Burgher Group LLC	Services	1M L + 11.75%		0.25	%	6/30/2017		8,750,000		8,592,500		8,596,876		4.29	%
Crestwood Holdings, LLC	Pipelines	3M L + 6.00% (3)		1.00	%	6/19/2019		9,898,788		9,857,978		9,997,775		4.99	%
Endeavour International Holding B.V. (4)	Oil and Gas	3M L + 7.00% (3)		1.25	%	11/30/2017		4,930,716		4,864,519		4,807,448		2.40	%
		3M L + 7.00% (3)		1.25	%	11/30/2017		6,860,064		6,767,964		6,688,562		3.34	%
Total								11,790,780		11,632,483		11,496,010		5.74	%
MF Global Holdings, Ltd. (4)	Diversified Financial Services	3M L + 6.50% (3)		2.00	%	12/4/2014		5,976,129		5,965,083		5,976,129		2.99	%
New Standard Energy Texas LLC	Oil and Gas	7.00% cash, 6.00% PIK (2)(5)		—		11/28/2016		4,524,411		4,524,411		4,524,411		2.26	%
PR Wireless, Inc. (6)	Telecommunications	3M L + 9.00%		1.00	%	6/27/2020		17,000,000		15,285,991		15,285,991		7.64	%
U.S. Well Services, LLC	Oilfield Services	1M L + 11.50%		0.50	%	5/2/2019		8,752,841		8,540,885		8,577,783		4.29	%
YRC Worldwide, Inc. (4)	Trucking and Leasing	3M L + 7.00% (3)		1.00	%	2/13/2019		14,925,000		14,787,021		14,962,313		7.47	%
Total Senior Secured First Lien Term Loans								115,942,949		112,820,980		112,078,038		55.98	%
Senior Secured Second Lien Term Loans
Bennu Oil & Gas, LLC	Oil and Gas	3M L + 7.50% (7)		1.25	%	11/1/2018		14,912,125		14,840,295		15,061,246		7.52	%
Caelus Energy Alaska 03 LLC	Oil and Gas	3M L + 7.50%		1.25	%	4/15/2020		14,000,000		13,726,110		13,720,000		6.85	%
CT Technologies Intermediate Holdings, Inc.	Healthcare-Products/Services	3M L + 8.00% (3)		1.25	%	10/5/2020		12,000,000		11,839,053		12,000,000		5.99	%
Ikaria Acquisition, Inc.	Healthcare-Products/Services	3M L + 7.75% (3)		1.00	%	2/12/2022		2,000,000		1,985,880		2,034,000		1.02	%
North American Lifting Holdings, Inc.	Industrial	3M L + 9.00% (3)		1.00	%	11/27/2021		15,000,000		13,888,676		14,775,000		7.38	%
RCHP, Inc.	Healthcare-Products/Services	3M L + 9.50%		1.00	%	10/23/2019		15,000,000		14,780,919		14,775,000		7.38	%
Road Infrastructure Investment, LLC	Construction & Building	3M L + 6.75% (3)		1.00	%	9/30/2021		5,000,000		4,975,918		4,950,000		2.47	%
Telecommunications Management, LLC	Telecommunications	3M L + 8.00% (3)		1.00	%	10/30/2020		11,539,815		11,463,166		11,620,593		5.81	%
Telular Corp.	Telecommunications	3M L + 8.00% (3)		1.25	%	6/24/2020		7,500,000		7,404,490		7,387,500		3.69	%
TNS, Inc.	Telecommunications	1M L + 8.00% (3)		1.00	%	8/14/2020		17,112,500		17,118,479		17,283,625		8.63	%
Trident USA Health Services, Inc.	Healthcare-Products/Services	3M L + 9.00% (3)		1.25	%	7/31/2020		20,000,000		19,948,051		20,000,000		9.99	%
Total Senior Secured Second Lien Term Loans								134,064,440		131,971,037		133,606,964		66.73	%
Senior Secured Notes
Capital Petroleum Group	Retail	11.00% cash, 3.00% PIK (2)(3)		—		9/30/2019		14,152,936		13,726,001		14,152,936		7.07	%
Virgin America, Inc.	Airlines	17.00% PIK (2)		—		6/9/2016		5,924,520		5,808,385		5,924,520		2.96	%
		8.50% cash, 8.50% PIK (2)		—		6/9/2016		5,886,125		5,584,289		5,886,125		2.94	%
Total								11,810,645		11,392,674		11,810,645		5.90	%
Total Senior Secured Notes								25,963,581		25,118,675		25,963,581		12.97	%

See notes to consolidated financial statements.

73

CM Finance Inc and subsidiary

Consolidated Schedule of Investments (Continued)

June 30, 2014

Investments(1)	Industry	Maturity Date	Principal Amount/ Shares (2)		Amortized Cost		Fair Value			% of Net Assets
Warrants
Endeavour International Holding B.V., $3.01 strike (4)(8)	Oil and Gas	4/30/2018		160,000		160,000		50,000			0.02	%
PR Wireless, Inc.,
$0.01 strike (6)(8)	Telecommunications	6/19/2019		201		1,374,009		1,374,009			0.69	%
Virgin America, Inc.,
$2.50 strike (8)	Airlines	5/10/2043	$	513,333	$	184,116	$	424,116			0.21	%
Virgin America, Inc.,
$3.50 strike (8)	Airlines	12/9/2041		385,000		53,441		213,757			0.11	%
Total Warrants				1,058,534		1,771,566		2,061,882			1.03	%
Total Non-Controlled/Non-Affiliates			$	277,029,504	$	271,682,258	$	273,710,465			136.71	%
Liabilities in excess of other assets								(73,493,644	)		(36.71	%)
Net Assets							$	200,216,821			100.00	%

	Industry	Interest Rate	Maturity Date	Notional Amount		Amortized Cost		Fair Value			% of Net Assets
Derivatives
Assets
Total Return Swap (9)	Diversified Financial Services	L + 2.85%	5/22/2016	$	76,500,000	$	—	$	471,137			0.23	%
Total Return Swap (9)	Diversified Financial Services	0.50%	12/4/2015		50,000,000		—		92,729			0.05	%
Total Assets					126,500,000		—		563,866			0.28	%
Liabilities
Embedded derivative —Notes Payable (9)	Diversified Financial Services				76,500,000		—		(471,137	)		(0.23	%)
Embedded derivative —Notes Payable (9)	Diversified Financial Services				50,000,000		—		(92,729	)		(0.05	%)
Total Liabilities					126,500,000		—		(563,866	)		(0.28	%)
Total Derivatives				$	253,000,000	$	—	$	—			—

(1) All investments are in non-controlled and non-affiliated issuers. All investments are valued in good faith by the board of directors.

(2) Principal amount includes capitalized PIK interest and is net of repayments and unfunded commitments.

(3) Held by the Company indirectly through CM Finance SPV, Ltd. and pledged as collateral for the Total Return Swaps.

(4) The investment is not a qualifying asset under Section 55 of the Investment Company Act of 1940, as amended. Non-qualifying assets represent 10.6% of total assets.

(5) In addition to interest, the borrower pays an overriding royalty interest of 1.25% of gross sales proceeds, subject to certain maximum amounts.

(6) Position or portion thereof unsettled as of June 30, 2014.

(7) $10,972,500 held by the Company indirectly through CM Finance SPV, Ltd. and pledged as collateral for the Total Return Swaps.

(8) Security is non-income producing.

(9) Refer to Note 5 for more detail on the Total Return Swaps and the Embedded derivatives—Notes Payable.

1M L	-	1 month LIBOR (as of June 30, 2014 this rate was 0.15%)
3M L	-	3 month LIBOR (as of June 30, 2014 this rate was 0.23%)
PIK	-	Payment-In-Kind

See notes to consolidated financial statements.

74

CM Finance Inc and subsidiaries

Notes to Consolidated Financial Statements

June 30, 2015

Note 1. Organization

CM Finance Inc (“CMFN,” the “Company”), a Maryland corporation formed in May 2013, is a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), and has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”) for U.S. federal income tax purposes. The Company is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services – Investment Companies.

On February 5, 2014, CM Finance Inc priced its initial public offering (the “Offering”), selling 7,666,666 shares of its common stock, par value $0.001, including the underwriters’ over-allotment, at a price of $15.00 per share with net proceeds of approximately $111.5 million.

CM Finance LLC, a Maryland limited liability company, commenced operations in March 2012. Immediately prior to the Offering, CM Finance LLC was merged with and into CM Finance Inc (the “Merger”). In connection with the Merger, CM Finance Inc issued 6,000,000 shares of common stock and $39.8 million in debt to the pre-existing CM Finance LLC investors, consisting of funds managed by Cyrus Capital Partners, L.P. (the “Original Investors” or “Cyrus Funds”). CM Finance Inc had no assets or operations prior to completion of the Merger and, as a result, the books and records of CM Finance LLC became the books and records of CM Finance Inc, as the surviving entity. Immediately after the Merger, CM Finance Inc issued 2,181,818 shares of its common stock to Stifel Venture Corp. in exchange for $32.7 million in cash. CM Finance Inc used all of the proceeds of the sale of shares to Stifel Venture Corp., to repurchase 2,181,818 shares of common stock from the Original Investors. Immediately after the completion of the Offering, the Company had 13,666,666 shares outstanding. The Company also used a portion of the net proceeds of the Offering to repay 100% of the debt issued to the Original Investors in connection with the Merger.

Upon its election to be regulated as a BDC on February 5, 2014, the Company entered into an investment advisory agreement (the “Advisory Agreement”) and an administrative agreement with CM Investment Partners LLC (the “Adviser”) as its investment adviser and administrator, respectively.

The Company’s primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing directly in debt and related equity of privately held lower middle market companies to help these companies fund acquisitions, growth or refinancing. The Company invests primarily in middle-market companies in the form of unitranche loans, standalone first and second lien and mezzanine loans. The Company may also invest in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments.

As a BDC, the Company is required to comply with certain regulatory requirements. For instance, as a BDC, the Company must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of total assets are qualifying assets. Qualifying assets include investments in “eligible portfolio companies.” Under the relevant SEC rules, the term “eligible portfolio company” includes all private operating companies, operating companies whose securities are not listed on a national securities exchange, and certain public operating companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250 million, in each case organized and with their principal of business in the United States.

The Company consolidates the operations of its wholly owned subsidiary, CM Finance SPV, Ltd. (“SPV”), a special purpose vehicle used to finance certain investments.

On September 23, 2014, the Company formed CM Portfolio Companies LLC, a wholly owned and consolidated taxable subsidiary.

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The Company has formed and expects to continue to form certain taxable subsidiaries (the “Taxable Subsidiaries”), which are taxed as corporations for federal income tax purposes. These Taxable Subsidiaries allow the Company to hold equity securities of portfolio companies organized as pass-through entities while continuing to satisfy the requirements of a RIC under the Code.

Note 2. Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Company.

a. Basis of Presentation

The accompanying consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and all values are stated in United States dollars, unless noted otherwise. The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the periods included herein as required by U.S. GAAP. These adjustments are normal and recurring in nature.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments and other amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates utilized in preparing the Company’s consolidated financial statements are reasonable and prudent. Actual results could differ materially from these estimates. All material inter-company balances and transactions have been eliminated.

b. Revenue Recognition, Security Transactions, and Realized/Unrealized Gains or Losses

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis.

Dividend income is recorded on the ex-dividend date.

Origination, closing, commitment, and amendment fees, purchase and original issue discounts associated with loans to portfolio companies are accreted into interest income over the respective terms of the applicable loans. Accretion of discounts or premiums is calculated by the effective interest or straight-line method, as applicable, as of the purchase date and adjusted only for material amendments or prepayments. Upon the prepayment of a loan or debt security, any prepayment penalties and unamortized fees and discounts are recorded as interest income. During the twelve months ended June 30, 2015 and June 30, 2014, $3,538,107 and $178,853 of prepayment penalties and unamortized discounts upon prepayment were recorded as interest income, respectively.

Structuring fees and similar fees are recognized as income as earned, usually when received. Structuring fees, excess deal deposits, net profits interests and overriding royalty interests are included in other fee income.

Investment transactions are accounted for on a trade-date basis. Realized gains or losses on investments are determined by calculating the difference between the net proceeds from the disposition and the amortized cost basis of the investments, without regard to unrealized gains or losses previously recognized. Realized gains or losses on the sale of investments are calculated using the specific identification method. The Company reports changes in fair value of investments as a component of the net change in unrealized appreciation (depreciation) on investments in the Consolidated Statements of Operations.

Management reviews all loans that become 90 days or more past due on principal or interest or when there is reasonable doubt that principal or interest will be collected for possible placement on non-accrual status. Accrued interest is generally reserved 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 regarding collectability. 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, although management may make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection.

The Company may hold debt investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision. PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is recorded on an accrual basis to the extent that such amounts are expected to be collected. PIK interest is not accrued if the Company does not expect the issuer to be able to pay all principal and interest when due. The Company earned PIK interest of $1,121,036, $1,723,676 and $641,008 during the twelve months ended June 30, 2015, June 30, 2014 and June 30, 2013, respectively.

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c. Paid In Capital

The Company records the proceeds from the sale of its common stock to common stock and additional paid-in capital, after all commissions and marketing support fees.

d. Earnings per Share

Earnings per share is calculated based upon the weighted average number of shares of common stock outstanding during the reporting period.

e. Distributions

Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by the board of directors each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment.

The Company has adopted a dividend reinvestment plan that provides for reinvestment of any distributions the Company declares in cash on behalf of the Company’s stockholders, unless a stockholder elects to receive cash. As a result, if the Company’s board of directors authorizes, and the Company declares, a cash distribution, then the Company’s stockholders who have not “opted out” of the Company’s dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution.

f. Cash and restricted cash

Cash and restricted cash consists of bank demand deposits. The Company deposits its cash in a financial institution and, at times, such balance may be in excess of the Federal Deposit Insurance Corporation insurance limits. The Company has restrictions on the uses of the cash held by SPV based on the terms of the Notes Payable. For more information on the Notes Payable, see Note 5.

g. Deferred Offering Costs

Deferred offering costs consist of fees and expenses incurred in connection with the offer and sale of the Company’s common stock and bonds, including legal, accounting, printing fees and other related expenses, as well as costs incurred in connection with the filing of a shelf registration statement. These costs are capitalized when incurred and recognized as a reduction of offering proceeds when the offering becomes effective.

h. Investment Transactions and Expenses

Purchases of loans, including revolving credit agreements, are recorded on a fully committed basis until the funded and unfunded portions are known or estimable, which in many cases may not be until settlement.

Expenses are accrued as incurred.

Organizational expenses consist principally of legal and accounting fees incurred in connection with the organization of the Company and were expensed as incurred.

Deferred debt issuance costs, incurred in connection with the Company’s Notes Payable, are amortized using the straight line method over the life of the notes.

Offering costs were charged to paid-in capital upon sale of shares in the Offering.

i. Investment Valuation

The Company applies fair value accounting to all of its financial instruments in accordance with the 1940 Act and ASC Topic 820 – Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC 820, the Company has categorized its investments and financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value

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hierarchy as discussed in Note 4. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.

Fair value is defined as the price that would be received upon a sale of an asset in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (a) are independent of us, (b) are knowledgeable, having a reasonable understanding about the asset based on all available information (including information that might be obtained through due diligence efforts that are usual and customary), (c) are able to transact for the asset, and (d) are willing to transact for the asset or liability (that is, they are motivated but not forced or otherwise compelled to do so).

Securities that are traded on securities exchanges (including such securities traded in the afterhours market) are valued on the basis of the closing price on the valuation date (if such prices are available). Securities that are traded on more than one securities exchange are valued at the closing price on the primary securities exchange on which such securities are traded on the valuation date (or if reported on the consolidated tape, then their last sales price on the consolidated tape). Listed options for which the last sales price falls between the last “bid” and “ask” prices for such options, are valued at their last sales price on the date of the valuation on the primary securities exchange on which such options are traded. Options for which the last sales price on the valuation date does not fall between the last “bid” and “ask” prices are valued at the average of the last “bid” and “ask” prices for such options on that date. To the extent these securities are actively traded, and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy. The Company did not hold any Level 1 investments as of June 30, 2015 or June 30, 2014.

Investments that are not traded on securities exchanges but are traded on the over-the-counter (“OTC”) markets (such as term loans, notes and warrants) are valued using various techniques, which may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (when observable) and fundamental data relating to the issuer. These investments are categorized in Level 2 of the fair value hierarchy, or in instances when lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in Level 3.

The embedded derivatives in the Term Notes payable (defined below) from SPV to UBS, AG (“UBS”) and the Total Return Swaps (the “TRS”) referencing the terms of the Notes Payable are valued based on the change in fair value and the underlying accrued interest of the portfolio of assets held in SPV less the accrued interest payable on the financing due to the TRS counterparty, UBS. Consideration has been given to counterparty risk. The Company has assessed the unsecured risk of the counterparty, UBS, in the form of credit ratings and the trading levels of that risk and has determined that the counterparty risk is minimal. The Company also notes that counterparty risk is further mitigated by the monthly settlement of both the interest portion of the embedded derivatives referencing the Notes Payable and the TRS. If the Company were to determine that counterparty risk were material, an adjustment to the fair value of the TRS would be made. The embedded derivatives in the Notes Payable and the TRS have been categorized in Level 3 of the fair value hierarchy. See Note 4 and Note 5 for more detail.

Investments for which market quotations are not readily available or may be considered unreliable are fair valued, in good faith, using a method determined to be appropriate in the given circumstances. The valuation methods used include the Cost Approach, the Market Approach and the Income Approach. Inputs used in these approaches may include, but are not limited to, interest rate yield curves, credit spreads, recovery rates, comparable company transactions, trading multiples, and volatilities. The valuation method of the Company may change as changes in the underlying company dictates, such as moving from the Cost Approach to Market Approach when underlying conditions change at the company. Because of the inherent uncertainty of valuation in these circumstances, the fair values for the aforementioned investments may differ significantly from values that would have been used had a ready and liquid market for such investments existed or from the amounts that might ultimately be realized, and such differences could be material.

The Company’s valuation policies and procedures are developed by the Adviser, which is also responsible for ensuring that the valuation policies and procedures are consistently applied across all investments of the Company, and approved by the Company’s board of directors. The valuations are continuously monitored and the valuation process for Level 3 investments is completed on a quarterly basis and is designed to subject the valuation of Level 3 investments to an appropriate level of consistency, oversight and review. The valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Adviser responsible for the portfolio investment. These investment professionals prepare the preliminary valuations based on their evaluation of financial and operating data, company specific developments, market valuations of comparable securities from the same company or that of comparable companies as well as any other relevant factors including recent purchases and sales that may have occurred preceding month-end.

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Valuation models are typically calibrated upon initial funding, and are re-calibrated as necessary upon subsequent material events (including, but not limited to additional financing activity, changes in comparable companies, and recent trades). The preliminary valuation conclusions are then documented and discussed with senior management of the Adviser. On a periodic basis and at least once annually, independent valuation firm(s) engaged by the Company conduct independent appraisals and review the Adviser’s preliminary valuations and make their own independent assessment. The Valuation Committee of the Company’s board of directors then reviews the preliminary valuations of the Adviser and that of the independent valuation firm. The Valuation Committee discusses the valuations and makes a recommendation to the Company’s board of directors regarding the fair value of each investment in good faith based on the input of the Adviser and the independent valuation firm. Upon recommendation by the Valuation Committee and a review of the valuation materials of the Adviser and the third party independent valuation firm, the board of directors of the Company determines, in good faith, the fair value of each investment.

For more information on the classification of the Company’s investments by major categories, see Note 4.

The fair value of the Company’s assets and liabilities that qualify as financial instruments under U.S. GAAP approximates the carrying amounts presented in the Consolidated Statements of Assets and Liabilities.

j. Income Taxes

The Company has elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Internal Revenue Code. To qualify and maintain qualification as a RIC, the Company must, among other things, meet certain source of income and asset diversification requirements and distribute to shareholders, for each taxable year, at least 90% of the Company’s “investment company taxable income,’’ which is generally the Company’s net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses. If the Company continues to qualify as a RIC and continues to satisfy the annual distribution requirement, the Company will not have to pay corporate level federal income taxes on any income that the Company distributes to its shareholders. The Company intends to make distributions in an amount sufficient to maintain RIC status each year and to avoid any federal income taxes on income. The Company will also be subject to nondeductible federal excise taxes if the Company does not distribute at least 98% of net ordinary income, 98.2% of any capital gains, if any, and any recognized and undistributed income from prior year for which it paid no federal income taxes.

U.S. GAAP requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet a more-likely-than-not threshold would be recorded as a tax expense in the current year. The Company’s policy is to recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision.

The Company has analyzed such tax positions and has concluded that no unrecognized tax benefits should be recorded for uncertain tax positions for any tax year since inception. Each of the tax years since inception remain subject to examination by taxing authorities. This conclusion may be subject to review and adjustment at a later date based on factors, including but not limited to, ongoing analysis and changes to laws, regulations, and interpretations thereof.

Permanent differences between investment company taxable income and net investment income for financial reporting purposes are reclassified among capital accounts in the financial statements to reflect their tax character. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes. During the years ended June 30, 2015 and June 30, 2014, the Company reclassified for book purposes amounts arising from permanent book/tax differences related to the different tax treatment of paydown gains and losses, distribution re-designations, premium amortization, and non-deductible expenses as follows:

	As of June 30, 2015			As of June 30, 2014
Additional paid-in capital	$	599,811		$	90,599
Distributions in excess of net investment income		(1,287,636	)		72,031
Accumulated net realized gain (loss)		687,825			(162,630	)

The tax character of all distributions paid by the Company were all ordinary income.

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At June 30, 2015 and June 30, 2014, the components of distributable earnings on a tax basis detailed below differ from the amounts reflected in the Company’s Consolidated Statement of Assets and Liabilities by temporary and other book/tax differences, primarily relating to the tax treatment of dividends payable and premium amortization accruals, deferred incentive, as follows:

	As of			As of
	June 30, 2015			June 30, 2014
Undistributed net investment income	$	8,035,838		$	3,976,661
Accumulated capital gains (losses)		277,173			—
Unrealized appreciation (depreciation)		(6,707,570	)		482,682
Distributions payable		(4,741,174	)		(4,612,500	)
Components of tax distributable earnings at year end	$	(3,135,733	)	$	(153,157	)

In addition, as of June 30, 2015, the wholly owned taxable subsidiary, CM Portfolio Companies LLC recorded a deferred tax asset and a corresponding valuation allowance of approximately $425,000.

k. Unrealized Gains Incentive Fee

Under GAAP, the Company calculates the unrealized gains incentive fee payable to the Adviser as if the Company had realized all investments at their fair values as of the reporting date. Accordingly, the Company accrues a provisional unrealized gains incentive fee taking into account any unrealized gains or losses. As the provisional incentive fee is subject to the performance of investments until there is a realization event, the amount of provisional unrealized gains incentive fee accrued at a reporting date may vary from the incentive fee that is ultimately realized and the differences could be material.

The cost basis used to compute gains and losses for the purpose of determining incentive fees is the fair value of the Company’s investment on February 5, 2014, at the time the Company priced its Offering.

As of June 30, 2015, there was no realized gains incentive fee payable to the Adviser under the Investment Advisory Agreement.

l. Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Note 3. New Accounting Pronouncements

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. Prior to the issuance of this ASU, debt issuance costs were required to be presented in the balance sheet as an asset. Upon adoption, the standard requires prior period financial statements to be retrospectively adjusted. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 with early adoption permitted in certain circumstances. The Company expects to adopt this standard on or before the effective date and we do not anticipate that the adoption will have a material impact on our consolidated financial statements.

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” or ASU 2014-15 introduces an explicit requirement for management to assess and provide certain disclosures if there is substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 is effective for the annual period ending after December 15, 2016. We do not anticipate that the adoption of ASU 2014-15 will have a material impact on our consolidated financial statements.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial statements upon adoption.

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Note 4. Investments

The Company’s investments at any time may include securities and other financial instruments, including, without limitation, corporate and government bonds, convertible securities, collateralized loan obligations, term loans, trade claims, equity securities, privately negotiated securities, direct placements, working interests, warrants and investment derivatives (such as credit default swaps, recovery swaps, total return swaps, options, forward contracts, and futures) (all of the foregoing collectively referred to in these financial statements as “investments.”)

a. Certain Risk Factors

In the ordinary course of business, the Company manages a variety of risks including market risk, liquidity risk and credit risk. The Company identifies, measures and monitors risk through various control mechanisms, including trading limits and diversifying exposures and activities across a variety of instruments, markets and counterparties.

Market risk is the risk of potential adverse changes to the value of financial instruments because of changes in market conditions, including as a result of changes in the credit quality of a particular issuer, credit spreads, interest rates, and other movements and volatility in security prices or commodities. In particular, the Company may invest in issuers that are experiencing or have experienced financial or business difficulties (including difficulties resulting from the initiation or prospect of significant litigation or bankruptcy proceedings), which involves significant risks. The Company manages its exposure to market risk through the use of risk management strategies and various analytical monitoring techniques.

The Company’s assets may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.

Credit risk is the potential loss the Company may incur from a failure of an issuer to make payments according to the terms of a contract. The Company is subject to credit risk because of its strategy of investing in the debt of leveraged companies and its involvement in derivative instruments. The Company’s exposure to credit risk on its investments is limited to the fair value of the investments. The Company’s TRS contracts are executed pursuant to an International Swaps and Derivatives Association (“ISDA”) master agreement (the “ISDA Agreement”) that the Company currently has in place with UBS. At June 30, 2015, the Company had all of its counterparty credit risk associated with non-performance for swaps with UBS. With regard to derivatives, the Company attempts to limit its credit risk by considering its counterparty’s (or its guarantor’s) credit rating. The Company’s policy is to not hold counterparty collateral on ISDA Agreements, but would do so if the exposure were material.

b. Investments

Investment purchases, sales and principal payments/paydowns are summarized below for the twelve months ended June 30, 2015, June 30, 2014 and June 30, 2013, respectively. These purchase and sale amounts exclude derivative instruments.

	Twelve Months Ended June 30,
	2015		2014		2013
Investment purchases, at cost (including PIK interest)	$	197,885,536	$	278,850,423	$	133,955,675
Investment sales and repayments		138,921,883		125,129,039		38,236,069

The composition of the Company’s investments as of June 30, 2015, as a percentage of the total portfolio, at amortized cost and fair value, are as follows:

	Investment at Amortized Cost		Percentage			Investments at Fair Value			Percentage
Senior Secured First Lien Debt Investments	$	166,950,202		49.67	%	$	165,068,123			49.97	%
Senior Secured Second Lien Debt Investments		158,477,349		47.15			156,420,966			47.35
Unsecured Debt		7,880,021		2.35			8,280,000			2.51
Equity, Warrants and Other Investments		2,785,067		0.83			554,767			0.17
Embedded derivative - Notes Payable		—		—			1,845,768			0.56
Total Return Swap		—		—			(1,845,768	)		(0.56	)
Total	$	336,092,639		100.00	%	$	330,323,856			100.00	%

(1) Includes assets previously classified as Senior Secured Notes.

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The composition of the Company’s investments as of June 30, 2014, as a percentage of the total portfolio, at amortized cost and fair value, are as follows:

	Investments at					Investments at
	Amortized Cost		Percentage			Fair Value			Percentage
Senior Secured First Lien Term Loans	$	112,820,980		41.53	%	$	112,078,038			40.95	%
Senior Secured Second Lien Term Loans		131,971,037		48.57			133,606,964			48.81
Senior Secured Notes		25,118,675		9.25			25,963,581			9.49
Warrants		1,771,566		0.65			2,061,882			0.75
Total Return Swaps		—		—			563,866			0.21
Embedded derivatives - Notes Payable		—		—			(563,866	)		(0.21	)
Total	$	271,682,258		100.00	%	$	273,710,465			100.00	%

The following table shows the portfolio composition by industry grouping at fair value at June 30, 2015:

	Investments at Fair Value		Percentage of Total Portfolio
Telecommunications	$	49,272,525		14.92	%
Healthcare-Products/Services		41,540,720		12.58
Entertainment and Leisure		29,439,655		8.91
Oil and Gas		28,378,347		8.59
Industrial		24,979,000		7.56
Oilfield Services		22,403,351		6.78
Automobiles and Components		20,097,323		6.08
Construction & Building		19,355,000		5.86
Media		19,300,000		5.84
Trucking and Leasing		19,268,283		5.83
Utilities		14,700,000		4.45
Cable		11,193,621		3.39
Pipelines		9,371,804		2.84
Services		8,504,227		2.58
Chemicals		8,280,000		2.51
Food & Beverage		4,240,000		1.28
Total	$	330,323,856		100.00	%

The following table shows the portfolio composition by industry grouping at fair value at June 30, 2014:

	Investments at		Percentage of
	Fair Value		Total Portfolio
Telecommunications	$	52,951,718		19.35	%
Healthcare-Products/Services		48,809,000		17.83
Oil and Gas		44,851,667		16.39
Trucking and Leasing		14,962,313		5.47
Entertainment and Leisure		14,775,750		5.40
Industrial		14,775,000		5.40
Retail		14,152,936		5.17
Automobiles and Components		12,960,000		4.73
Airlines		12,448,518		4.55
Pipelines		9,997,775		3.65
Services		8,596,876		3.14
Oilfield Services		8,577,783		3.13
Diversified Financial Services		5,976,129		2.18
Construction & Building		4,950,000		1.81
Commercial Services		4,925,000		1.80
Total	$	273,710,465		100.00	%

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The following table shows the portfolio composition by geographic grouping at fair value at June 30, 2015:

	Investments at Fair Value		Percentage Total Portfolio
U.S. Midwest	$	77,395,477		23.43	%
U.S. West		60,766,007		18.40
U.S. Southwest		57,563,573		17.43
U.S. Southeast		39,252,516		11.88
U.S. Northeast		38,959,188		11.79
U.S. Mid-Atlantic		37,087,095		11.23
Europe		19,300,000		5.84
Total	$	330,323,856		100.00	%

The following table shows the portfolio composition by geographic grouping at fair value at June 30, 2014:

	Investments at		Percentage of
	Fair Value		Total Portfolio
U.S. Southwest	$	69,260,200		25.30	%
U.S. Mid-Atlantic		64,371,690		23.52
U.S. Southeast		48,385,000		17.68
U.S. Midwest		46,930,406		17.15
U.S. West		34,765,394		12.70
U.S. Northeast		9,997,775		3.65
Total	$	273,710,465		100.00	%

The Company’s primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing directly in debt and related equity of privately held lower middle market companies to help these companies fund acquisitions, growth or refinancing. During the twelve months ended June 30, 2015, the Company made investments in new and existing portfolio companies of approximately $154.0 million and $42.7 million, respectively, to which it was not previously contractually committed to provide the financial support. During the twelve months ended June 30, 2015, the Company made investments of $1.1 million in companies to which it was previously committed to provide the financial support. The details of the Company’s investments have been disclosed on the Consolidated Schedule of Investments.

c. Derivatives

Derivative contracts include total return swaps and embedded derivatives in Notes Payable. The Company enters into derivative contracts as part of its investment strategies.

The Company and UBS entered into two TRS transactions whereby the Company will receive the Total Return of the Term Notes and the Revolving Notes (as defined in Note 5) purchased by UBS and pay the Financing Rate and the Revolver Financing Rate (both as defined in Note 5). Therefore, amounts required for the future satisfaction of the swaps may be greater or less than the amount recorded. Realized and change in unrealized gains and losses on total return swaps, if any, are included in the net realized gain or loss on derivatives, and net change in unrealized appreciation (depreciation) on derivatives in the Consolidated Statements of Operations.

In connection with the TRS transactions the Company entered into an ISDA Agreement with UBS. The ISDA Agreement includes provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Agreement, the Company typically may offset with the counterparty certain derivative payable and/or receivable with collateral held and/or posted and create one single net payment (close-out netting) in the event of default or termination.

The Company’s ISDA Agreement may contain provisions for early termination of OTC derivative transactions in the event the net assets of the Company decline below specific levels (“net asset contingent features”). If these levels are triggered, the Company’s counterparty has the right to terminate such transaction and require the Company to pay or receive a settlement amount in connection with the terminated transaction.

The Company has determined that each of the Term Notes payable from SPV to UBS (discussed further in Note 5) contain an embedded derivative. SPV is obligated to pay UBS the net appreciation (depreciation) of the SPV Assets, as defined below, as well as pay any income generated by the SPV Assets until maturity. Therefore, amounts required for the future satisfaction of the note may be

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greater or less than the amount recorded. Realized and change in unrealized gains and losses on the embedded derivatives are included in the net realized gain or loss on derivatives, and net change in unrealized appreciation (depreciation) on derivatives in the Consolidated Statements of Operations.

The following table reflects the fair value and notional amount or number of contracts of the Company’s derivative contracts, none of which were designated as hedging instruments under U.S. GAAP, which are presented on a gross basis, at June 30, 2015.

	Assets		Liabilities		Notional		Contracts
Credit Risk:
Total Return Swaps	$	—	$	1,845,768		152,000,000		2
Embedded derivatives
Notes Payable		1,845,678		—		152,000,000		2
Gross fair value of derivative contracts	$	1,845,678	$	1,845,768
Counterparty netting		—		—
Net fair value of derivative contracts		1,845,678		1,845,768
Collateral not offset		—		—
Net amount	$	1,845,678	$	1,845,768

On September 26, 2014, the notional size of the Company’s derivative contract was increased from $126.5 million to $152.0 million.

The following table reflects the fair value and notional amount or number of contracts of the Company’s derivative contracts, none of which were designated as hedging instruments under U.S. GAAP, which are presented on a gross basis, at June 30, 2014.

	Assets		Liabilities		Notional		Contracts
Credit Risk:
Total Return Swaps	$	563,866	$	—	$	126,500,000		2
Embedded derivatives
Note Payable		—		563,866	$	126,500,000		2
Gross fair value of derivative contracts		563,866		563,866
Counterparty netting		—		—
Net fair value of derivative contracts		563,866		563,866
Collateral not offset		—		—
Net amount	$	563,866	$	563,866

The following table reflects the amount of gains (losses) on derivatives included in the Consolidated Statements of Operations for the twelve months ended June 30, 2015, June 30, 2014 and June 30, 2013, respectively. None of the derivatives were designated as hedging instruments under U.S. GAAP.

	Included in net change in unrealized (depreciation) appreciation on investments and derivatives
	For the twelve months ended June 30,
	2015			2014			2013
Total Return Swaps	$	(2,409,634	)	$	(279,998	)	$	843,864
Embedded derivatives Notes Payable		2,409,634			279,998			(843,864	)
Total	$	—		$	—		$	—

d. Fair Value Measurements

ASC 820 defines fair value 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. ASC 820 also establishes a framework for measuring fair value and a valuation hierarchy that prioritizes the inputs used in the valuation of an asset or liability based upon their transparency. The valuation hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1)

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and the lowest priority to unobservable inputs (Level 3). Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assets and liabilities measured at fair value have been classified in the following three categories:

Level 1 – valuation is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 – valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – valuation is based on unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is, an exit price from the perspective of a market participant that holds the asset or owes the liability. Therefore, unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Unobservable inputs are developed based on the best information available in the circumstances, which might include the Company’s own data. The Company’s own data used to develop unobservable inputs is adjusted if information is reasonably available without undue cost and effort that indicates that market participants would use different assumptions.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of the market and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

Estimates of fair value for cash and restricted cash are measured using observable, quoted market prices, or Level 1 inputs. All other fair value significant estimates are measured using unobservable inputs, or Level 3 inputs.

The following table summarizes the classifications within the fair value hierarchy of the Company’s assets and liabilities measured at fair value as of June 30, 2015:

	Fair Value Measurements as of June 30, 2015
	Level 1		Level 2		Level 3			Total
Assets
Investments
Senior Secured First Lien Debt Investments		—		—		165,068,123			165,068,123
Senior Secured Second Lien Debt Investments		—		—		156,420,966			156,420,966
Unsecured Debt		—		—		8,280,000			8,280,000
Equity, Warrants and Other Investments		—		—		554,767			554,767
Total Investments		—		—		330,323,856			330,323,856
Derivatives
Embedded derivative
Notes Payable		—		—		1,845,768			1,845,768
Total Derivatives		—		—		1,845,768			1,845,768
Total Assets	$	—	$	—	$	332,169,624			332,169,624
Liabilities
Derivatives
Total Return Swaps		—		—		(1,845,768	)		(1,845,768	)
Total Derivatives		—		—		(1,845,768	)		(1,845,768	)
Total Liabilities	$	—	$	—	$	(1,845,768	)		(1,845,768	)

(1) Includes assets previously classified as Senior Secured Notes.

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The following table summarizes the classifications within the fair value hierarchy of the Company’s assets and liabilities measured at fair value as of June 30, 2014:

	Fair Value Measurements as of June 30, 2014
	Level 1		Level 2		Level 3		Total
Assets
Investments
Senior Secured First Lien Term Loans	$	—	$	—	$	112,078,038	$	112,078,038
Senior Secured Second Lien Term Loans		—		—		133,606,964		133,606,964
Senior Secured Notes		—		—		25,963,581		25,963,581
Warrants		—		—		2,061,882		2,061,882
Total Investments		—		—		273,710,465		273,710,465
Derivatives
Total Return Swaps		—		—		563,866		563,866
Total Derivatives		—		—		563,866		563,866
Total Assets	$	—	$	—	$	274,274,331	$	274,274,331
Liabilities
Derivatives
Embedded derivative
Note Payable		—		—		563,866		563,866
Total Derivatives		—		—		563,866		563,866
Total Liabilities	$	—	$	—	$	563,866	$	563,866

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the twelve months ended June 30, 2015:

	Senior Secured First Lien Debt Investments (1)			Senior Secured Second Lien Debt Investments (1)			Senior Secured Notes			Unsecured Debt		Equity, Warrants and Other Investments			Total Investments
Balance as of June 30, 2014	$	112,078,038		$	133,606,964		$	25,963,581		$	—	$	2,061,882		$	273,710,465
Reclassification of investment type		20,039,060			5,924,521			(25,963,581	)		—		—			—
Purchases (including PIK interest)		126,759,584			61,129,046			—			7,807,500		2,189,406			197,885,536
Sales		(87,576,525	)		(33,923,262	)		—			—		(938,348	)		(122,438,135	)
Amortization		1,663,072			698,560			—			72,521		—			2,434,153
Net realized gains (losses)		159,415			(2,090,446	)		—			—		400,316			(1,530,715	)
Transfers in		—			—			—			—		—			—
Transfers out		(6,186,613	)		(5,115,972	)		—			—		(637,873	)		(11,940,458	)
Net change in unrealized (depreciation) appreciation		(1,867,908	)		(3,808,445	)		—			399,979		(2,520,616	)		(7,796,990	)
Balance as of June 30, 2015		165,068,123			156,420,966			—			8,280,000		554,767			330,323,856
Change in unrealized gains (losses) relating to assets and liabilities still held as of June 30, 2015	$	(1,202,373	)	$	(3,288,246	)	$	—		$	399,979	$	(2,120,300	)	$	(6,210,940	)

⁽¹⁾  Includes assets previously classified as Senior Secured Notes.

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	Total Return Swaps			Embedded derivatives - Notes Payable			Total Derivatives
Balance as of June 30, 2014	$	563,866		$	(563,866	)	$	—
Net change in unrealized (depreciation) appreciation		(2,409,634	)		2,409,634			—
Balance as of June 30, 2015	$	(1,845,768	)	$	1,845,768		$	—
Change in unrealized gains (losses) relating to assets and liabilities still held as of June 30, 2015	$	(2,409,634	)	$	2,409,634		$	—

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the twelve months ended June 30, 2014:

	Senior Secured First Lien Term Loans			Senior Secured Second Lien Term Loans			Senior Secured Notes			Unsecured Debt			Warrants		Total Investments
Balance as of June 30, 2013	$	74,807,541		$	23,448,281		$	20,397,491		$	—		$	555,971	$	119,209,284
Purchases (including PIK interest)		107,476,264			129,506,004			25,681,646			14,812,500			1,374,009		278,850,423
Sales		(68,829,644	)		(20,919,860	)		(20,256,000	)		(15,123,535	)		—		(125,129,039	)
Amortization		279,676			130,914			3,800			187,500			—		601,890
Net realized gains (losses)		(836,102	)		22,775			(94,186	)		123,535			—		(783,978	)
Net change in unrealized (depreciation) appreciation		(819,697	)		1,418,850			230,830			—			131,902		961,885
Balance as of June 30, 2014	$	112,078,038		$	133,606,964		$	25,963,581		$	—		$	2,061,882	$	273,710,465
Change in unrealized gains (losses) relating to assets and liabilities still held as of June 30, 2014	$	(1,008,131	)	$	1,197,899		$	230,830		$	—		$	131,902	$	552,500

	Total Return Swaps			Embedded derivatives -Notes Payable			Total Derivatives
Balance as of June 30, 2013	$	843,864		$	(843,864	)	$	—
Net change in unrealized (depreciation) appreciation		(279,998	)		279,998			—
Balance as of June 30, 2014	$	563,866		$	(563,866	)	$	—
Change in unrealized gains (losses) relating to assets and liabilities still held as of June 30, 2014	$	(279,998	)	$	279,998		$	—

Transfers into Level 3 during or at the end of the reporting period are reported under Level 1 or Level 2 as of the beginning of the period. Transfers out of Level 3 during or at the end of the reporting period are reported under Level 3 as of the beginning of the period. Changes in unrealized gains (losses) relating to Level 3 instruments are included in net change in unrealized (depreciation) appreciation on investments and derivatives on the Consolidated Statements of Operations.

During the twelve months ended June 30, 2015 and June 30, 2014, the Company did not transfer any investments among Levels 1 and 2 and 3.

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The following tables present the ranges of significant unobservable inputs used to value the Company’s Level 3 investments as of June 30, 2015 and June 30, 2014. These ranges represent the significant unobservable inputs that were used in the valuation of each type of investment. These inputs are not representative of the inputs that could have been used in the valuation of any one investment. For example, the highest market yield presented in the table for senior secured notes is appropriate for valuing a specific investment but may not be appropriate for valuing any other investment. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 investments.

	Fair Value as of June 30, 2015			Valuation Methodology	Unobservable Input(s)	Weighted Average			Range
Senior Secured First Lien Debt Investments	$	165,068,123		Yield Analysis	Market Yields		12.9	%	7.4% -24.1%
Senior Secured Second Lien Debt Investments		156,420,966		Yield Analysis	Market Yields		11.9	%	9.1% -15.8%
Unsecured Debt		8,280,000		Yield Analysis	Market Yields		12.4	%	12.4%
Equity, Warrants and Other Investments		554,767		EV Multiple	LTM EBITDA		7.4x		5.3x - 7.5x
Total Return Swaps		(1,845,768	)	Other Approach	Intrinsic value		N/A		N/A
Embedded derivatives - Note Payable		1,845,768		Other Approach	Intrinsic value		N/A		N/A
	Fair Value as of June 30, 2014			Valuation Methodology	Unobservable Input(s)	Weighted Average			Range
Senior Secured First Lien Term Loans	$	112,078,038		Yield Analysis Broker Quoted Collateral Coverage	Market Yields		12.7	%	9.9% -14.5%
Senior Secured Second Lien Term Loans		133,606,964		Yield Analysis Broker Quoted Collateral Coverage	Market Yields		11.4	%	9.6% -12.4%
Senior Secured Notes		25,963,581		Yield Analysis Broker Quoted Collateral Coverage	Market Yields		16.4	%	15.0% - 18.1%
Warrants		2,061,882		EV Multiple	LTM EBITDA		7.6x		7.5x - 7.8x
				Option Analysis	Asset Volatility		25	%	N/A
					Equity Volatility		87	%	N/A
					Illiquidity Discount		21	%	9% - 50%
Total Return Swaps		563,866		Other Approach	Intrinsic value		N/A		N/A
Embedded derivatives - Note Payable		(563,866	)	Other Approach	Intrinsic value		N/A		N/A

Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value and such changes could result in a significant increase or decrease in the fair value. Significant increases in illiquidity discounts, PIK discounts and market yields would result in significantly lower fair value measurements. Significant increases in implied volatility would result in significantly higher fair value measurements.

Note 5. Notes Payable

On May 23, 2013, as amended on June 6, 2013, September 26, 2014 and July 20, 2015, the Company, through SPV, entered into a $102.0 million financing transaction (the “Term Facility”) due December 5, 2018 with UBS. The Financing Facility is collateralized by the portion of the Company’s assets held by SPV (the “SPV Assets”) and pledged as collateral as noted in the Consolidated Schedule of Investments. The Company will pay interest on the face amount of the Financing Facility at a rate of one month LIBOR plus a spread of 2.75% per annum (the “Financing Rate”). Prior to September 26, 2014, the Company paid interest on the Financing Facility at a rate of one month LIBOR plus a spread of 2.85% per annum.

On December 5, 2013, as modified on September 26, 2014, the Company amended the terms of the Term Facility to add a $50.0 million revolving financing (the “Revolving Financing” and together with the Term Facility, the “Financing Facility”), which expires on December 4, 2016. The Revolving Financing bears interest at a fixed rate of 2.00% per annum on drawn amounts and 0.50% per

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annum on any undrawn portion. Prior to September 26, 2014, the rate on drawn amounts was 2.10% per annum through December 4, 2014, and 1.60% thereafter. As of June 30, 2015 and June 30, 2014, $48.8 and $9.1 million was outstanding on the Revolving Financing, respectively.

This financing transaction was initially executed in four steps:

First, the Company organized SPV, a consolidated wholly owned bankruptcy remote special purpose vehicle in the Cayman Islands to purchase the SPV Assets through (i) the issuance and sale of notes secured by the SPV Assets (the “Term Notes”) to UBS and the Company and (ii) the transfer of cash to the Company. UBS purchased Term Notes with a face value of $76.5 million, which represent 51% of the Term Notes issued and outstanding, for $76.5 million in cash. The Company purchased Term Notes with a face value of $73.5 million (which are eliminated in consolidation), which represent 49% of the Term Notes issued and outstanding. Under the terms of the indenture under which the Term Notes were issued (the “Indenture”), the holders of the Term Notes are entitled to (i) periodic interest payments equal to their pro rata portion of the interest collected on the assets held by SPV and (ii) their pro-rata portion of the net appreciation (depreciation) on the SPV Assets at maturity (the “Total Return of the Notes”) This represents the embedded derivative in the Term Notes payable from SPV to UBS. On September 26, 2014, the Company increased the size of the Term Facility to $102.0 million. In connection with the upsize, UBS purchased additional Term Notes with a face value of $25.5 million for $25.5 million in cash. The Company also purchased additional Term Notes with a face value of $24.5 million.

Second, the Company and UBS entered into a TRS transaction whereby the Company will receive the Total Return of the Notes purchased by UBS and pay the Financing Rate.

Third, SPV issued and sold an additional $50.0 million notes (the “Revolving Notes”) together with the Term Notes, the “Notes”, secured by the SPV Assets to UBS. Cash is only exchanged when the Revolving Notes are drawn. Under the terms of the Indenture under which the Revolving Notes were issued (the “Revolver Indenture”), the holders of the Revolving Notes are entitled to (i) periodic interest payments equal to their pro rata portion of the interest collected on the SPV Assets and (ii) their pro-rata portion of the net appreciation (depreciation) on the SPV Assets at maturity (the “Total Return of the Revolving Notes”). This represents the embedded derivative in the Revolving Notes payable from SPV to UBS.

Fourth, the Company and UBS entered into another TRS transaction whereby the Company will receive the Total Return of the Revolving Notes purchased by UBS and pay the Revolver Financing Rate.

The fair value of the Company’s Notes Payable is estimated based on the rate at which similar facilities would be priced. At June 30, 2015 and June 30, 2014, the fair value of the Notes Payable was estimated at $150.8 million and $85.6 million, respectively, which the Company concluded was a Level 3 fair value.

Cash, restricted (as shown on the Consolidated Statements of Assets and Liabilities) is held by the trustee of the Financing Facility and is restricted to purchases of investments by SPV that must meet certain eligibility criteria identified by the Indenture. As of June 30, 2015, SPV had assets of $298.8 million, which included $292.9 million of the Company’s portfolio investments at fair value, $2.5 million of accrued interest receivable and $3.4 million in cash held by the trustee of the Financing Facility. At June 30, 2015 and June 30, 2014, the carrying amount of the Notes approximates the fair value. For the twelve months ended June 30, 2015, the weighted average outstanding debt balance and the weighted average stated interest rate was $122.6 million and 2.88%. For the twelve months ended June 30, 2014, the weighted average outstanding debt balance and the weighted average stated interest rate was $78.9 million and 2.44%, respectively.

Note 6. Indemnification, Guarantees, Commitments and Contingencies

In the normal course of business, the Company enters into contracts which provide a variety of representations and warranties, and that provide general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.

On June 10, 2015, the Company’s Board of Directors declared a special distribution of $0.43 per share payable on September 15, 2015 to shareholders of record as of September 1, 2015, and, a regular quarterly distribution for the quarter ended September 30, 2015 of $0.3469 per share payable on October 2, 2015 to shareholders of record as of September 18, 2015.

Loans purchased by the Company may include revolving credit agreements or other financing commitments obligating the Company to advance additional amounts on demand. The Company generally sets aside sufficient liquid assets to cover its unfunded commitments. As of June 30, 2015, the Company held unfunded commitments in the amount of approximately $250,000 and, as of June 30, 2014, the Company held unfunded commitments in the amount of approximately $1.4 million.

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The following table details the unfunded commitments as of June 30, 2015:

Investments	Unfunded Commitment		Fair Value		Annual Non-use Fee			Expiration Date
Butler Burgher Group LLC	$	250,000	$	—		0.50	%		June 30, 2017
Total Unfunded Commitments	$	250,000	$	—

The following table details the unfunded commitments as of June 30, 2014:

Investments	Unfunded Commitment		Annual Non-use Fee
Butler Burgher Group LLC	$	250,000		0.50	%
U.S. Well Services, LLC		1,136,364		0.50	%
Total Unfunded Commitments	$	1,386,364

Note 7. Agreements and Related Party Transactions

Related Party Transactions

As of June 30, 2015, Mr. Michael C. Mauer, the Company’s Chief Executive Officer, and Mr. Christopher E. Jansen, the Company’s President and Secretary and members of the Company’s board of directors together owned 1.2% of the Company’s outstanding common stock, and Messrs. Mauer and Jansen also hold a 42% interest in the Adviser.

As of June 30, 2015, Stifel Venture Corp. (“Stifel”) owns 16% of the Company’s outstanding common stock, and also holds a 20% interest in the Adviser.

As of June 30, 2015, the Cyrus Funds own 27.91% of the Company’s outstanding common stock and a 38% interest in the Adviser.

In connection with the Offering, the Adviser, paid $3.45 million or 50% of the total underwriting costs, and offering costs in excess of the $1.2 million paid by Company.

Investment Advisory Agreement

On February 5, 2014, upon the Company’s election to be regulated as a BDC, the Company entered into the Advisory Agreement with the Adviser. Pursuant to the Advisory Agreement, the Company has agreed to pay to the Adviser a base management fee of 1.75% of gross assets, as adjusted, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents and “fair value of derivatives associated with the Company’s financing”, and an incentive fee consisting of two parts.

The first part of the incentive fee which is calculated and payable quarterly in arrears, equals 20.0% of the “pre-incentive fee net investment income” (as defined in the agreement) for the immediately preceding quarter, subject to a hurdle rate of 2.0% per quarter (8.0% annualized), and is subject to a “catch-up” feature. The incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of the Company’s pre-incentive fee net investment income will be payable except to the extent 20.0% of the cumulative net increase in net assets resulting from operations over the then current and 12 preceding quarters exceeds the cumulative incentive fees accrued and/or paid for the 12 preceding quarters. The net pre-incentive fee investment income used to calculate this part of the incentive fee is also included in the amount of the Company’s gross assets used to calculate the 1.75% base management fee.

The second part of the incentive fee is calculated and payable in arrears as of the end of each calendar year and equals 20.0% of the aggregate cumulative realized capital gains from inception through the end of each calendar year, computed net of aggregate cumulative realized capital losses and aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid capital gain incentive fees.

The Adviser has agreed to permanently waive: (i) all or portions of base management fees through December 31, 2014, to the extent required to support an annualized dividend yield of 9.0% per annum based on the price per share of the Company’s common stock in the Offering of $15.00, and (ii) all or portions of the incentive fee for 2014, 2015 and 2016, to the extent required to support an annualized dividend yield of 9.0%, 9.25% and 9.375% per annum, respectively, based on the price per share of the Company’s common stock in of the Offering of $15.00.

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For the twelve months ended June 30, 2015, $5,169,039 in base management fees were earned by the Adviser, of which $1,420,978 was payable at June 30, 2015. For the period from February 6, 2014 through June 30, 2014, $1,461,770 in base management fees were earned by the Adviser, of which $1,148,533 were waived and $313,327 was payable at June 30, 2014. No base management fees were earned, waived or payable prior to February 6, 2014.

For the twelve months ended June 30, 2015, the Company incurred $4,711,675 of incentive fees related to pre-incentive fee net investment income, of which $1,174,655 was waived. As of June 30, 2015, $1,438,910 of such incentive fees are currently payable to the Adviser and $284,350 of pre-incentive fees incurred by the Company were generated from deferred interest (i.e. PIK and certain discount accretion) and are not payable until such amounts are received in cash. No incentive fees were earned, waived or payable prior to June 30, 2014.

The realized gains incentive fee consists of fees related to both realized gains and unrealized gains (described in more detail below). As of June 30, 2015, there was no realized gains incentive fee payable to the Adviser under the Investment Advisory Agreement. No realized gains incentive fees were earned or payable prior to June 30, 2014.

With respect to the incentive fee expense accrual relating to the unrealized gains incentive fee, GAAP requires that the realized gains incentive fee accrual consider the cumulative aggregate unrealized appreciation in the calculation, as a realized gains incentive fee would be payable if such unrealized appreciation were realized, even though such unrealized appreciation is not permitted to be considered in calculating the fee actually payable under the Advisory Agreement.

The Advisory 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 under the Advisory Agreement, the Adviser and its officers, managers, partners, agents, employees, controlling persons and members, and any other person or entity affiliated with it, are entitled to indemnification from the Company 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 Advisory Agreement or otherwise as the Adviser.

Prior to the Company’s election to be regulated as a BDC on February 5, 2014, no base or incentive management fees were due and payable.

Administration Agreement

The Company entered into an administration agreement with the Adviser pursuant to which the Adviser furnishes the Company with office facilities and equipment and will provide the Company with the clerical, bookkeeping, recordkeeping and other administrative services necessary to conduct day-to-day operations. Under this administration agreement, the Adviser will perform, or oversee the performance of, its required administrative services, which includes, among other things, being responsible for the financial records which it is required to maintain and preparing reports to its stockholders and reports filed with the SEC. Under an administration agreement with the Adviser, the Adviser provides the Company with the Company’s other accounting and back-office professionals, equipment and clerical, bookkeeping, recordkeeping and other administrative services. The Investment Adviser has also retained the services of accounting and back office professionals through a services agreement with Cyrus Funds to assist the Adviser in fulfilling certain of its obligations to the Company under the administration agreement. There were $591,233 of such costs incurred under the administration agreement for the twelve months ended June 30, 2015. For the period from February 6, 2014 through June 30, 2014, $267,809 was incurred under the administrative agreement and included in professional fees and other expenses on the Consolidated Statement of Operations.

As of June 30, 2015 and June 30, 2014, the Company recorded $137,500 and $132,619, respectively, in accrued expenses and other liabilities on its Consolidated Statements of Assets and Liabilities for reimbursement of expenses owed to the Adviser.

License Agreement

The Company has entered into a license agreement with the Adviser under which the Adviser has agreed to grant the Company a non-exclusive, royalty-free license to use the name “CM Finance.” Under this agreement, the Company has a right to use the “CM Finance” name for so long as the Adviser or one of its affiliates remains the Adviser. Other than with respect to this limited license, the Company has no legal right to the “CM Finance” name.

91

Stifel Arrangement

In December 2013, the Company entered into an arrangement pursuant to which Stifel made a capital contribution to the Company on February 5, 2014 and the Company granted Stifel certain rights, such as a right to nominate for election a member of the Company’s board of directors. Stifel does not have any rights to exercise a controlling influence over the Company’s day-to-day operations or the investment management function of the Company’s Adviser.

Five of the investment professionals employed by the Adviser as part of the investment team are also employees of Stifel. Although these investment professionals dedicate substantially all of their time to the business and activities of the Adviser, they are dual employees of both Stifel and the Adviser, and as a result, may continue to engage in investment advisory activities for Stifel.

Note 8. Directors Fees

Each of the Company’s four independent directors receive (i) an annual fee of $75,000, and (ii) $2,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending in person or telephonically each regular board of directors meeting and each special telephonic meeting. The Company’s independent directors also receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with each committee meeting attended in person and each telephonic committee meeting. The chairman of the audit committee receives an annual fee of $7,500. The chairperson of the valuation committee, the nominating and corporate governance committee and the compensation committee received an annual fee of $2,500, $2,500 and $2,500, respectively. The Company has obtained directors’ and officers’ liability insurance on behalf of the Company’s directors and officers. Independent directors have the option of having their directors’ fees paid in shares of the Company’s common stock issued at a price per share equal to the greater of net asset value or the market price at the time of payment. For twelve months ended June 30, 2015, the Company recorded directors’ fees of $426,255, of which $0 were payable at June 30, 2015. For twelve months ended June 30, 2014 and June 30, 2013, the Company recorded directors’ fees of $201,500 and $0, respectively, of which $0 and $0 were payable at June 30, 2014 and June 30, 2013, respectively.

Note 9. Earnings Per Share

In accordance with the provisions of ASC Topic 260 – Earnings per Share (“ASC 260”), basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.

The following table sets forth the computation of the weighted average basic and diluted net increase in net assets per share from operations:

Basic and Diluted Net Increase (Decrease) in Net Assets Per Share
	Twelve Months Ended June 30, 2015		For the period from February 6, 2014 through June 30, 2014
Net increase in net assets resulting from operations attributable to CM Finance Inc	$	15,433,288	$	6,956,182
Weighted average shares outstanding		13,666,812		13,666,666
Basic/diluted net increase in net assets from operations per share	$	1.13	$	0.51

Note 10. Distributions

The following table reflects the cash distributions per share that the Company declared and/or paid to its stockholders since the Offering in February 2014. Stockholders of record as of each respective record date were entitled to receive the distribution:

Declaration Date	Record Date	Payment Date	Amount Per Share
March 14, 2014	March 24, 2014	March 31, 2014	$	0.1812
May 14, 2014	June 16, 2014	July 1, 2014	$	0.3375
September 4, 2014	September 18, 2014	October 1, 2014	$	0.3375
November 6, 2014	December 18, 2014	January 5, 2015	$	0.3375
January 28, 2015	March 18, 2015	April 2, 2015	$	0.3469
June 10, 2015*	September 1, 2015	September 15, 2015	$	0.4300
June 10, 2015	September 18, 2015	October 2, 2015	$	0.3469

^*  Special dividend

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The following table reflects the sources of the cash distributions that the Company has paid on its common stock during the twelve months ended June 30, 2015 and June 30, 2014:

	Twelve Months Ended June 30, 2015,
	2015					2014
	Distribution Amount		Percentage			Distribution Amount		Percentage
Net investment income	$	18,707,141		100	%	$	7,089,351		100	%
Short-term capital gains		—		—			—		—
Long-term capital gains		—		—			—		—
Total	$	18,707,141		100	%	$	7,089,351		100	%

Note 11. Share Transactions

The following table summarizes the total shares issued for the twelve months ended June 30, 2015.

	Shares		Amount
Balance at beginning of year		13,666,666	$	200,349,990
Shareholder distributions		601		7,881
Balance at end of year		13,667,267		200,357,871

The following table summarizes the total shares issued and proceeds received in connection with the Company’s Offering and other formation transactions for the twelve months ended June 30, 2014.

	Shares			Amount
Issuance of shares to Original Investors		6,000,000		$	90,000,000
Issuance of shares to Stifel		2,181,818			32,727,270
Repurchase of shares from Original Investors		(2,181,818	)		(32,727,270	)
Issuance of shares in the Offering		7,666,666			114,999,990
Total Shares issued		13,666,666			204,999,990
Underwriting costs		—			(3,450,000	)
Offering costs		—			(1,200,000	)
Total shares outstanding/net proceeds to Company		13,666,666		$	200,349,990

As of June 30, 2014, the Company has issued 13,666,666 shares of common stock through (i) issuance to the Original Investors and Stifel, net of a repurchase of shares from the Original Investors, and (ii) the Offering.

93

Note 12. Financial Highlights

The following represents the per share data and the ratios to average net assets for CM Finance Inc:

	Twelve months ended June 30, 2015			For the period from February 6, 2014 through June 30, 2014
Per Share Data:(1)
Net asset value, beginning of period	$	14.65		$	14.75	*
Net investment income		1.48			0.47
Net realized and unrealized gains (losses)		(0.35	)		0.04
Net increase in net assets resulting from operations		1.13			0.51
Distributions from net investment income(2)		(1.37	)		(0.52	)
Offering costs		—			(0.09	)
Net decrease in net assets resulting from capital share transactions		—			(0.34	)
Net asset value, end of period	$	14.41		$	14.65
Market value per share, end of period	$	13.61		$	14.56
Total return based on net asset value(3)(4)		7.55	%		2.86	%
Total return based on market value(4)(5)		3.67	%		0.57	%
Shares outstanding at end of period		13,667,267			13,666,666
Ratio/Supplemental Data:
Net assets, at end of period	$	196,950,849		$	200,216,821
Ratio of total expenses to average net assets(6)		8.95	%		5.46	%
Ratio of net expenses to average net assets(6)		8.36	%		4.02	%
Ratio of interest expense and fees and amortization of deferred debt issuance costs to average net assets(6)		2.37	%		1.27	%
Ratio of net investment income before fee waiver to average net assets(6)		9.54	%		6.58	%
Ratio of net investment income after fee waiver to average net assets(6)		10.13	%		8.03	%
Total Notes Payable		150,847,459			85,591,314
Asset Coverage Ratio(7)		2.31			3.34
Portfolio Turnover Rate(4)		46	%(8)		67	%(9)

* Net asset value at beginning of period reflects the deduction of the sales load of $0.25 per share paid by the shareholder from the $15.00 offering price.

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

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

⁽³⁾  Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions, if any, reinvested. Distributions are assumed to be reinvested at prices obtained under the Company’s dividend reinvestment plan.

⁽⁴⁾  Not annualized.

⁽⁵⁾  Total return based on market value is based on the change in market price per share.

⁽⁶⁾  Annualized. For the period from February 6, 2014 through June 30, 2014.

⁽⁷⁾  Asset coverage ratio is equal to (i) the sum of (A) net assets at the end of the period and (B) debt outstanding at the end of the period, divided by (ii) total debt outstanding at the end of the period.

⁽⁸⁾  For the twelve months ended June 30, 2015.

⁽⁹⁾  For the period from February 6, 2014 through June 30, 2014.

94

The following represents supplemental ratios and data for CM Finance LLC:

	Period from July 1, 2013 to February 5, 2014			Twelve months ended June 30, 2013			Period from March 7, 2012 to June 30, 2012
Total return		7.86	%		16.16	%		2.58	%
Ratio of net investment income to average members’ capital		8.40	%		11.11	%		2.06	%
Ratio of operating expenses to average members’ capital		(2.37	)%		(1.12	)%		(1.34	)%
Ratio of credit facility related expenses to average members’ capital		(1.54	)%		(0.29	)%		0.00	%
Ratio of total expenses to average members’ capital		(2.53	)%		(1.14	)%		(1.34	)%
Portfolio turnover rate		41.76	%		68.37	%		69.68	%
Supplemental Data:
Members’ capital at end of period	$	90,000,000		$	87,250,637		$	18,141,667
Average members’ capital	$	105,716,373		$	55,294,030		$	14,790,409

Total return is calculated based on a time-weighted rate of return methodology for the members, and is not annualized. Total return is reflected after all investment-related and operating expenses. An individual member’s return may vary from these returns based on the timing of capital transactions. The ratios to average members’ capital are calculated based on the monthly average members’ capital during the period.

The ratios to average members’ capital are calculated based on the monthly average members’ capital during the period. Credit facility related expenses include interest expense and amortization of deferred debt issuance costs.

Note 13. Other Fee Income

The other fee income consists of structuring fee income, amendment fee income and royalty income. The following tables summarize the Company’s other fee income for the twelve months ended June 30, 2015, June 30, 2014 and June 30, 2013:

	Twelve Months Ended June 30,
	2015		2014		2013
Loan Structuring Fee	$	452,467	$	170,000	$	241,135
Loan Amendment/Consent Fee		75,875		431,590		—
Royalty Income		101,864		—		—
Other Fee Income	$	630,206	$	601,590	$	241,135

Note 14. Tax Information

As of June 30, 2015, the Company’s aggregate investment unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	337,031,426
Gross unrealized appreciation		2,556,631
Gross unrealized depreciation		(9,264,201	)
Net unrealized investment depreciation	$	(6,707,570	)

As of June 30, 2014, the Company’s aggregate investment unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	273,227,783
Gross unrealized appreciation		1,218,578
Gross unrealized depreciation		(735,896	)
Net unrealized investment appreciation	$	482,682

95

Note 15. Selected Quarterly Financial Data (unaudited)

	For the Quarter Ended June 30, 2015			For the Quarter Ended March 31, 2015			For the Quarter Ended December 31, 2014		For the Quarter Ended September 30, 2014
Total Investment Income	$	11,519,845		$	8,329,040		$	9,207,351	$	7,860,869
Total Investment Income per Common Share		0.84			0.61			0.67		0.58
Net Investment Income		6,251,707			4,740,996			4,612,500		4,612,500
Net Investment Income per Common Share		0.46			0.35			0.34		0.34
Net Realized and Unrealized Gain		(1,585,671	)		(6,651,128	)		3,471,444		(19,060	)
Net Realized and Unrealized Gain per Common Share		(0.12	)		(0.49	)		0.25		(0.00	)*
Net Increase in Net Assets Resulting from Operations		4,666,036			(1,910,132	)		8,083,944		4,593,440
Basic and Diluted Earnings per Common Share		0.34			(0.14	)		0.59		0.34
Net Asset Value per Common Share at End of Quarter		14.41			14.42			14.90		14.65

* Rounds to less than $(0.005).

Note 16. Subsequent Events

The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued.

On August 14, 2015, the Company entered into the Fifth Amended Total Return Swap Confirmation Letter Agreement with UBS, which amended the Term Financing to (i) extend the Stated Maturity by one year to December 5, 2018 and (ii) increase all-in costs (interest and fees) to LIBOR plus 3.35% from LIBOR plus 3.00% (for the extended one-year period).

Subsequent to the year ended June 30, 2015 through September 2, 2015, the Company invested $35.7 million in new and existing portfolio companies and received repayment or sales proceeds of $44.5 million.

96

Item 9. Changes in and Disagreements with Independent Registered Public Accounting Firm on Accounting and Financial Disclosure

There were no changes in or disagreements on accounting or financial disclosure with Ernst & Young, LLP, the Company’s independent registered public accounting firm, during the fiscal year ended June 30, 2015.

Item 9A. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

As of June 30, 2015 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(b) Changes in Internal Control Over Financial Reporting

Management did not identify any change in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

This annual report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for newly reporting companies and provisions in the JOBS Act applicable to emerging growth companies.

Item 9B. Other Information.

None.

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PART III

We will file a definitive Proxy Statement for our 2015 Annual Meeting of Stockholders with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted under General Instruction G(3) to the annual report on Form 10-K. Only those sections of our definitive Proxy Statement that specifically address the items set forth herein are incorporated by reference.

Item 10. Directors, Executive Officers and Corporate Governance

The information required by Item 10 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2015 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.

We have adopted a code of business conduct and ethics that applies to our directors, officers and employees. This code of ethics is published on our website at www.cmfn-inc.com. We intend to disclose any future amendments to, or waivers from, this code of conduct within four business days of the waiver or amendment through a Web site posting.

Item 11. Executive Compensation

The information required by Item 11 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2015 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2015 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2015 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.

Item 14. Principal Accountant Fees and Services

The information required by Item 14 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2015 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.

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PART IV

Item 15. Exhibits, Financial Statement Schedules

a. Documents Filed as Part of this Report

The following financial statements are set forth in Item 8:

	Page
Report of Independent Registered Public Accounting Firm		66
Consolidated Statements of Assets and Liabilities as of June 30, 2015 and June 30, 2014		67
Consolidated Statements of Operations for the twelve months ended June 30, 2015, June  30, 2014 and June 30, 2013		68
Consolidated Statements of Changes in Net Assets for the twelve months ended June 30, 2015, June  30, 2014 and June 30, 2013		69
Statements of Cash Flows for the twelve months ended June 30, 2015, June 30, 2014 and June  30, 2013		70
Schedule of Investments as of June 30, 2015		71
Schedule of Investments as of June 30, 2014		73
Notes to Financial Statements		75

99

b. Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:

3.1	Amended and Restated Articles of Incorporation(1)
3.3	Bylaws(1)
4.1	Irrevocable Proxy of the Cyrus Funds(2)
4.2	Form of Stock Certificate(1)
10.1	Form of Investment Advisory Agreement between Registrant and CM Investment Partners LLC(1)
10.2	Collateral Management Agreement, dated as of May 23, 2013, by and between CM Finance SPV Ltd and CM Investment Partners, LP(1)
10.3	Form of Letter Agreement between the Registrant and CM Investment Partners LLC(3)
10.4	Form of Dividend Reinvestment Plan(2)
10.5	Form of Custody Agreement(2)
10.6	Form of Administration Agreement between Registrant and CM Investment Partners LLC(1)
10.7	Form of License Agreement between the Registrant and CM Investment Partners LLC(1)
10.8	Form of Indemnification Agreement between the Registrant and the Directors(1)
10.9	2002 Master Agreement, dated as of May 20, 2013, between Registrant and UBS AG(1)
10.10	Indenture, dated as of May 23, 2013, between CM Finance SPV Ltd., as Issuer and State Street Bank and Trust Company, as Trustee(1)
10.11	Master Assignment and Participation Agreement, dated as of May 23, 2013 between Registrant and CM Finance SPV Ltd.(1)
10.12	Collateral Administration Agreement, dated as of May 23, 2013 by and among CM Finance SPV Ltd., CM Investment Partners, LP and State Street Bank and Trust Company(1)
10.13	Amended and Restated Confirmation Letter Agreement, dated as of May 23, 2013, between UBS, AG and CM Finance LLC(1)
10.14	Contribution Agreement, dated as of May 23, 2013, between CM Finance LLC and State Street Bank and Trust Company(1)
10.15	First Supplemental Indenture, dated as of June 6, 2013, between CM Finance SPV Ltd., as Issuer and State Street Bank and Trust Company, as Trustee(1)
10.16	Amended and Restated Indenture, dated as of December 4, 2013, between CM Finance SPV Ltd., as Issuer and State Street Bank and Trust Company, as Trustee(2)
10.17	Revolving Credit Note Agreement, dated as of December 4, 2013, by and among CM Finance SPV Ltd., State Street Bank and Trust Company and the noteholders party thereto(2)

100

10.18	Amendment Agreement, dated as of December 4, 2013, between CM Finance SPV Ltd. and State Street Bank and Trust Company(2)
10.19	Amendment Agreement to 2002 ISDA Master Agreement, dated as of December 4, 2013 between Registrant and UBS AG(2)
10.20	Omnibus Amendment Agreement, dated as of December 4, 2013, by and between CM Finance SPV Ltd. and State Street Bank and Trust Company(2)
10.21	Form of Assignment of Collateral Management Agreement by and among CM Investment Partners, LP and CM Investment Partners LLC(3)
10.22	Form of Assignment of Collateral Administration Agreement by and among CM Investment Partners, LP and CM Investment Partners LLC(3)
10.23	Registration Right Agreement, dated as of December 17, 2013, between Registrant and certain stockholders(2)
10.24	Stockholder Agreement, dated as of December 17, 2013, between the Registrant and Stifel Venture Corp. (2)
10.25	Amended and Restated Revolving Credit Note Agreement, dated September 26, 2014, by and among CM Finance Inc., CM SPV Ltd., UBS AG, and State Street Bank and Trust Company(4)
10.26	Second Amended and Restated Indenture, dated September 26, 2014, between CM SPV Ltd. and State Street Bank and Trust Company(4)
10.27	Second Amendment Agreement to 2002 ISDA Master Agreement, dated September 26, 2014, between CM Finance Inc. and UBS AG(4)
10.28	Second Amendment Agreement to the Second Amended and Restated Indenture, dated September 26, 2014, between CM SPV Ltd. and State Street Bank and Trust Company (4)
10.29	Second Omnibus Amendment Agreement, dated September 26, 2014, between CM SPV Ltd., CM Investment Partners LLC and State Street Bank and Trust Company(4)
10.30	Amended Total Return Swap Confirmation Letter Agreement, dated September 26, 2014, between UBS AG and CM Finance Inc(4)
10.31	Third Amended Total Return Swap Confirmation Letter Agreement, dated September 26, 2014, between UBS AG and CM Finance Inc(4)
10.32*	Second Amended and Restated Revolving Credit Note Agreement, dated July 20, 2015, by and among CM Finance Inc., CM SPV Ltd., UBS AG, and State Street Bank and Trust Company
10.33*	Third Amended and Restated Indenture, dated July 20, 2015, between CM SPV Ltd. and State Street Bank and Trust Company
10.34*	Third Amendment Agreement to 2002 ISDA Master Agreement, dated July 20, 2015, between CM Finance Inc. and UBS AG
10.35*	Third Amendment Agreement to the Third Amended and Restated Indenture, dated July 20, 2015, between CM SPV Ltd. and State Street Bank and Trust Company
10.36*	Fourth Amended Total Return Swap Confirmation Letter Agreement, dated July 20, 2015, between UBS AG and CM Finance Inc

101

10.37*	Second Amended Total Return Swap Confirmation Letter Agreement, dated July 17, 2015, between UBS AG and CM Finance Inc
10.38*	Fifth Amended Total Return Swap Confirmation Letter Agreement, dated August 14, 2015, between UBS AG and CM Finance Inc
11.1	Computation of Per Share Earnings (included in the notes to the audited financial statements contained in this report)
14.1	Code of Ethics of CM Finance Inc(1)
21.1	Subsidiaries of CM Finance Inc CM Finance SPV Ltd.
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.
32.1*	Certification of Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

* Filed herewith

(1) Incorporated by reference to Registrant’s Registration Statement on Form N-2 (File No. 333-192370), filed on November 15, 2013.

(2) Incorporated by reference to Registrant’s Registration Statement on Form N-2 (File No. 333-192370), filed on December 20, 2013.

(3) Incorporated by reference to Registrant’s Registration Statement on Form N-2 (File No. 333-192370), filed on January 24, 2014.

(4) Incorporated by reference to Registrant’s Current Report on Form 8-K (File No. 814-01054), filed on October 2, 2014.

c. Financial statement schedules

No financial statement schedules are filed herewith because (1) such schedules are not required or (2) the information has been presented in the aforementioned financial statements.

102

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CM FINANCE INC
Date: September 8, 2015	/s/    Michael C. Mauer
	Michael C. Mauer Chief Executive Officer
Date: September 8, 2015	/s/    Jai Agarwal
	Jai Agarwal Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.

Date: September 8, 2015	/s/    Michael C. Mauer
	Michael C. Mauer Chief Executive Officer
Date: September 8, 2015	/s/    Jai Agarwal
	Jai Agarwal Chief Financial Officer (Principal Accounting and Financial Officer)
Date: September 8, 2015	/s/    Christopher E. Jansen
	Christopher E. Jansen President, Treasurer, Secretary and Director
Date: September 8, 2015	/s/    Keith Lee
	Keith Lee Director
Date: September 8, 2015	/s/    Julie Persily
	Julie Persily Director
Date: September 8, 2015	/s/    Robert P. Ryder
	Robert P. Ryder Director
Date: September 8, 2015	/s/    Robert T. Wagner
	Robert T. Wagner Director

103

EX-10.32

Exhibit 10.32

Execution Copy

Dated as of July 20, 2015

CM FINANCE SPV LTD.,

as Issuer

THE ENTITIES FROM TIME TO TIME PARTY HERETO,

as the Class A-R Noteholders

STATE STREET BANK AND TRUST COMPANY,

as Revolving Credit Note Agent

and

STATE STREET BANK AND TRUST COMPANY,

as Trustee

SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE AGREEMENT

CONTENTS

SECTION		PAGE
1.	Definitions and Interpretation		1
1.1.	Definitions		1
1.2.	Interpretation		4
2.	The Class A-R Notes		4
2.1.	Borrowings		4
2.2.	Advances; Repayments; Class A-R Commitment Amounts		7
2.3.	Outstanding Class A-R Funded Amount		7
2.4.	Agency Compensation		7
2.5.	Class A-R Prepayment Account; Withdrawals		8
2.6.	Class A-R Note Interest		10
3.	Conditions Precedent to Borrowings		10
3.1.	Conditions to Funding.		10
3.2.	Representations regarding Conditions.		11
4.	Assignments		11
4.1.	Assignment		11
4.2.	Rights of Assignee under this Agreement		12
4.3.	Notice of Assignment		13
4.4.	Class A-R Note Register; Information		13
5.	Representations and Warranties		14
5.1.	Representations and Warranties of the Issuer		14
5.2.	Representations and Warranties of each Class A-R Noteholder		14
6.	The Revolving Credit Note Agent		15
7.	Miscellaneous		19
7.1.	Waivers; Amendments; Etc.		19
7.2.	Notices, Etc.		20
7.3.	Captions		20
7.4.	Governing Law; Jurisdiction; Venue		20
7.5.	Consent to Service of Process		20

7.6.	Waiver of Jury Trial	21
7.7.	Execution in Counterparts	21
7.8.	Tax Treatment of Notes	21
7.9.	Transfer Taxes	21
7.10.	Severability	21
7.11.	Further Assurances	22
7.12.	Limited Recourse, Non-Petition as to the Issuer	22
7.13.	Prior Agreements	22

Exhibit A	-	Form of Notice of Borrowing
Exhibit B	-	Form of Assignment and Acceptance

SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE AGREEMENT, dated as of July 20, 2015 (this “Agreement”), between:

CM FINANCE SPV LTD., an exempted company incorporated with limited liability under the laws of the Cayman Islands (the “Issuer”);

each of UBS AG, LONDON BRANCH and CM FINANCE INC. (as successor by merger to CM Finance LLC), as a Class A-R Noteholder on the Amendment and Restatement Date, as evidenced by its execution of this Agreement on the Amendment and Restatement Date (each, an “Initial Holder”), and any entity that becomes a party hereto as a Class A-R Noteholder (each, together with each Initial Holder, a “Class A-R Noteholder”);

STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as agent for the Issuer (in such capacity, together with its successors in such capacity, the “Revolving Credit Note Agent”); and

STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as trustee under the Indenture (the “Trustee”).

This Agreement amends, restates and supersedes in its entirety that certain Amended and Restated Revolving Credit Note Agreement, dated as of September 26, 2014 between the Issuer, each Initial Holder, the Revolving Credit Note Agent and the Trustee.

WHEREAS, the Issuer and the Trustee are parties to the Second Amended and Restated Indenture, dated as of July 20, 2015 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), pursuant to which the Issuer proposes to issue up to U.S.$100,000,000 Class A-R Notes (the “Class A-R Notes”) up to the Maximum RCN Facility Funding Commitment (as defined below) in effect from time to time.

ACCORDINGLY, the parties hereto agree as follows:

1. DEFINITIONS AND INTERPRETATION

1.1. Definitions

Capitalized terms used but not defined herein (including any Exhibits hereto) have the meanings given to them in the Indenture. As used in this Agreement (including any Exhibits hereto), the following terms have the meanings specified below:

“Advance” means any advance made or to be made by (or on behalf of) a Class A-R Noteholder to the Issuer in respect of any Borrowing.

“Aggregate Bond Notional Amount” has the meaning given to such term in the A-R Note/Bond Master TRS Confirmation.

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“A-R Note/Bond Master TRS Confirmation” means the Master Confirmation dated as of December 4, 2013 (amended and restated as of September 26, 2014, and as further amended and restated as of July 20, 2015) relating to certain total return swap transactions referencing the Class A-R Notes and bond securities, with UBS Reference Number 85242362 between UBS and the Sole Shareholder, as the same may be further amended, modified or otherwise supplemented from time to time.

“Assignment and Acceptance” means an assignment and acceptance entered into by a Class A-R Noteholder and any assignee of such Class A-R Noteholder, and delivered to the Revolving Credit Note Agent on behalf of the Issuer, in substantially the form of Exhibit B, pursuant to which a Class A-R Noteholder assigns all, but not less than all, of its rights and obligations under this Agreement with respect to the portion of such Class A-R Noteholder’s Class A-R Notes being assigned in accordance with the terms of Section 4.1.

“Bond Transaction” has the meaning given to such term in the A-R/Bond Master TRS Confirmation.

“Borrowing” means any advance of funds or capital contribution to the Issuer contemplated by Section 2.1; provided that, the term “Borrowing” shall exclude any amounts that remain on deposit in any Class A-R Prepayment Account.

“Borrowing Date” means the date of any proposed Borrowing, as set forth in the applicable Notice of Borrowing.

“Borrowing Request” has the meaning set forth in Section 2.1(a).

“Class A-R Commitment Amount” means, on any date and as to any Class A-R Noteholder, the product of (a) the Commitment Percentage of such Class A-R Noteholder as of such day and (b) an amount which is the Remaining Unfunded Facility Commitment (expressed as a Dollar amount) on such date.

“Class A-R Noteholder” means, with respect to any Class A-R Note, the Person in whose name such Class A-R Note is registered in the Class A-R Note Register.

“Class A-R Prepayment Account” has the meaning set forth in Section 2.5(a).

“Commitment Percentage” means, for any Class A-R Noteholder as of any date of determination, a percentage equal to (a)(i) the pro rata portion of the Remaining Unfunded Facility Commitment represented by the Class A-R Notes of such Class A-R Noteholder divided by (ii) the Remaining Unfunded Facility Commitment multiplied by (b) 100%; provided that, the Commitment Percentage for the Initial Holders as of the Amendment and Restatement Date shall be as set out below:

Initial Holder	Commitment Percentage
UBS AG, London Branch		50	%
CM Finance Inc.		50	%

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“Commitment Termination Date” means the earliest to occur of (a) the Stated Maturity of the Class A-R Notes; and (b) the occurrence of an Enforcement Event.

“Final Price” means, with respect to a terminated Bond Transaction, the “Final Price” for such Bond Transaction determined in accordance with the terms of the A-R Note/Bond Master TRS Confirmation.

“Maximum RCN Facility Funding Commitment” means, on any day, an amount equal to (a) U.S.$100,000,000, minus (b) the product of (i) two, and (ii) the Aggregate Bond Notional Amount (determined on a trade date basis).

“Notice of Borrowing” has the meaning set forth in Section 2.1(b).

“Notice of Repayment” has the meaning set forth in Section 2.5(e).

“Outstanding Class A-R Funded Amount” means the aggregate outstanding principal amount of Borrowings funded by Class A-R Noteholders pursuant to Section 2.1 of this Agreement which have not been repaid. The Outstanding Class A-R Funded Amount shall be subject to adjustment as described in Sections 2.2 and 2.5 of this Agreement.

“Prepayment Refund Date” means, with respect to any Class A-R Noteholder that has deposited all (or a portion of) its Class A-R Commitment Amount into such Class A-R Noteholder’s Class A-R Prepayment Account in accordance with Section 2.5(a), the Business Day after the Commitment Termination Date has occurred (or such earlier date designated by the relevant Class A-R Noteholder by notice to the Trustee, the Issuer and the Revolving Credit Note Agent).

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Remaining Unfunded Facility Commitment” means, with respect to any date of determination, the excess (if any) of: (a) the Maximum RCN Facility Funding Commitment over (b) the Outstanding Class A-R Funded Amount. For the avoidance of doubt, the Remaining Unfunded Facility Commitment shall not be reduced by the amount of any funds deposited in any Class A-R Prepayment Account by the relevant Class A-R Noteholder.

“Revolving Credit Note Agent Expenses” has the meaning set forth in Section 2.4(b).

“Substitution Notice” has the meaning set forth in Section 2.5(f).

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“Termination Settlement Date” has the meaning given to such term in the Bond TRS Master Confirmation.

1.2. Interpretation

Except as otherwise specified herein or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Agreement, and the definitions of such terms are equally applicable both to the singular and plural forms of such terms and to the masculine, feminine and neuter genders of such terms. Except as otherwise specified herein or as the context may otherwise require: (i) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (ii) references to a statute, regulation or other government rule are to it as amended from time to time and, as applicable, are to corresponding provisions of successor governmental rules (whether or not already so stated); (iii) the word “including” and correlative words shall be deemed to be followed by the phrase “without limitation” unless actually followed by such phrase or a phrase of like import; (iv) the word “or” is always used inclusively herein (for example, the phrase “A or B” means “A or B or both,” not “either A or B but not both”), unless used in an “either … or” construction; (v) references to a Person are references to such Person’s successors and assigns (whether or not already so stated); (vi) all references in this Agreement to designated “Articles”, “Sections”, “sub-Sections”, other subdivisions, Schedules and Exhibits are to the designated articles, sections, sub-sections, other subdivisions, schedules and exhibits of this Agreement; and (vii) the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular article, section, sub-section or other subdivision.

2. THE CLASS A-R NOTES

2.1. Borrowings

(a) Subject to the terms and conditions hereof, on any Business Day prior to the Commitment Termination Date, the Issuer (or the Collateral Manager on behalf of the Issuer) may request Borrowings (each a “Borrowing Request”) hereunder.

(b) From time to time as required pursuant to and in accordance with the terms of the Indenture, the Issuer (or the Collateral Manager on behalf of the Issuer) may deliver to the Revolving Credit Note Agent and the Class A-R Noteholders a notice (with a copy to the Trustee and the Collateral Manager, if not the notifying party), substantially in the form of Exhibit A hereto (each, a “Notice of Borrowing”), of a proposed Borrowing no later than 5:00 p.m. (New York City time) on the third Business Day prior to the proposed Borrowing Date. Each of the Issuer and, if applicable, the Collateral Manager agrees that any Notice of Borrowing delivered pursuant to this Section 2.1(b) shall be transmitted to the Revolving Credit Note Agent and the Class A-R Noteholders by facsimile or electronic mail (to the

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facsimile number or electronic mail address, as the case may be, specified on the Revolving Credit Note Agent’s and each Class A-R Noteholder’s respective signature pages to this Agreement), shall be substantially in the form of Exhibit A hereto, and shall specify the proposed Borrowing Date (which shall be a Business Day), the amount of such proposed Borrowing and relevant wire transfer instructions. In the event any Notice of Borrowing is not transmitted to the Revolving Credit Note Agent and the Class A-R Noteholders until after 5:00 p.m. (New York City time) on a Business Day, it will be treated as having been transmitted on the following Business Day for all purposes hereunder. The Revolving Credit Note Agent shall notify the Collateral Manager promptly (and in any event within one Business Day) of any change to the facsimile number or electronic mail address specified on each Class A-R Noteholder’s signature page to this Agreement to the extent that the Revolving Credit Note Agent has received notice of such change from a Class A-R Noteholder.

(c) So long as (x) the Commitment Termination Date has not occurred and (y) the conditions to funding set out in Section 3.1 have been satisfied, the Class A-R Noteholders shall make Advances to the Issuer on the Borrowing Date specified in the Notice of Borrowing (pro rata based on their respective Commitment Percentages) as follows:

(i) each Class A-R Noteholder obligated to make an Advance hereunder, no later than 12:00 p.m. (New York City time) on the Borrowing Date specified in the Notice of Borrowing, shall have made available to the Trustee, in immediately available funds, an amount equal to its Commitment Percentage of the Borrowing in respect of such Advance in accordance with the wire transfer instructions set forth in the Notice of Borrowing;

(ii) a Class A-R Noteholder that has elected to establish a Class A-R Prepayment Account pursuant to Section 2.5(a) shall be deemed to satisfy its obligation under clause (i) if, no later than 12:00 p.m. (New York City time) on the Borrowing Date specified in the Notice of Borrowing, such Class A-R Noteholder has cash standing to the credit of its Class A-R Prepayment Account in an amount no less than its Commitment Percentage of the Borrowing in respect of such Advance;

If, as of 12:00 p.m. (New York City time) on the Borrowing Date specified in the related Notice of Borrowing:

(A) each Class A-R Noteholder has satisfied its Advance payment obligation (either by payment to the Trustee in accordance with Section 2.1(c)(i) or deemed satisfaction pursuant to Section 2.1(c)(ii) above), (I) the Trustee shall transfer all funds received pursuant to Section 2.1(c)(i) to the Principal Collection Subaccount and (II) in the case of any Class A-R Noteholder that

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has satisfied such obligation pursuant to Section 2.1(c)(ii), the Trustee shall instruct the Custodian (without consent of such Class A-R Noteholder) to transfer cash in an amount equal to such Class A-R Noteholder’s Commitment Percentage of the Borrowing in respect of such Advance from such Class A-R Prepayment Account to the Principal Collection Subaccount; or

(B) any Class A-R Noteholder has failed to satisfy its Advance payment obligation (whether by payment to the Trustee in accordance with Section 2.1(c)(i) or deemed satisfaction pursuant to Section 2.1(c)(ii) above), (I) if the Trustee has received funds from a Class A-R Noteholder pursuant to Section 2.1(c)(i), the Trustee shall return such funds to such Class A-R Noteholder and (II) with respect to any funds standing to the credit of a Class A-R Prepayment Account, the Trustee shall instruct the Custodian to return such funds to the related Class A-R Noteholder.

For the avoidance of doubt, if with respect to any Advance, a Class A-R Noteholder has satisfied its Advance payment obligation pursuant to Section 2.1(c)(ii) but any other Class A-R Noteholder has failed to satisfy its own Advance payment obligation as of 12:00 p.m. (New York City time) on the Borrowing Date, the Trustee shall not be entitled to instruct the Custodian to transfer cash from such Class A-R Prepayment Account to the Issuer or any other Person (other than such Class A-R Noteholder as required by sub-clause (B) above) without the consent of such Class A-R Noteholder.

(d) The Issuer hereby agrees that each Class A-R Noteholder, acting in good faith, (i) is entitled to rely upon any Notice of Borrowing furnished to such Class A-R Noteholder hereunder by the Collateral Manager purporting to act on behalf of the Issuer, is genuine and authorized and (ii) shall not be liable to the Issuer with respect to any action taken or omitted to be taken by such Class A-R Noteholder in good faith in accordance with any such Notice of Borrowing.

(e) Following the termination of any Bond Transaction in accordance with Clause 3(a)(i) of the A-R Note/Bond Master TRS Confirmation, so long as (i) the Commitment Termination Date has not occurred, (ii) the conditions to funding set out in Section 3.1 have been satisfied, (iii) the Capital Contribution Amount (defined below) is less than or equal to the Remaining Unfunded Facility Amount on such day (determined after giving effect to any increase thereto resulting from such termination), and (iv) the only Class A-R Noteholders are the Initial Holders, each Class A-R Noteholder shall, promptly following, but in any event no later than the day falling two Business Days following, the relevant Termination Settlement Date (the “Capital Contribution Date”), make a capital contribution to the Issuer of an amount equal to the relevant Final Price (together, the “Capital Contribution Amount”).

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Each capital contribution made by a Class A-R Noteholder in accordance with this Section 2.1(e) shall be:

(i) deposited by the Issuer into the Principal Collection Subaccount for the benefit of the Secured Parties in accordance with Section 10.2(a) of the Indenture; and

(ii) deemed to constitute a “Borrowing” and an “Advance” for the purposes of this Agreement and the Indenture and the “Borrowing Date” for such Borrowing shall be the relevant Capital Contribution Date.

2.2. Advances; Repayments; Class A-R Commitment Amounts

(a) All Advances to the Issuer hereunder may be repaid by the Issuer pursuant to Section 2.5(e), notwithstanding the Priority of Payments, and any such Advances repaid by the Issuer may, subject to the conditions set forth herein, be reborrowed from time to time by the Issuer hereunder.

(b) Repayments of Advances to any Class A-R Noteholders under Section 2.2(a) and Section 2.5(e) of this Agreement or Section 11.1(a)(ii) of the Indenture shall be applied to pay the Class A-R Noteholders, pro rata, based on the respective portions of the Outstanding Class A-R Funded Amount represented by their Class A-R Notes, and such payment shall reduce the Outstanding Class A-R Funded Amount.

(c) Any deposit by a Class A-R Noteholder of any amount into such Class A-R Noteholder’s Class A-R Prepayment Account pursuant to the terms hereof will not reduce such Class A-R Noteholder’s Class A-R Commitment Amount.

2.3. Outstanding Class A-R Funded Amount

The parties hereto hereby acknowledge and agree that all Borrowings shall be deemed to be part of the Outstanding Class A-R Funded Amount, regardless of whether the conditions to the related Borrowing set forth herein or in the Indenture were in fact satisfied, until such amounts are repaid in accordance with the terms of this Agreement, the Indenture and such Class A-R Notes. Each of the Class A-R Noteholders acknowledges that the obligations of the Issuer to pay any Outstanding Class A-R Funded Amount under the Class A-R Notes, and the terms of repayment thereof, are governed by this Agreement and the Indenture.

2.4. Agency Compensation

(a) The Issuer agrees to reimburse the Revolving Credit Note Agent (subject to any written agreement between the Issuer and the Revolving Credit Note Agent) forthwith upon its request for all reasonable expenses incurred or made by the Revolving Credit Note Agent in accordance with any provision of this Agreement or the Indenture.

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(b) The Issuer will reimburse, and does hereby indemnify and hold harmless, the Revolving Credit Note Agent and its affiliates, directors, officers, shareholders, agents and employees with respect to all expenses, losses, damages, liabilities, demands, charges and claims of any nature (including the reasonable fees and expenses of counsel and other experts) in respect of or arising from its appointment as Revolving Credit Note Agent or from any acts or omissions performed or omitted by the Revolving Credit Note Agent, its affiliates, directors, officers, shareholders, agents or employees hereunder in good faith except to the extent resulting from gross negligence, willful misconduct or fraud on the part of the Revolving Credit Note Agent or any Affiliate thereof (any such amounts, together with expenses reimbursable under Section 2.4(b), “Revolving Credit Note Agent Expenses”). The indemnification obligations of the Issuer shall survive termination of this Agreement and the resignation or removal of the Revolving Credit Note Agent.

(c) The Revolving Credit Note Agent Expenses shall be considered Administrative Expenses and shall be payable from the Expense Account in accordance with the Indenture.

(d) The Revolving Credit Note Agent hereby agrees not to cause the filing of a petition in bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceedings under any law or jurisdiction against the Issuer for the non-payment to the Revolving Credit Note Agent of any amounts provided by this Section 2.4 before 366 days have elapsed or, if longer, the applicable preference period then in effect (including, without limitation, any period established pursuant to the laws of the Cayman Islands) (plus one day) after the payment in full of all Notes issued under the Indenture.

2.5. Class A-R Prepayment Account; Withdrawals

(a) The Trustee shall cause to be established and maintained by the Custodian, as Securities Intermediary, a separate securities account (each such account, a “Class A-R Prepayment Account”) for each Class A-R Noteholder that elects to establish such an account, which securities account shall be established in the name of the Trustee as entitlement holder in trust for the benefit of the Issuer and such Class A-R Noteholder. The Trustee shall deposit any amounts received from a Class A-R Noteholder to pay an Advance payment obligation into such Class A-R Noteholder’s Class A-R Prepayment Account. UBS AG, London Branch, as an Initial Holder as of the date hereof, hereby elects to establish such a Class A-R Prepayment Account, and the Trustee shall cause to be established (on or prior to the Amendment and Restatement Date) and maintained by the Custodian, as Securities Intermediary, a Class A-R Prepayment Account in the name of the Trustee as entitlement holder in trust for the benefit of the Issuer and UBS AG, London Branch, as Initial Holder, in accordance with the terms of this Agreement and Section 10.3(e) of the Indenture.

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(b) Subject to the terms of this Agreement and the Indenture, the only permitted withdrawal from or application of funds or other property standing to the credit of any Class A-R Prepayment Account shall be for the purpose of (i) investing or reinvesting such funds or other property in Eligible Investments pursuant to Section 2.5(c); (ii) any withdrawal in connection with an Advance pursuant to Section 2.1(c); (iii) any withdrawal in connection with a Prepayment Refund Date pursuant to Section 2.5(d); or (iv) any withdrawal in connection with any other payment pursuant to Section 2.5(e).

(c) The Trustee shall, pursuant to the written directions of a Class A-R Noteholder, invest and reinvest funds standing to the credit of such Class A-R Noteholder’s Class A-R Prepayment Account in Eligible Investments. None of the Issuer, the Revolving Credit Note Agent, the Trustee or the Custodian shall in any way be held liable for reason of any insufficiency of any Class A-R Prepayment Account resulting from any loss relating to any investment of funds standing to the credit of such Class A-R Prepayment Account, except to the extent such loss results from the Issuer’s, the Revolving Credit Note Agent’s, the Trustee’s or the Custodian’s fraud, gross negligence or willful misconduct.

(d) The Trustee shall, at any time (including any time on or following any Prepayment Refund Date) with respect to a Class A-R Prepayment Account, upon and pursuant to the written directions of the related Class A-R Noteholder, withdraw all (or any portion) of the funds and other property (including any funds and other property in excess of such Class A-R Noteholder’s Class A-R Commitment Amount, whether as a result of increased market value, a reduction of the Maximum RCN Facility Funding Commitment or otherwise) standing to the credit of such Class A-R Noteholder’s Class A-R Prepayment Account, and direct the Custodian to pay or transfer the same to such Class A-R Noteholder (or to such account or accounts as such Class A-R Noteholder shall otherwise direct the Trustee in writing).

(e) So long as no Event of Default has occurred and is continuing, the Issuer (or the Collateral Manager on behalf of the Issuer) shall have the right at any time to repay any Advance by delivering to the Revolving Credit Note Agent and the relevant Class A-R Noteholders a notice (with a copy to the Trustee and the Collateral Manager, if not the notifying party) (each, a “Notice of Repayment”) of a proposed repayment no later than 5:00 p.m. (New York City time) on the third Business Day prior to the proposed repayment. Each of the Issuer and, if applicable, the Collateral Manager agrees that any Notice of Repayment delivered pursuant to this Section 2.5(e) shall be transmitted to the Revolving Credit Note Agent and the relevant Class A-R Noteholders by facsimile or electronic mail (to the facsimile number or electronic mail address, as the case may be, specified on the Revolving Credit Note Agent’s and such Class A-R Noteholders’ respective signature pages to this Agreement) and shall specify the proposed repayment date (which shall be a Business Day) and the amount of such proposed repayment. In the event any Notice of Repayment is not transmitted to the Revolving Credit Note

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Agent and the Class A-R Noteholders until after 5:00 p.m. (New York City time) on a Business Day, it will be treated as having been transmitted on the following Business Day for all purposes hereunder. The Trustee shall, on the proposed repayment date and in accordance with Section 2.2(b) of this Agreement and Section 11.1(a)(ii) of the Indenture, direct the Custodian to pay or transfer the amount of such proposed repayment from the Principal Collection Subaccount to each Class A-R Noteholder in accordance with the wire instructions provided by such Class A-R Noteholder in the Subscription Agreement pursuant to which it subscribed for the Class A-R Notes or such account or accounts as such Class A-R Noteholder shall otherwise direct the Trustee in writing). Pursuant to Section 2.2(b), any repayment under this Section 2.5(e) shall reduce the Outstanding Class A-R Funded Amount.

(f) Upon three Business Days prior written notice (the “Substitution Notice”) by any Class A-R Noteholder to the Trustee and the Collateral Manager specifying which Eligible Investments standing to the credit of the Class A-R Prepayment Account of such Class A-R Noteholder are to be exchanged (and the principal amount and CUSIP (if applicable) of the new Eligible Investments to be delivered), a Class A-R Noteholder may on any Business Day, at its own expense, deposit into its Class A-R Prepayment Account substitute Eligible Investments and the Trustee shall, not later than the Business Day following the date on which the Trustee receives such substitute Eligible Investments, transfer to such Class A-R Noteholder the Eligible Investments specified in such written notice; provided that, the Trustee shall not transfer Eligible Investments to any Class A-R Noteholder as specified in such written notice if and to the extent that such transfer would cause the balance of such Class A-R Prepayment Account to decrease.

2.6. Class A-R Note Interest

Eligible Investment Income received on Eligible Investments standing to the credit of Class A-R Prepayment Accounts shall be payable to the applicable Holders of the Class A-R Notes as and to the extent provided in the Indenture.

3. CONDITIONS PRECEDENT TO BORROWINGS

3.1. Conditions to Funding.

The obligation of any Class A-R Noteholder to fund its Commitment Percentage of any Borrowing under Section 2.1 is subject to the following conditions:

(a) at the time of such Borrowing, the Commitment Termination Date shall not have occurred;

(b) UBS AG, London Branch shall have received all fees referred to in that certain fee letter between UBS AG, London Branch and CM Finance Inc. (as successor by merger to CM Finance LLC), dated as of the Amendment and Restatement Date, which are payable on or prior to the time of such Borrowing;

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(c) the Indenture shall have been executed and delivered by each party thereto; and

(d) no Event of Default shall have occurred and be continuing.

3.2. Representations regarding Conditions.

Each Borrowing shall be deemed to constitute a representation and warranty by the Issuer on the date thereof that the conditions specified in sub-sections (a) through (d) of Section 3.1 are satisfied.

4. ASSIGNMENTS

4.1. Assignment

(a) Successors and Assigns; General Prohibition. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Except as provided in Section 7.1(b) hereof, no Person other than the parties hereto, their respective successors and assigns and, to the extent expressly contemplated by the Indenture, the Secured Parties as beneficiaries of the Grant of the Issuer provided for in the Indenture shall have any rights under this Agreement. Neither this Agreement nor any right or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) or delegated by any party hereto. Any purported transfer that is not in compliance with this provision will be void.

(b) Permitted Assignments of Class A-R Notes and Obligations under this Agreement. Subject to the requirements set forth in the Indenture with respect to transfers of Notes, a Class A-R Noteholder may assign all of its rights and obligations hereunder (in whole but not in part) in respect of a specified Aggregate Outstanding Amount of its Class A-R Notes to an assignee if (i) all conditions precedent to the transfer of the relevant Class A-R Notes specified in the Indenture and in the legend on the Class A-R Note have been satisfied; (ii) the transferee and transferor have complied with all the requirements set forth in the Indenture, including Section 2.5 of the Indenture and any eligibility requirements for any Noteholder of Class A-R Notes; (iii) the representations set forth on the transfer certificates or other documents required under the Indenture with respect to its acquisition of a Class A-R Note are true with respect to such assignee; and (iv) the parties to such assignment shall have executed and delivered to the Trustee a duly completed Assignment and Acceptance. Any such assignment by a Class A-R Noteholder shall be effected by the execution and delivery to the Revolving Credit Note Agent of (A) a duly completed Assignment and Acceptance executed by the transferee and any other items required under Section 2.5 of the Indenture and (B)

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the physical security representing the Class A-R Notes to be transferred by the Class A-R Noteholder. Upon satisfaction of the conditions to such assignment, (1) the Issuer shall execute (x) a new Class A-R Note in the name of the assignee; and (y) if the assigning Class A-R Noteholder is retaining a portion of the Aggregate Outstanding Amount of its Class A-R Notes following such transfer, a new Class A-R Note in the name of the assigning Class A-R Noteholder reflecting the portion so retained; and (2) the Trustee shall authenticate and deliver such Class A-R Note(s) to the relevant Class A-R Noteholder(s). From and after the Effective Date (as defined in the applicable Assignment and Acceptance), the Revolving Credit Note Agent shall reflect the assignment of the Class A-R Notes in the Class A-R Note Register and shall direct the Trustee to make all payments in respect of the assigned portion of the Class A-R Notes (including, without limitation, all payments of principal, interest and fees with respect thereto) to the new Class A-R Noteholder as reflected in the Class A-R Note Register. For avoidance of doubt, in transferring all or a portion of a Class A-R Note to a transferee in accordance with this Section 4.1, such Class A-R Noteholder is simultaneously transferring an equivalent share of its then-existing Class A-R Commitment Amount to such transferee.

(c) Trustee and Revolving Credit Note Agent Duties in Respect of Assignments. The Trustee and the Revolving Credit Note Agent shall have no obligation with respect to determining whether any transfer or assignment is permitted hereunder and whether the representations set forth in any transfer certificate or other document are true with respect to it; provided that, in the case of any such certificates or forms which by any provision of this Agreement are specifically required to be furnished to the Trustee or the Revolving Credit Note Agent, the Trustee and the Revolving Credit Note Agent shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Agreement (or the Indenture, as the case may be) and shall promptly notify the party delivering the same and the Collateral Manager if such certificate or form does not conform.

4.2. Rights of Assignee under this Agreement

Upon any assignment in accordance with Section 4.1(b), the assignee receiving such assignment shall be a party hereto and have all of the rights and obligations of a Class A-R Noteholder hereunder with respect to its Class A-R Notes and all of the rights and obligations hereunder. In addition, the related assigning Noteholder shall, to the extent of the interest assigned, be released from its obligations hereunder (and, in the case of an Assignment and Acceptance covering all of the assigning Noteholder’s rights and obligations under this Agreement and in respect of Class A-R Notes, such Noteholder shall cease to be a party hereto).

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4.3. Notice of Assignment

Each Class A-R Noteholder that is assigning any of its rights and obligations under this Agreement or any Class A-R Notes shall provide notice to the Revolving Credit Note Agent, the Issuer, the Trustee and the Collateral Manager of such assignment of any interest in any Class A-R Note or any of its rights or obligations under this Agreement.

4.4. Class A-R Note Register; Information

(a) The Class A-R Note Registrar shall record in the Class A-R Note Register: (i) the names and addresses of the Class A-R Noteholders, (ii) the Class A-R Commitment Amount of and Outstanding Class A-R Funded Amount owing to each Class A-R Noteholder from time to time and (iii) the amounts (if any) that each Class A-R Noteholder has deposited in a Class A-R Prepayment Account. The entries in the Class A-R Note Register shall be conclusive and binding for all purposes (including as to the entitlement to exercise voting and other consensual rights), absent manifest error, and the Issuer, the Trustee, the Revolving Credit Note Agent and the Class A-R Noteholders may treat each Person whose name is recorded in the Class A-R Note Register as a Class A-R Noteholder hereunder for all purposes of this Agreement.

(b) On each date that (i) a Borrowing is funded pursuant to the terms hereof, (ii) any Outstanding Class A-R Funded Amount or Class A-R Prepayment Account or any interest therein is assigned to any other Person, (iii) the Outstanding Class A-R Funded Amount is, or funds or other property on deposit in any Class A-R Prepayment Account are, reduced or increased, (iv) the Maximum RCN Facility Funding Commitment and the Remaining Unfunded Facility Amount are reduced as a result of a new Bond Transaction being entered into pursuant to the terms of the A-R Note/Bond Master TRS Confirmation, or (v) the Maximum RCN Facility Funding Commitment and the Remaining Unfunded Facility Amount are increased as a result of an existing Bond Transaction being terminated in accordance with Clause 3(a)(i) of the A-R Note/Bond Master TRS Confirmation, a duly authorized officer, employee or agent of the Class A-R Note Registrar shall make appropriate notations in the Class A-R Note Register of the amount of such Borrowing, assignment, reduction or increase, as applicable, and the allocation of the amount of such Borrowing, assignment, reduction or increase, as applicable, among the Holders of the Class A-R Notes, as applicable, and shall promptly report the same to the Trustee for notation in its records.

(c) The Class A-R Note Registrar will, promptly following a request from the Trustee, provide such information to the Trustee regarding the date and amount of each Borrowing and any other information pertinent to the performance by the Trustee of its duties under the Indenture as the Trustee may reasonably request.

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5. REPRESENTATIONS AND WARRANTIES

5.1. Representations and Warranties of the Issuer

The Issuer hereby represents and warrants to each Class A-R Noteholder as follows:

(a) it has full power and authority, and has taken all corporate action necessary, to execute and deliver this Agreement and to fulfill its obligations under, and consummate the transactions contemplated by, this Agreement;

(b) the execution, delivery and performance by it of this Agreement and all documents required to be executed and delivered by it hereunder do not and will not violate in any material respect any law or regulation of the jurisdiction of its organization or any other law or regulation applicable to it or any material agreement to which it is a party or is bound or subject;

(c) this Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)); and

(d) all approvals and authorizations of, all filings with, and all actions by, any governmental or other administrative or judicial authority necessary for the validity or enforceability of its obligations under this Agreement have been obtained.

5.2. Representations and Warranties of each Class A-R Noteholder

Each Class A-R Noteholder hereby represents and warrants to the Issuer as follows:

(a) it has full power and authority, and has taken all action necessary, to execute and deliver this Agreement and to fulfill its obligations under, and consummate the transactions contemplated by, this Agreement;

(b) the execution, delivery and performance by it of this Agreement and all documents required to be executed and delivered by it hereunder do not and will not violate any law or regulation of the jurisdiction of its organization or any other law or regulation applicable to it;

(c) this Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law));

(d) all approvals and authorizations of, all filings with and all actions by any governmental or other administrative or judicial authority necessary for the validity or enforceability of its obligations under this Agreement have been obtained;

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(e) on the date on which it becomes a party to this Agreement (whether on the date hereof or thereafter pursuant to Section 4), all representations set forth in the transfer certificates or other documents required under the Indenture with respect to its acquisition of a Class A-R Note and the Assignment and Acceptance, as applicable, are true with respect to it; and

(f) such Class A-R Noteholder has delivered to the Issuer (or shall promptly deliver upon request by the Trustee or the Issuer) an investor letter and certification (generally, an Internal Revenue Service Form W-9 (or applicable successor form) in the case of a person that is a “United States person” within the meaning of Section 7701(a)(30) of the Code or an Internal Revenue Service Form W-8 (or applicable successor form) in the case of a person that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code) in a form satisfactory to the Issuer, each duly executed and completed.

6. THE REVOLVING CREDIT NOTE AGENT

(a) The Issuer hereby irrevocably appoints the Revolving Credit Note Agent as its agent hereunder and under the Indenture as provided herein.

(b) The Revolving Credit Note Agent shall not have any duties or obligations except those expressly set forth herein and in the Indenture. Without limiting the generality of the foregoing, (i) the Revolving Credit Note Agent shall not be subject to any fiduciary or other implied duties, regardless of whether an Event of Default has occurred and is continuing, (ii) the Revolving Credit Note Agent shall not have any duty to take any discretionary action or exercise any discretionary powers and (iii) the Revolving Credit Note Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Issuer or any of its subsidiaries that is communicated to or obtained by the bank serving as Revolving Credit Note Agent or any of its Affiliates in any capacity. The Revolving Credit Note Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Issuer or in the absence of its own fraud, gross negligence or willful misconduct. The Revolving Credit Note Agent shall be deemed not to have knowledge of any Event of Default unless and until written notice thereof is given to the Revolving Credit Note Agent by the Issuer or a Class A-R Noteholder, and the Revolving Credit Note Agent shall not be responsible for or have any duty to ascertain or inquire into (A) any statement, warranty or representation made in or in connection with this Agreement, (B) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (C) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein, (D) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document or (E) the satisfaction of any condition set forth in Section 3 or elsewhere herein or therein, other than (in each case) to confirm receipt of items expressly required to be delivered to the Revolving Credit Note Agent.

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(c) The Revolving Credit Note Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, in the absence of bad faith on its part, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Revolving Credit Note Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Revolving Credit Note Agent may consult with legal counsel (who may be counsel for the Issuer), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

(d) The Revolving Credit Note Agent may perform any and all of its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Revolving Credit Note Agent. The Revolving Credit Note Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding sub-sections shall apply to any such sub-agent and to the Related Parties of the Revolving Credit Note Agent and any such sub-agent; provided that, the Revolving Credit Note Agent shall not be relieved of any of its obligations hereunder by virtue of any appointment of a sub-agent.

(e) Subject to the appointment and acceptance of a successor Revolving Credit Note Agent as provided in this sub-section (e), the Revolving Credit Note Agent may resign at any time by notifying the Issuer (with a copy to the Collateral Manager). Upon any such resignation, the Issuer (or the Collateral Manager on the Issuer’s behalf) shall appoint a successor Revolving Credit Note Agent meeting the requirements set forth below. If no successor shall have been so appointed by the Issuer and shall have accepted such appointment within 30 days after the retiring Revolving Credit Note Agent gives notice of its resignation, then the retiring Revolving Credit Note Agent may, on behalf of the Issuer, petition a court of competent jurisdiction for the appointment of a successor Revolving Credit Note Agent. Any successor Revolving Credit Note Agent shall be a bank with an office in New York City or an Affiliate of any such bank having a combined capital and surplus of at least U.S.$200,000,000, having a credit rating of “BBB+” or better by S&P and “Baa1” or better by Moody’s (and if rated “Baal”, such rating not on watch for downgrade). Upon the acceptance of its appointment as Revolving Credit Note Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Revolving Credit Note Agent and the retiring Revolving Credit Note Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Issuer to a successor Revolving Credit Note Agent (including a successor appointed

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pursuant to the last sentence of this sub-section (e)) shall be the same as those payable to its predecessor unless otherwise agreed between the Issuer and such successor. After the Revolving Credit Note Agent’s resignation hereunder, the provisions of Section 2.4(c) and this Section 6 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Revolving Credit Note Agent. Notwithstanding the foregoing, the Revolving Credit Note Agent may resign its duties hereunder without any requirement that a successor Revolving Credit Note Agent be obligated hereunder and without any liability for further performance of any duties hereunder upon at least 60 days prior written notice to the Issuer of termination upon the occurrence of any of the following events and the failure to cure such event within such 60-day notice period: (i) failure of the Issuer to pay any of the Revolving Credit Note Agent Expenses or (ii) failure of the Issuer to provide any indemnity payment or expense reimbursement to the Revolving Credit Note Agent required under this Agreement upon the receipt by the Issuer of a written request for such payment or reimbursement, in each case, when funds are available therefor in the Expense Account. Upon receipt of any such resignation notice, the Issuer (or the Collateral Manager on the Issuer’s behalf) shall appoint a successor Revolving Credit Note Agent meeting the requirements set forth above and shall use its reasonable best efforts to effect such appointment within such notice period.

(f) Every successor Revolving Credit Note Agent appointed hereunder shall execute, acknowledge and deliver to the Issuer and the retiring Revolving Credit Note Agent an instrument accepting such appointment. Upon delivery of the required instrument, the resignation or removal of the retiring Revolving Credit Note Agent shall become effective and such successor Revolving Credit Note Agent, without any other act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of the retiring Revolving Credit Note Agent; provided that, upon request of the Issuer or the successor Revolving Credit Note Agent, such retiring Revolving Credit Note Agent shall, upon payment of its fees and expenses then unpaid, execute and deliver an instrument transferring to such successor Revolving Credit Note Agent all the rights, powers and trusts of the retiring Revolving Credit Note Agent.

(g) Each Class A-R Noteholder acknowledges that it has, independently and without reliance upon the Revolving Credit Note Agent or any other Person and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Class A-R Noteholder also acknowledges that it will, independently and without reliance upon the Revolving Credit Note Agent or any other Person and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any related agreement or any document furnished hereunder.

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(h) The Revolving Credit Note Agent shall be obligated only for the performance of such duties as are specifically set forth in this Agreement and in the Indenture and may rely and shall be protected in acting or refraining from acting on any written notice, request, waiver, consent or instrument reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. The Revolving Credit Note Agent may exercise any of its rights or powers hereunder or perform any of its duties hereunder either directly or by or through agents or attorneys, and the Revolving Credit Note Agent shall not be responsible for any misconduct or negligence on the part of any non-affiliated appointed and supervised agent, or non-affiliated attorney, appointed hereunder with due care by it.

(i) Anything in this Agreement notwithstanding, in no event shall the Revolving Credit Note Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Revolving Credit Note Agent has been advised of such loss or damage and regardless of the form of action.

(j) No provision of this Agreement shall be construed to relieve the Revolving Credit Note Agent from liability for its own fraud, gross negligence or willful misconduct, except that (i) this subsection shall not be construed to limit the effect of sub-sections (b) and (c) of this Section 6; (ii) the Revolving Credit Note Agent shall not be liable for any error of judgment made in good faith by an Officer, unless it shall be proven that the Revolving Credit Note Agent was grossly negligent in ascertaining the pertinent facts; and (iii) no provision of this Agreement shall require the Revolving Credit Note Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers contemplated hereunder, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(k) The Revolving Credit Note Agent shall not be accountable for the use by the Issuer of the proceeds from the Class A-R Notes, shall not be responsible for any statement of the Issuer or a Class A-R Noteholder in this Agreement or the Indenture or in any document issued in connection with the sale of the Class A-R Notes and shall in no event assume or incur any liability, duty or obligation to any Class A-R Noteholder. Under no circumstances shall the Revolving Credit Note Agent be liable for indebtedness evidenced by or arising under the Indenture or any related documents, including the amounts payable on the Class A-R Notes.

(l) Notwithstanding anything in this Agreement to the contrary, the Revolving Credit Note Agent shall not be responsible for enforcing the provisions of this Agreement (including collection actions hereunder) against any Class A-R Noteholder at any time.

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(m) The provisions of this Section 6 shall survive the termination of this Agreement and the resignation or removal of the Revolving Credit Note Agent.

7. MISCELLANEOUS

7.1. Waivers; Amendments; Etc.

(a) No Deemed Waivers; Remedies Cumulative. No failure or delay by any party hereto in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties to this Agreement hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any party therefrom shall in any event be effective unless the same shall be permitted by Section 7.1(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the funding of a Borrowing shall not be construed as a waiver of any Event of Default, regardless of whether the Revolving Credit Note Agent or any Class A-R Noteholder may have had notice or knowledge of such Event of Default at the time.

(b) Amendments. Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Issuer and the Class A-R Noteholders or by the Issuer and the Revolving Credit Note Agent with the consent of the Class A-R Noteholders; provided that, no such agreement shall amend, modify or otherwise affect the (i) rights or duties of the Revolving Credit Note Agent or the Trustee hereunder without the prior written consent of the Revolving Credit Note Agent or the Trustee, as the case may be; or (ii) rights or duties of the Collateral Manager hereunder or under the Collateral Management Agreement or the Indenture without the prior written consent of the Collateral Manager.

(c) Third Party Beneficiaries. Each covenant and other agreement under this Agreement stated to be owing by any party hereto to the Collateral Manager is expressly intended to be made for the benefit of the Collateral Manager, and the Collateral Manager is an express third party beneficiary of each such covenant or other agreement and is entitled to enforce each such covenant or agreement (without regard to any modification thereof which is adverse to the Collateral Manager) without any act or notice of acceptance hereof or reliance hereon, all as if the Collateral Manager were a party hereto.

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7.2. Notices, Etc.

All notices and other communications under or in connection with this Agreement shall be given or made in writing (including by telex or facsimile) to the intended recipient at its “Address for Notices” specified under its signature hereto or in its Assignment and Acceptance; or, as to any party (including the Collateral Manager), at such other address as shall be set forth in Section 14.3 of the Indenture or as shall be designated by such party in a notice to each other party. The Revolving Credit Note Agent shall (a) forward any Notices received by the Revolving Credit Note Agent under the Indenture to each Class A-R Noteholder; and (b) promptly (and in any event within one Business Day after receipt of the information) notify the Collateral Manager if any existing Class A-R Noteholder disposes of its Class A-R Notes or any additional Class A-R Noteholder acquires any Class A-R Notes (together with the notice details for Notices of Borrowing for such additional Class A-R Noteholder) such that the Collateral Manager has the information that it requires with respect to the Class A-R Noteholders in order to deliver Notices of Borrowing on behalf of the Issuer.

7.3. Captions

The captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

7.4. Governing Law; Jurisdiction; Venue

This Agreement shall be construed in accordance with, and this Agreement and any matters arising out of or relating in any way whatsoever to this Agreement (whether in contract, tort or otherwise), shall be governed by, the law of the State of New York.

With respect to any suit, action or proceedings relating to this Agreement or any matter between the parties arising under or in connection with this Agreement (“Proceedings”), each party irrevocably: (a) submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York sitting in the Borough of Manhattan and the United States District Court for the Southern District of New York, and any appellate court from any thereof; and (b) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes any party from bringing Proceedings in any other jurisdiction, nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.

7.5. Consent to Service of Process

Each party to this Agreement irrevocably consents to service of process by personal delivery, certified mail, postage prepaid or overnight courier. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

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7.6. Waiver of Jury Trial

EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING. Each party hereby (a) certifies that no representative, agent or attorney of any other has represented, expressly or otherwise, that such other would not, in the event of a Proceeding, seek to enforce the foregoing waiver; and (b) acknowledges that it has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this paragraph.

7.7. Execution in Counterparts

This Agreement (and each amendment, modification and waiver in respect of this Agreement) may be executed and delivered in any number of counterparts (including by e-mail (PDF) or facsimile), each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument, and each of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart of this Agreement by e-mail (PDF) or facsimile shall be deemed to constitute due and sufficient delivery of such counterpart.

7.8. Tax Treatment of Notes

Each of the Issuer, the Revolving Credit Note Agent, the Trustee and each Class A-R Noteholder hereby agrees to treat the Class A-R Notes as indebtedness solely of the Issuer for U.S. Federal, and, to the extent permitted by law, state and local income and franchise tax purposes, to report all income (or loss) in accordance with such characterization and not to take any action inconsistent with such treatment unless otherwise required by any relevant taxing authority.

7.9. Transfer Taxes

Any applicable stamp duties or other transfer taxes and duties (including notarial fees) and any costs attributable to the sale and purchase of the Class A-R Notes shall be payable by the Issuer in accordance with the Priority of Payments.

7.10. Severability

If any term, provision, covenant or condition of this Agreement, or the application thereof to any party hereto or any circumstance, is held to be unenforceable, invalid or illegal (in whole or in part) for any reason (in any relevant jurisdiction), the remaining terms, provisions, covenants and conditions of this Agreement, modified by the deletion of the unenforceable, invalid or illegal portion (in any relevant jurisdiction), will continue in full force and effect, and such unenforceability, invalidity, or illegality will not otherwise affect

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the enforceability, validity or legality of the remaining terms, provisions, covenants and conditions of this Agreement, so long as this Agreement, as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the deletion of such portion of this Agreement, will not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.

7.11. Further Assurances

Each of the Issuer and each Class A-R Noteholder hereby agrees to execute and deliver such other instruments, and take such other actions, as the other parties may reasonably request in connection with the transactions contemplated by this Agreement.

7.12. Limited Recourse, Non-Petition as to the Issuer

The Class A-R Notes will be limited recourse debt obligations of the Issuer, and all obligations of the Issuer under this Agreement are limited-recourse obligations of the Issuer, and are payable solely from the Collateral Granted by the Issuer to secure the Notes in accordance with the Priority of Payments and, following the exhaustion of the Collateral under the Indenture, all obligations of and claims against the Issuer hereunder or arising in connection herewith shall be extinguished and shall not thereafter revive. None of the Collateral Manager, the Trustee or the Collateral Administrator or any incorporator, stockholder, affiliate, officer, member, manager, partner, employee or director of the Issuer, the Collateral Manager, the Trustee or the Collateral Administrator, or any of their respective affiliates or any other Person will be obligated to make payments on the Class A-R Notes or hereunder. No recourse shall be had against any officer, member, director, employee, securityholder or incorporator of the Issuer or its successors or assigns for the payment of any amounts payable under the Class A-R Notes or this Agreement. Notwithstanding any provision of this Agreement, each Class A-R Noteholder hereby agrees not to cause the filing of a petition in bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceedings or other proceedings under any law or jurisdiction against the Issuer before 366 days have elapsed or, if longer, the applicable preference period then in effect (including, without limitation, any period established pursuant to the laws of the Cayman Islands) (plus one day) after the payment in full of all Notes issued under the Indenture. The provisions of this Section 7.12 shall survive the termination of this Agreement.

7.13. Prior Agreements

This Agreement amends, restates and supersedes that certain Revolving Credit Note Agreement dated as of December 4, 2013 between the Issuer, the Trustee, the Class A-R Noteholders and the Revolving Credit Note Agent.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

CM FINANCE SPV LTD.,

as Issuer

By:

Name:

Title:

Address for Notices:

c/o CM Finance Inc.

399 Park Avenue, 39th Floor

New York, NY 10022

Attention:	Stephon Barnes, Christopher E. Jansen and Michael C. Mauer
Telephone no.:	(212) 380-5904
Facsimile no.:	(212) 380-5915
Email:	cjansen@cmfn-inc.com
	mm@cmfn-inc.com
	jagarwal@cmfn-inc.com
	ops@cyruscapital.com

Revolving Credit Note Agreement

STATE STREET BANK AND TRUST COMPANY,

as Revolving Credit Note Agent

By:

Name:

Title:

Address for Notices:

1 Iron Street

Boston, MA 02210

Attention:	Structured Trust & Analytics
Facsimile No.:
E-mail:	statestreet_CDO_services@statestreet.com

Revolving Credit Note Agreement

STATE STREET BANK AND TRUST COMPANY,

as Trustee

By:

Name:

Title:

Address for Notices:
1 Iron Street
Boston, MA 02210
Attention:	Structured Trust & Analytics
Facsimile No.:
E-mail:	statestreet_CDO_services@statestreet.com

Wire Instructions:

State Street Bank,

Boston, MA

ABS #: 011-000-028

Account #: 00608836

Account Name: CM Finance SPV Loan Account

Reference: CYB1 – Borrower Name & Activity

Revolving Credit Note Agreement

COMMITMENT PERCENTAGE AS OF THE DATE HEREOF: 50%

CM FINANCE INC. (as successor by merger to CM Finance LLC),

as Class A-R Noteholder

By:

Name:

Title:

Address for Notices:

399 Park Avenue, 39th Floor

New York, NY 10022

Revolving Credit Note Agreement

COMMITMENT PERCENTAGE AS OF THE DATE HEREOF: 50%

UBS AG, LONDON BRANCH,

as Class A-R Noteholder

By:

Name:

Title:

By:

Name:

Title:

Address for Notices:

1285 Avenue of the Americas

New York, NY 10019-6064

Attention: Structured Funding

Telephone Number: 203-719-7390

Email: OL-Cyrus-TRS@ubs.com

Revolving Credit Note Agreement

EXHIBIT A

FORM OF NOTICE OF BORROWING

[DATE]

STATE STREET BANK AND TRUST COMPANY,

as Revolving Credit Note Agent and as Trustee

1 Iron Street

Boston, MA 02210,

Attention: Structured Trust & Analytics

[Insert Notice Details for each current Class A-R Noteholder]

Ladies and Gentlemen:

Reference is hereby made to (i) that certain Second Amended and Restated Indenture, dated as of July 20, 2015 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Indenture”) between CM Finance SPV Ltd., an exempted company with limited liability incorporated under the law of the Cayman Islands (the “Issuer”), and State Street Bank and Trust Company, as Trustee and as Bank; and (ii) that certain Amended and Restated Revolving Credit Note Agreement, dated as of July 20, 2015 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Agreement”) between the Issuer, certain other parties, State Street Bank and Trust Company, as Revolving Credit Note Agent and the Trustee. Terms defined in the Indenture or the Agreement and used herein shall have the meanings given such terms in the Indenture or the Agreement.

The Issuer hereby gives you notice, irrevocably, pursuant to Section 2.1(b) of the Agreement that the Issuer hereby requests a Borrowing under the Agreement (the “Proposed Borrowing”) and, in that connection, sets forth below the information relating to such Proposed Borrowing as required pursuant to the terms of the Agreement:

(a) The Business Day of the Proposed Borrowing is [                    ].

(b) The aggregate principal amount of the Proposed Borrowing is U.S.$[        ].

(c) The total amount of outstanding Borrowings after giving effect to the Proposed Borrowing is U.S.$[        ].

(d) The total amount of the Remaining Unfunded Facility Commitment after giving effect to the Proposed Borrowing is U.S.$[        ].

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Payment shall be made by wire transfer to the Trustee pursuant to the following wire transfer instructions:

[INSERT PAYMENT INSTRUCTIONS]

The submission of this notice constitutes a certification of the Issuer that the conditions to such Borrowing set forth in Section 3 of the Agreement have been satisfied or waived by each Class A-R Noteholder as of the date of the Proposed Borrowing.

CM FINANCE SPV LTD.
By: CM INVESTMENT PARTNERS LLC (as successor to CM Investment Partners, L.P.), as Collateral Manager
By: MMCMIP LLC, as Managing Member
By:
Name:
Title:	MMCMIP Designee

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EXHIBIT B

FORM OF ASSIGNMENT AND ACCEPTANCE

[DATE]

ASSIGNMENT AND ACCEPTANCE, dated [                    ] (the “Assignment and Acceptance”), among                                           (“Assignor”) and                                           (“Assignee”).

Reference is hereby made to (i) that certain Second Amended and Restated Indenture, dated as of July 20, 2015 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), between CM Finance SPV Ltd., an exempted company with limited liability incorporated under the law of the Cayman Islands (the “Issuer”), and State Street Bank and Trust Company, as Trustee and as Bank; and (ii) that certain Amended and Restated Revolving Credit Note Agreement, dated as of July 20, 2015 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Agreement”), between the Issuer, certain other parties, State Street Bank and Trust Company, as Revolving Credit Note Agent and the Trustee. Terms defined in the Indenture or the Agreement and used herein shall have the meanings given such terms in the Indenture or the Agreement.

Assignor hereby sells and assigns, without recourse, to Assignee, and Assignee hereby purchases and assumes, without recourse, from Assignor, effective as of the Effective Date (as defined below), a [    ]% interest (the “Assigned Interest”) in all of Assignor’s rights and obligations under the Agreement, the Indenture and under any other Transaction Documents, and in the interests in the Class A-R Notes of Assignor in existence on the Effective Date, together with the rights of Assignor to payment in respect of outstanding principal and accrued and unpaid interest relating to such Assigned Interest. The Outstanding Class A-R Funded Amount allocated to the Assigned Interest is U.S.$[        ].

Each of Assignor and Assignee hereby agrees to be bound by all the agreements set forth in the Indenture or the Agreement (including Section 4.1 of the Agreement), a copy of each of which has been received by each such party. From and after the Effective Date, (i) Assignee shall be a party to and be bound by the provisions of the Agreement and the Indenture and, to the extent of the interests assigned pursuant to this Assignment and Acceptance, have the rights and obligations of a Class A-R Noteholder thereunder, and (ii) to the extent of the interests assigned by this Assignment and Acceptance, Assignor hereby relinquishes its rights and is released from its obligations under the Agreement.

Assignor hereby represents and warrants that the Assigned Interest to be sold hereby is owned by Assignor free and clear of any liens, claims or encumbrances created or suffered to exist by Assignor. Except as otherwise set forth in the foregoing sentence, or as otherwise agreed in writing by Assignor, Assignor makes no representation or warranty and assumes no responsibility with respect to (i) any statements, representations or warranties made in or in connection with the Agreement, any Class A-R Note or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Agreement or any Class A-R Note, or (ii) the business condition (financial or otherwise), operations, properties or prospects of the Issuer, the Collateral Manager or any Affiliate of any thereof or the performance or observance by any party of any of its obligations under the Indenture, the Agreement or otherwise.

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Assignee hereby (i) confirms that it has received a copy of the Agreement, the Indenture, and such other documents and information requested by it, and that it has, independently and without reliance upon the Trustee, the Revolving Credit Note Agent, the Collateral Manager, the Assignor, or any other Person, and based on such documentation and information as it has deemed appropriate, made its own decision to enter into this Assignment and Acceptance; (ii) agrees that it shall, independently and without reliance upon the Trustee, the Revolving Credit Note Agent, the Collateral Manager, the Assignor, or any other Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Agreement; (iii) confirms that it satisfies the eligibility requirements for any Noteholder of Class A-R Notes set forth in the Indenture and that the representations set forth in the transfer certificates or other documents required under the Indenture with respect to its acquisition of a Class A-R Note are true with respect to it; (iv) makes each representation and warranty set forth in Section 5.2 of the Agreement as if set out in full herein, each of which is true and correct on and as of the date hereof; (v) agrees that it shall perform in accordance with their terms all of the obligations that by the terms of the Agreement and the Indenture are required to be performed by it as a Class A-R Noteholder; (vi) specifies as its address for notices the office set forth below; and (vii) in the event that Assignee is organized under the laws of a jurisdiction other than the United States or a state thereof, represents and warrants that attached to this Assignment and Acceptance are the forms and certificates required pursuant to Section 2.5 of the Indenture, accurately completed and duly executed, pursuant to which forms and certificates each of the Issuer and the Trustee may make payments to, and deposit funds to or for the account of, Assignee hereunder and under the Indenture without any deduction or withholding for or on account of any tax.

The effective date for this Assignment and Acceptance shall be the later of (A) the date on which the Revolving Credit Note Agent confirms that this Assignment and Acceptance on its face satisfies the requirements of the Agreement, and (B) [             , 20    ] (the later of such dates being the “Effective Date”).

Each of the Assignor and the Assignee hereby agrees that the Trustee, the Revolving Credit Note Agent, the Issuer and the Collateral Manager are third-party beneficiaries of this Assignment and Acceptance.

From and after the Effective Date, the Revolving Credit Note Agent shall reflect the assignment of the Assigned Interest hereunder in the Class A-R Note Register and shall direct the Trustee to make all payments in respect of the Assigned Interests assigned hereby (including, without limitation, all payments of principal, interest and fees with respect thereto) to Assignee as reflected in the Class A-R Note Register. Assignor and Assignee shall make all appropriate adjustments in payments under the Agreement and the Assigned Interests for periods prior to the Effective Date directly between themselves.

This Assignment and Acceptance shall be construed in accordance with, and this Assignment and Acceptance and any matters arising out of or relating in any way whatsoever to this Assignment and Acceptance (whether in contract, tort or otherwise), shall be governed by, the law of the State of New York.

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Legal Name of Assignor:

Legal Name of Assignee:

Registered Name on Class A-R Note:

[Federal Tax Identification Number of Assignee:]

Assignee’s Address for Notices:

[Address]

[Telephone]

[Facsimile]

[Email]

Assignee’s Wiring Instructions:

[                    ]

A. Immediately after giving effect to this Assignment and Acceptance, the aggregate Outstanding Class A-R Funded Amount of Assignee’s interest in the Class A-R Note is U.S.$[        ] and its Class A-R Commitment Amount is U.S.$[        ].

B. Immediately after giving effect to this Assignment and Acceptance, the aggregate Outstanding Class A-R Funded Amount of Assignor’s interest in the Class A-R Note is U.S.$[        ] and its Class A-R Commitment Amount is U.S.$[        ].

[ASSIGNOR]

By:

Name:

Title:

[ASSIGNEE]

By:

Name:

Title:

Attachment: Duly endorsed certificate representing the Class A-R Notes

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EX-10.33

Exhibit 10.33

Execution Copy

THIRD AMENDED AND RESTATED INDENTURE (this Indenture), dated as of July 20, 2015, between CM FINANCE SPV LTD., an exempted company incorporated with limited liability under the laws of the Cayman Islands (the Issuer) and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as trustee (herein, together with its permitted successors and assigns in the trusts hereunder, the Trustee) and, solely as expressly specified herein, in its individual capacity (the Bank).

This Indenture amends, restates and supersedes that certain Indenture, dated as of May 23, 2013 (as supplemented by (x) the First Supplemental Indenture, dated as of June 6, 2013, between the Issuer and the Trustee and amended and restated by the Amendment Agreement dated as of December 4, 2013 and (y) the Second Amendment and Restatement Agreement dated as of September 26, 2014, in each case between the Issuer, the Trustee and the Bank), between the Issuer, the Trustee and the Bank.

PRELIMINARY STATEMENT

The Issuer is duly authorized to execute and deliver this Indenture to provide for the Notes issuable as provided in this Indenture. Except as otherwise provided herein, all covenants and agreements made by the Issuer herein are for the benefit and security of the Secured Parties. The Issuer is entering into this Indenture, and the Trustee is accepting the trusts created hereby, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

All things necessary to make this Indenture a valid agreement of the Issuer in accordance with the agreement’s terms have been done.

GRANTING CLAUSES

The Issuer hereby Grants to the Trustee, for the benefit and security of the Holders of the Notes, the Trustee and the Collateral Administrator (collectively, the Secured Parties) (or, where particular Secured Parties are specified as the beneficiaries of such Grant with respect to items of personal property identified in any of the sub-clauses below, for the benefit and security of such Secured Parties only), except as expressly set forth below, all of its right, title and interest in, to and under, in each case, whether now owned or existing, or hereafter acquired or arising, (a) the Portfolio Assets as of the Closing Date which the Issuer causes to be Delivered to the Trustee (directly or through an intermediary or bailee, including the Custodian) herewith and all payments thereon or with respect thereto, and all Portfolio Assets which are Delivered to the Trustee (directly or through an intermediary or bailee, including the Custodian) in the future pursuant to the terms hereof and all payments thereon or with respect thereto, (b) each of the Accounts (excluding any Class A-R Prepayment Account), and any Eligible Investments purchased with funds on deposit in any of the Accounts (excluding any Class A-R Prepayment Account), and all income from the investment of funds therein and all other property standing to the credit of each such Account, (c) the Collateral Management Agreement as set forth in Article 15 hereof, the Collateral Administration Agreement, each Placement Agency Agreement, each Subscription Agreement, the Revolving Credit

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Note Agreement, the Issuer Contribution Agreement, the Issuer Account Control Agreement, the Master Participation and Assignment Agreement and the Side Letter Security Agreement, (d) all Cash delivered to the Trustee (or the Custodian) for the benefit of the Secured Parties, (e) for the exclusive benefit of each Class A-R Noteholder, the Issuer’s interest in such Class A-R Noteholder’s Class A-R Prepayment Account, (f) all accounts, chattel paper, Deposit Accounts, general intangibles, instruments and investment property, and all letter-of-credit rights and other supporting obligations relating to the foregoing (in each case as defined in the UCC), (g) any other property otherwise delivered to the Trustee (directly or through an intermediary or bailee, including the Custodian) by or on behalf of the Issuer (including any other securities or investments not listed above and whether or not constituting Portfolio Assets or Eligible Investments) and (h) all proceeds with respect to the foregoing; provided that such Grants shall not include any Excepted Property (the assets referred to in (a) through (h), excluding the Excepted Property, are collectively referred to as the Collateral).

The above Grant of Collateral is made in favor of the Trustee to hold in trust to secure the Notes and certain other amounts payable by the Issuer as described herein. Except as set forth in the Priority of Payments and Article 13 of this Indenture, the Notes are secured by the Grant equally and ratably without prejudice, priority or distinction between any Note and any other Note by reason of difference in time of issuance or otherwise; provided that, amounts on deposit in a Class A-R Prepayment Account shall be available only for distribution to the Class A-R Noteholders pursuant to the Revolving Credit Note Agreement and shall not be available to the Issuer to pay amounts owed to any Secured Parties other than the Class A-R Noteholders. The Grant is made to secure, in accordance with the priorities set forth in the Priority of Payments and Article 13 of this Indenture, (i) the payment of all amounts due on the Notes in accordance with their terms, (ii) the payment of all other sums payable under this Indenture, (iii) the payment of amounts owing by the Issuer under the Collateral Administration Agreement and (iv) compliance with the provisions of this Indenture, in each case as provided in this Indenture (collectively, the Secured Obligations). The foregoing Grant shall, for the purpose of determining the property subject to the lien of this Indenture, be deemed to include any interests in any securities and any investments granted to the Trustee by or on behalf of the Issuer, whether or not such securities or investments satisfy the Asset Eligibility Criteria or other criteria set forth in the definitions of Portfolio Asset or Eligible Investments, as the case may be.

The Trustee acknowledges such Grant, accepts the trusts hereunder in accordance with the provisions hereof, and agrees to perform the duties herein in accordance with the terms hereof.

1. DEFINITIONS

1.1 Definitions

Except as otherwise specified herein or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this

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Indenture, and the definitions of such terms are equally applicable both to the singular and plural forms of such terms and to the masculine, feminine and neuter genders of such terms. Except as otherwise specified herein or as the context may otherwise require: (i) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (ii) references to a statute, regulation or other government rule are to it as amended from time to time and, as applicable, are to corresponding provisions of successor governmental rules (whether or not already so stated); (iii) the word “including” and correlative words shall be deemed to be followed by the phrase “without limitation” unless actually followed by such phrase or a phrase of like import; (iv) the word “or” is always used inclusively herein (for example, the phrase “A or B” means “A or B or both,” not “either A or B but not both”), unless used in an “either … or” construction; (v) references to a Person are references to such Person’s successors and assigns (whether or not already so stated); (vi) all references in this Indenture to designated “Articles”, “Sections”, “sub-Sections”, other subdivisions, Schedules and Exhibits are to the designated articles, sections, sub-sections, other subdivisions, schedules and exhibits of this Indenture; and (vii) the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular article, section, sub-section or other subdivision.

Acceleration Event: The meaning specified in Section 5.4(a).

Accounts: (i) The Payment Account, (ii) the Collection Account, (iii) the Expense Account, (iv) the Delayed Draw/Committed Proceeds Account, (v) the Custodial Account and (vi) each Class A-R Prepayment Account.

Accredited Investor: The meaning set forth in Rule 501(a) of Regulation D of the Securities Act.

Act and Act of Holders: The meanings specified in Section 14.2(a).

Adjusted Principal Balance: With respect to any Portfolio Asset on any date of determination, the product of (i) the Principal Balance of such Portfolio Asset as of such date of determination and (ii) the Purchase Price of such Portfolio Asset.

Administrative Expenses: The fees, expenses (including indemnities) and other amounts due or accrued and payable by the Issuer from funds standing to the credit of the Expense Account in the following order by the Issuer:

first, on a pro rata basis, (i) to the Trustee pursuant to Section 6.7 and the other provisions of this Indenture and (ii) to the Revolving Credit Note Agent pursuant to the Revolving Credit Note Agreement,

second, to the Collateral Administrator and Collateral Manager pursuant to the Collateral Administration Agreement and Collateral Management Agreement, respectively,

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third, on a pro rata basis, to any other Person in respect of any other fees or expenses permitted under this Indenture and the documents delivered pursuant to or in connection with this Indenture (including all legal and other fees and expenses incurred in connection with the purchase or sale of any Portfolio Assets and any other expenses incurred in connection with the Portfolio Assets) and the Notes, and

fourth, on a pro rata basis, indemnities payable to any Person pursuant to any Transaction Document;

provided that Administrative Expenses shall not include (a) any amounts due or accrued with respect to the actions taken on or in connection with the Closing Date or (b) amounts payable in respect of the Notes.

Administrator: Appleby Trust (Cayman) Ltd. and any successor thereto.

Affected Bank: A “bank” for purposes of Section 881 of the Code or an entity affiliated with such a bank that is neither (x) a United States Person nor (y) entitled to the benefits of an income tax treaty with the United States under which withholding taxes on interest payments made by obligors resident in the United States to such bank are reduced to 0%.

Affiliate: With respect to a Person, (i) any other Person who, directly or indirectly, is in control of, or controlled by, or is under common control with, such Person or (ii) any other Person who is an Officer or employee (a) of such Person, (b) of any subsidiary or parent company of such Person or (c) of any Person described in clause (i) above. For the purposes of this definition, “control” of a Person shall mean the power, direct or indirect, (x) to vote more than 50% of the securities having ordinary voting power for the election of directors of such Persons or (y) to direct or cause the direction of the management and policies of such Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

Agent Members: Members of, or participants in, DTC Euroclear or Clearstream.

Aggregate Outstanding Amount: With respect to any of the Notes of any Class as of any date, the aggregate unpaid principal amount of such Notes Outstanding on such date (which, in the case of the Class A-R Notes, shall be the Outstanding Class A-R Funded Amount).

Aggregate Principal Balance: When used with respect to all or a portion of the Portfolio Assets or the Collateral, the sum of the Principal Balances of all or of such portion of the Portfolio Assets or Collateral, respectively.

Amendment and Restatement Date: September 26, 2014.

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Asset-backed Commercial Paper: Commercial paper or other short-term obligations of a program that primarily issues externally rated commercial paper backed by assets or exposures held in a bankruptcy-remote, special purpose entity.

Asset Eligibility Criteria: Criteria satisfied in respect of a Portfolio Asset or prospective Portfolio Asset on the trade date for the acquisition thereof (the Portfolio Asset Trade Date) if:

(a) the obligation is a Loan (or a Participation Interest therein) excluding, in the case of a Loan, a security that is not a permissible collateral security for purposes of securing asset-backed securities that satisfy the loan securitization exclusion under Section 248.10(c)(8) of the Volcker Rule (12 C.F.R. Part 248);

(b) the obligation is denominated in USD and is neither convertible by the related Portfolio Asset Obligor thereon or thereof into, nor payable in, any other currency;

(c) the obligation constitutes a legal, valid, binding and enforceable obligation of each related Portfolio Asset Obligor, enforceable against such person in accordance with its terms;

(d) the obligation is not a lease;

(e) the obligation provides for a fixed amount of principal payable at no less than par, in cash, no later than its stated maturity;

(f) the obligation is in the form of, and is treated as, indebtedness for U.S. Federal income tax purposes;

(g) no principal, interest, fee or other amount owing on such obligation that became payable prior to the Portfolio Asset Trade Date remains unpaid;

(h) the obligation is not a Defaulted Obligation or Margin Stock;

(i) the Issuer is entitled to receive all payments on such obligation free of U.S. Federal or foreign withholding tax;

(j) the obligation is not a Bridge Security, Structured Finance Obligation or Synthetic Security;

(k) the obligation is not, by its terms, convertible into or exchangeable for an Equity Security at any time over its life, provided that the obligation may have attached warrants the aggregate value of which does not exceed 5% of the purchase price of such obligation (which valuation will be based on the reasonable business judgment of the Collateral Manager, without regard to any Portfolio Asset Obligor’s valuation of such warrants);

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(l) the obligation does not require any future advances to be made to any Portfolio Asset Obligor on or after the Portfolio Asset Trade Date; provided that this claim shall be deemed not to apply to any Delayed-Draw Loan if the undrawn portion of such Delayed-Draw Loan is deposited in the Delayed-Draw Committed Proceeds Account; and

(m) the obligation is Registered.

Authenticating Agent: The Person designated by the Trustee to authenticate the Notes on behalf of the Trustee pursuant to Section 6.14 hereof.

Authorized Representative: With respect to the Issuer, any Officer or any other Person who is authorized to act for the Issuer in matters relating to, and binding upon, the Issuer; provided that the Collateral Manager is not an Authorized Officer of the Issuer. With respect to the Collateral Manager, any Officer, employee, member or agent of the Collateral Manager who is authorized to act for the Collateral Manager in matters relating to, and binding upon, the Collateral Manager with respect to the subject matter of the request, certificate or order in question. With respect to the Collateral Administrator, any Officer, employee, partner or agent of the Collateral Administrator who is authorized to act for the Collateral Administrator in matters relating to, and binding upon, the Collateral Administrator with respect to the subject matter of the request, certificate or order in question. With respect to the Trustee or any other bank or trust company acting as trustee of an express trust or as custodian, a Trust Officer. With respect to any Authenticating Agent, any Officer of such Authenticating Agent who is authorized to authenticate the Notes. Each party may receive and accept a certification of the authority of any other party as conclusive evidence of the authority of any Person to act, and such certification may be considered as in full force and effect until receipt by such other party of written notice to the contrary.

Authorizing Resolution: With respect to (i) the Issuer, any action or resolution taken by the Board of Directors or the Sole Shareholder within the powers vested to it pursuant to the Constitutive Documents of the Issuer and (ii) the Sole Shareholder, any action taken by its manager, CM Investment Partners LLC (as successor to CM Investment Partners, L.P.), any Officer of, or other Person authorized by, such manager or any Officer of the Sole Shareholder, within the powers vested to it pursuant to the Constitutive Documents of the Sole Shareholder.

Balance: On any date, with respect to Cash or Eligible Investments in any account, the aggregate of the (i) current balance of Cash, demand deposits, time deposits, bankers’ acceptances and certificates of deposit; (ii) principal amount of any interest-bearing Eligible Investments; and (iii) the accreted amount (but not greater than the face amount) of any non-interest-bearing Eligible Investments other than Cash.

Bank: State Street Bank and Trust Company, in its individual capacity and not as Trustee, or any successor thereto.

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Bankruptcy Law: The federal Bankruptcy Code, Title 11 of the United States Code, Part V of the Companies Law (2012 Revision) of the Cayman Islands, the Bankruptcy Law (1997 Revision) of the Cayman Islands, the Foreign Bankruptcy Proceedings (International Cooperation) Rules 2008 of the Cayman Islands and the Companies Winding Up Rules 2008 of the Cayman Islands, each as amended from time to time.

Benefit Plan Investor: An employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to Part 4 of Title I of ERISA, a plan to which Section 4975 of the Code applies or an entity whose underlying assets include “plan assets” by reason of such an employee benefit plan’s or a plan’s investment in such entity, in each case within the meaning of the Plan Asset Regulation or otherwise.

Board of Directors: With respect to the Issuer, the directors of the Issuer duly appointed by the Sole Shareholder of the Issuer or the board of directors of the Issuer in accordance with the Issuer’s Constitutive Documents.

Bond: A debt security (that is not a loan) that is issued by a corporation, limited liability company, partnership or trust.

Borrowing: The meaning specified for such term in the Revolving Credit Note Agreement.

Borrowing Request: The meaning specified for such term in the Revolving Credit Note Agreement.

Bridge Security: Any obligation or security that (x) is a debt obligation incurred in connection with a merger, acquisition, consolidation, sale of all or substantially all of the assets of a Person, restructuring or similar transaction and (y), which debt obligation by its terms is required to be repaid within one year of the incurrence thereof with proceeds from additional borrowings or other refinancings (other than any additional borrowing or refinancing if one or more financial institutions shall have provided the obligor on such debt obligation with a binding written commitment to provide the same) (it being understood that any such obligation or security that has a nominal maturity date of one year or less from the incurrence thereof but has a term-out or other provision whereby (automatically or at the sole option of the obligor thereof) the maturity of the indebtedness thereunder may be extended to a later date is not a Bridge Security).

Business Day: A day on which commercial banks and foreign exchange markets settle payments in New York, Boston and London and that is also a TARGET Settlement Day, other than a Saturday, Sunday or other day that is a legal holiday in the city in which the Corporate Trust Office is located or on which the New York Stock Exchange or banks are authorized or obligated by law or executive order to close in New York, New York or Boston, Massachusetts.

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Cash: Such funds denominated in currency of the United States of America as at the time shall be legal tender for payment of all public and private debts in the United States of America, including funds standing to the credit of an Account.

Certificate of Authentication: The meaning specified in Section 2.1.

Certificated Note: A Note issued in the form of a definitive, fully registered note without coupons substantially in the applicable form attached as Exhibit A2 (in the case of a Class A Note) or Exhibit A3 (in the case of a Class A-R Note) which shall be registered in the name of the owner thereof, duly executed by the Issuer and authenticated by the Trustee as herein provided.

Certificated Security: The meaning specified in Section 8-102(a)(4) of the UCC.

Class: Each of the Class A Notes and the Class A-R Notes.

Class A Note Register: The meaning specified in Section 2.5(a).

Class A Note Registrar: The meaning specified in Section 2.5(a).

Class A Noteholder: With respect to any Class A Note, the Person in whose name such Class A Note is registered in the Class A Note Register.

Class A Notes: The Class A Notes issued pursuant to this Indenture and having the characteristics specified in Section 2.3.

Class A Placement Agency Agreement: The Placement Agency Agreement, dated as of May 23, 2013, as amended as of September 26, 2014 between the Issuer and the Placement Agent.

Class A-R Commitment Amount: The meaning specified in the Revolving Credit Note Agreement.

Class A-R Note Register: The meaning specified in Section 2.5(a).

Class A-R Note Registrar: The meaning specified in Section 2.5(a).

Class A-R Noteholder: With respect to any Class A-R Note, the Person in whose name such Class A-R Note is registered in the Class A-R Note Register, each of which is required to be a party to the Revolving Credit Note Agreement.

Class A-R Notes: The Class A-R Notes issued pursuant to this Indenture and having the characteristics specified in Section 2.3.

Class A-R Placement Agency Agreement: The Placement Agency Agreement, dated as of December 4, 2013, as amended as of September 26, 2014 between the Issuer and the Placement Agent.

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Class A-R Prepayment Account: The meaning specified in the Revolving Credit Note Agreement.

Clearing Agency: An organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.

Clearing Corporation: (i) Clearstream, (ii) DTC, (iii) Euroclear and (iv) any entity included within the meaning of “clearing corporation” under Section 8-102(a)(5) of the UCC.

Clearing Corporation Security: Securities which are in the custody of or maintained on the books of a Clearing Corporation or a nominee subject to the control of a Clearing Corporation and, if they are Certificated Securities in registered form, properly endorsed to or registered in the name of the Clearing Corporation or such nominee.

Clearstream: Clearstream Banking, société anonyme, a corporation organized under the laws of the Duchy of Luxembourg (formerly known as Cedelbank, société anonyme).

Closing Date: May 23, 2013.

Code: The U.S. Internal Revenue Code of 1986, as amended, and the Treasury regulations promulgated thereunder.

Collateral: The meaning assigned in the Granting Clauses hereof.

Collateral Administration Agreement: An agreement dated as of the Closing Date relating to the administration of the Collateral among the Issuer, the Collateral Manager and the Collateral Administrator.

Collateral Administrator: State Street Bank and Trust Company, acting as collateral administrator under the Collateral Administration Agreement, and any successor thereto.

Collateral Management Agreement: The agreement dated as of the Closing Date, between the Issuer and the Collateral Manager relating to the management of the Portfolio Assets and the other Collateral by the Collateral Manager on behalf of the Issuer.

Collateral Manager: CM Investment Partners LLC (as successor to CM Investment Partners, L.P.), a limited liability company formed under the laws of the State of Delaware.

Collection Account: The account established pursuant to Section 10.2, which consists of the Principal Collection Subaccount and the Interest Collection Subaccount.

Commitment Amount: With respect to any Portfolio Asset that is a Delayed-Draw Loan as of any date of determination, the maximum outstanding principal amount of such Portfolio Asset that a registered holder of the amount of such Portfolio Asset held by the Issuer would on such date be obligated to fund (including all amounts previously funded and outstanding, whether or not such amounts, if repaid, may be reborrowed).

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Commitment Termination Date: The meaning specified for such term in the Revolving Credit Note Agreement.

Committed Proceeds Asset: A Portfolio Asset that is the subject of a Committed Proceeds Transaction.

Committed Proceeds Transaction: Any transaction for the acquisition of a Portfolio Asset listed in Schedule 1 hereto with respect to which, as of the Closing Date, the Issuer has entered into a contractual commitment to acquire such Portfolio Asset but for which the settlement date of such transaction has not yet occurred.

Confidential Information: The meaning specified in Section 14.15(b).

Constitutive Documents: With respect to (i) the Issuer, the Issuer’s Certificate of Incorporation, dated as of May 14, 2013, and Amended and Restated Memorandum of Association and Articles of Association, dated as of May 23, 2013, as they may be amended, revised or restated from time to time and (ii) the Sole Shareholder, the Sole Shareholder’s Articles of Incorporation, dated as of February 15, 2012 and bylaws dated March 1, 2012.

Corporate Trust Office: The principal corporate trust office of the Trustee, currently located at 1 Iron Street, Boston, Massachusetts 02210, Attention: Structured Trust and Analytics, or such other address as the Trustee may designate from time to time by notice to the Holders of the Notes, the Collateral Manager and the Issuer or the principal corporate trust office of any successor Trustee.

Costs of Assignment: With respect to any Portfolio Asset, the sum of (a) any costs of any purchase, exchange, sale, transfer or assignment transaction with respect to such Portfolio Asset that would be paid by a Person effecting such transaction under the terms of such Portfolio Asset or otherwise actually imposed on such Person by any applicable trustee, administrative agent, registrar, borrower or obligor incurred in connection with any such transaction with respect to such Portfolio Asset (including, without limitation, any amounts reimbursable by such Person in respect of any tax or other governmental charge incurred with respect thereto), (b) any reasonable expenses that are incurred by such Person in connection with any such transaction and (c) any reasonable administrative, legal or accounting fees, costs and expenses (including, without limitation, any fees and expenses of the trustee of or outside counsel to the Obligor) that are incurred by such Person in connection with any such transaction.

Cov-Lite Loan: An obligation, the Underlying Instruments for which do not (i) contain any financial covenants or (ii) require the Obligor thereunder to comply with any Maintenance Covenants (regardless of whether compliance with one or more Incurrence Covenants is otherwise required by such Underlying Instruments).

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Current Price: On any date with respect to any Portfolio Asset, the determination by the Valuation Agent of the net cash proceeds that would be received from the sale on such date of determination of such Portfolio Asset, exclusive of accrued interest and capitalized interest and net of the related Costs of Assignment. The “Current Price” shall be (a) expressed as a percentage of par and (b) determined exclusive of accrued interest and capitalized interest.

Custodial Account: The account established pursuant to Section 10.3(b).

Custodian: The meaning specified in the first sentence of Section 3.2(a) with respect to items of collateral referred to therein, and each entity with which an Account is maintained, as the context may require, each of which shall be a Securities Intermediary.

Daily Report: The meaning specified in Section 10.5(c).

Default: Any Event of Default or any occurrence that is, or with notice or the lapse of time or both would unless cured or waived become, an Event of Default.

Defaulted Obligation: Any Portfolio Asset as to which (a) there has occurred a default as to the payment of principal and/or interest and/or capitalized interest (without regard to any notice requirement or grace period) (provided that such default may continue for a period of up to three Business Days from the date of such default if the Collateral Manager has certified to the Trustee that the payment failure is not due to credit-related reasons), (b) such Portfolio Asset is a Participation Interest with respect to which the Selling Institution has defaulted in any respect in the performance of any of its payment obligations under the Participation Interest or (c) such Portfolio Asset is a Participation Interest in a Loan that would, if such Loan were a Portfolio Asset, constitute a “Defaulted Obligation”; provided that, in each of the cases set forth in clauses (a) through (c) above, such Portfolio Asset will only constitute a “Defaulted Obligation” for so long as such default has not been cured or waived.

Deferrable Security: A Portfolio Asset which by its terms permits the deferral and/or capitalization of payment of accrued, unpaid interest.

Delayed-Draw Loan: Any Loan with respect to which the Issuer is obligated to make or otherwise fund future term-loan advances to a borrower, but such future term-loan advances may not be paid back and reborrowed.

Delayed-Draw/Committed Proceeds Account:: The account established pursuant to Section 10.3(d).

Deliver or Delivered or Delivery: The taking of the following steps:

(i) in the case of each Certificated Security (other than a Clearing Corporation Security) and Instrument,

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(a) causing the delivery of such Certificated Security or Instrument to the Custodian by registering the same in the name of the Custodian or its affiliated nominee or by endorsing the same to the Custodian or in blank;

(b) causing the Custodian to indicate continuously on its books and records that such Certificated Security or Instrument is credited to the applicable Account; and

(c) causing the Custodian to maintain continuous possession of such Certificated Security or Instrument;

(ii) in the case of each Uncertificated Security (other than a Clearing Corporation Security),

(a) causing such Uncertificated Security to be continuously registered on the books of the issuer thereof in the name of the Custodian; and

(b) causing the Custodian to indicate continuously on its books and records that such Uncertificated Security is credited to the applicable Account;

(iii) in the case of each Clearing Corporation Security,

(a) causing the relevant Clearing Corporation to credit such Clearing Corporation Security to a securities account in the name of the Custodian, and

(b) causing the Custodian to indicate continuously on its books and records that such Clearing Corporation Security is credited to the applicable Account;

(iv) in the case of each security issued or guaranteed by the United States of America or agency or instrumentality thereof and that is maintained in book-entry records of a Federal Reserve Bank (FRB) (each such security, a Government Security),

(a) causing the creation of a Security Entitlement to such Government Security by the credit of such Government Security to a securities account in the name of the Custodian at such FRB, and

(b) causing the Custodian to indicate continuously on its books and records that such Government Security is credited to the applicable Account;

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(v) in the case of each Security Entitlement with respect to a Financial Asset not governed by clauses (iii) through (iv) above,

(a) causing the relevant Securities Intermediary to indicate on its books and records that the underlying Financial Asset has been credited to the Custodian’s securities account,

(b) causing such Securities Intermediary to make entries on its books and records continuously identifying such Financial Asset as belonging to the Custodian and continuously indicating on its books and records that such Financial Asset is credited to the Custodian’s securities account, and

(c) causing the Custodian to indicate continuously on its books and records that such Security Entitlement (or all rights and property of the Custodian representing such Security Entitlement) is credited to the applicable Account;

(vi) in the case of Cash,

(a) causing the delivery of such Cash to the Custodian,

(b) causing the Custodian to credit such Cash to the applicable Account or sub-account (which shall be a Deposit Account), and

(c) causing the Custodian to indicate continuously on its books and records that such Cash is credited to the applicable Account; and

(vii) in the case of each general intangible (including any Participation Interest),

(a) causing the filing of a Financing Statement in the office of the Recorder of Deeds of the District of Columbia, Washington, DC naming the Issuer as debtor and the Trustee as secured party and describing such Participation Interest as the collateral or indicating that the collateral includes “all assets” or “all personal property” of the Issuer (or a similar description), and

(b) causing the registration of this Indenture in the Secured Note Register of Mortgages of the Issuer at the Issuer’s registered office in the Cayman Islands.

In addition, the Collateral Manager on behalf of the Issuer will obtain any and all consents required by the Underlying Instruments relating to any general intangibles for the transfer of ownership and/or pledge of Collateral hereunder (except to the extent that the requirement for such consent is rendered ineffective under Section 9-406 of the UCC).

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Deposit Account: The meaning of “deposit accounts” as defined in Section 9-102(a)(29) of the UCC, as to which the Issuer is the “customer” (within the meaning of Section 4-104(1)(e) of the UCC) of such Accounts.

Determination Date: The last day of each Monthly Period.

DIP Loan: A loan made to a debtor-in-possession pursuant to Section 364 of the U.S. Bankruptcy Code having the priority allowed by either Section 364(c) or 364(d) of the U.S. Bankruptcy Code and fully secured by senior liens.

Dollar, USD or U.S.$: Such coin or currency of the United States of America as at the time shall be legal tender for all debts, public and private.

DTC: The Depository Trust Company, its nominees, and their respective successors.

Due Date: Each date on which any payment is due on a Portfolio Asset, Eligible Investment or other financial asset held by the Issuer in accordance with its terms.

Eligible Investment Required Ratings: (a) If such obligation or security (i) has both a long-term and a short-term credit rating from Moody’s, such ratings are “Aa3” (or then equivalent grade) or better (not on credit watch for possible downgrade) and “P-1” (or then equivalent grade) (not on credit watch for possible downgrade), respectively, (ii) has only a long-term credit rating from Moody’s, such rating is “Aaa” (or then equivalent grade) (not on credit watch for possible downgrade) or (iii) has only a short-term credit rating from Moody’s, such rating is “P-1” (or then equivalent grade) (not on credit watch for possible downgrade) and (b) “A-1” (or then equivalent grade) or better (or, in the absence of a short-term credit rating, a long-term credit rating of “A+” (or then equivalent grade) or better) from S&P.

Eligible Investments: Either Cash, or any Dollar investment that, at the time it is Delivered (directly or through an intermediary), (x) matures not later than the Business Day immediately preceding the Payment Date immediately following the date of Delivery thereof (or such earlier date as expressly provided herein), and (y) is one or more of the following obligations or securities:

(i) [reserved];

(ii) deposit and trust accounts payable on demand with any depository institution or trust company incorporated under the laws of the United States of America or any State thereof (including the Bank) and subject to supervision and examination by Federal and/or State banking authorities so long as the commercial paper and/or the debt obligations of such depository institution or trust company (or, in the case of the principal depository institution in a holding company system, the commercial paper or debt obligations of such holding company) at the time of such investment or contractual commitment providing for such investment have the Eligible Investment Required Ratings; and

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(iii) [reserved];

provided that (1) no investment shall be an Eligible Investment unless it is indebtedness for US Federal income tax purposes, (2) Eligible Investments purchased with funds in the Collection Account shall be held until maturity except as otherwise specifically provided herein and shall include only such obligations or securities as mature (or are putable at par to the issuer thereof) no later than the earlier of 60 days and the Business Day prior to the next Payment Date unless such Eligible Investments are issued by the Bank, in which event such Eligible Investments may mature on such Payment Date; (3) Eligible Investments shall exclude any investments not treated as “cash equivalents” for purposes of Section 75.10(c)(8)(iii)(A) of the regulations implementing the Volcker Rule in accordance with any applicable interpretive guidance thereunder; and (4) none of the foregoing obligations or securities shall constitute Eligible Investments if (a) such obligation or security has an “f”, “r”, “p”, “pi”, “q” or “t” subscript (or then equivalent subscript) assigned by S&P, (b) all, or substantially all, of the remaining amounts payable thereunder consist of interest and not principal payments, (c) interest payments with respect to such obligations or securities or proceeds of disposition would be subject to withholding taxes by any jurisdiction and the payor is not required to make “gross-up” payments that cover the full amount of any such withholding tax on an after-tax basis, (d) such obligation or security is secured by real property, (e) such obligation or security is purchased at a price greater than 100% of the principal or face amount thereof, (f) such obligation or security is subject of a tender offer, voluntary redemption, exchange offer, conversion or other similar action, (g) in the Collateral Manager’s judgment (as certified to the Trustee in writing), such obligation or security is subject to material non-credit related risks, (h) such obligation is a Structured Finance Obligation, (i) such obligation or security is represented by a certificate of interest in a grantor trust, (j) such obligation or security is not an identified banking product for purposes of 17 CFR 255.2(h)(2)(ii) of the final rule implementing Section 13 of the Bank Holding Company Act of 1956, as amended, and any other applicable implementing rule or regulation, or (k) such obligation or security is not an asset or holding allowed for an issuing entity under 17 CFR 255.10(c)(8) of the final rule implementing Section 13 of the Bank Holding Company Act of 1956, as amended, and any other applicable implementing rule or regulation. Subject to the other requirements of this definition, Eligible Investments may include, without limitation, those investments for which the Trustee or an Affiliate of the Trustee provides services and receives compensation.

Eligible Investment Income: The meaning specified in Section 2.7(a)(ii).

Enforcement Event: The meaning specified in Section 11.1(a)(iii).

Equity Security: Any equity or other security that is not eligible for purchase by the Issuer as a Portfolio Asset.

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ERISA: The United States Employee Retirement Income Security Act of 1974, as amended.

Euroclear: Euroclear Bank S.A./N.V.

Event of Default: The meaning specified in Section 5.1.

Excepted Property: The U.S.$250 transaction fee paid to the Issuer in consideration of the issuance of the Notes and the funds attributable to the issuance and allotment of the Issuer’s ordinary shares or the bank account in the Cayman Islands in which such funds are deposited (or any interest thereon).

Exchange Act: The U.S. Securities Exchange Act of 1934, as amended.

Expense Account: The account established pursuant to Section 10.3(c).

FATCA: The meaning specified in Section 2.12(b).

FATCA Compliance: Compliance with Sections 1471 through 1474 of the Code and any related provisions of law, court decisions, or administrative guidance.

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

Financing Statements: The meaning specified in Section 9-102(a)(39) of the UCC.

GAAP: The meaning specified in Section 6.3(j).

Global Note: Any Regulation S Global Note or Rule 144A Global Note.

Grant or Granted: To grant, bargain, sell, convey, assign, transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit, set over and confirm. A Grant of Collateral, or of any other instrument, shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including, the immediate continuing right to claim for, collect, receive and receipt for principal and interest payments in respect of Collateral, and all other Cash payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise, and generally to do and receive anything that the granting party is or may be entitled to do or receive thereunder or with respect thereto.

Hedge Agreement: Any interest rate swap, floor and/or cap agreements, including without limitation one or more interest rate basis swap agreements.

Holder: With respect to any Note, the Person whose name appears on the applicable Note Register as the registered holder of such Note.

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Incurrence Covenant: A covenant by any borrower to comply with one or more financial covenants only upon the occurrence of certain actions of the borrower, including a debt issuance, dividend payment, share purchase, merger, acquisition or divestiture.

Indebtedness: With respect to any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all guarantees by such Person of Indebtedness of others, (h) all capital lease obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances.

Indenture: This instrument as originally executed and, if from time to time supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, as so supplemented or amended.

Independent: As to any Person, any other Person (including, in the case of an accountant or lawyer, a firm of accountants or lawyers, and any member thereof, or an investment bank and any member thereof) who (i) does not have and is not committed to acquire any material direct or any material indirect financial interest in such Person or in any Affiliate of such Person, and (ii) is not connected with such Person as an Officer, employee, promoter, underwriter, voting trustee, partner, director or Person performing similar functions. “Independent” when used with respect to any accountant may include an accountant who audits the books of such Person if in addition to satisfying the criteria set forth above the accountant is independent with respect to such Person within the meaning of Rule 101 of the Code of Professional Conduct of the American Institute of Certified Public Accountants.

Whenever any Independent Person’s opinion or certificate is to be furnished to the Trustee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning hereof.

Any pricing service, certified public accountant or legal counsel that is required to be Independent of another Person under this Indenture must satisfy the criteria above with respect to the Issuer, the Collateral Manager and their Affiliates.

Insolvency Event: With respect to any Person, an event that occurs when such Person shall (1) be dissolved (other than pursuant to a consolidation, amalgamation or merger);

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(2) become insolvent or unable to pay its debts or fail or admit in writing its inability generally to pay its debts as they become due; (3) make a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institute or have instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition shall be presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 45 days of the institution or presentation thereof; (5) have a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seek or become subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) have a secured party take possession of all or substantially all its assets or have a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party shall maintain possession, or any such process shall not be dismissed, discharged, stayed or restrained, in each case within 45 days thereafter; (8) cause or become subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

Instrument: The meaning specified in Section 9-102(a)(47) of the UCC.

Interest Collection Subaccount: The meaning specified in Section 10.2(a).

Interest Collections: With respect to any Monthly Period, (a) all collections of interest, capitalized interest, fees and other amounts (other than Principal Collections) paid in respect of any Portfolio Asset and received by the Issuer during such Monthly Period (whether or not directly from the relevant Portfolio Asset Obligor), including the portion of the proceeds of any sale properly attributable to any of the foregoing or, in the case of any sale of a Portfolio Asset permitted hereunder, any Realized Gains that are attributable to such sale (but not including any amounts deducted or withheld by any Obligor on a Portfolio Asset for or on account of any present or future taxes, duties, assessments or governmental charges with respect to payments by such Obligor on such Portfolio Asset); and (b) with respect to Eligible Investments credited to the Interest Collection Subaccount at any time during such Monthly Period, all interest paid on, and proceeds of, such Eligible Investments.

Investment Company Act: The U.S. Investment Company Act of 1940, as amended from time to time, and the rules promulgated thereunder.

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ISDA Master Agreement: The ISDA 2002 Master Agreement (together with the Schedule and Credit Support Annex thereto and Confirmation exchanged thereunder), each dated as of May 20, 2013, between UBS AG and the Sole Shareholder.

Issuer: The Person named as such on the first page of this Indenture until a successor Person shall have become the Issuer pursuant to the applicable provisions of this Indenture, and thereafter “Issuer” shall mean such successor Person.

Issuer Account Control Agreement: The Account Control Agreement dated as of the Closing Date between the Issuer, the Trustee and State Street Bank and Trust Company, as Custodian.

Issuer Contribution Agreement: The Equity Contribution Agreement dated as of May 23, 2013 between the Sole Shareholder and the Trustee.

Issuer Order and Issuer Request: A written order or request (which may be a standing order or request) to be provided by the Issuer or by the Collateral Manager on behalf of the Issuer in accordance with the provisions of this Indenture, dated and signed in the name of the Issuer by an Authorized Representative of the Issuer, as applicable, or, in the case of an order or request executed by the Collateral Manager, by an Authorized Representative thereof, on behalf of the Issuer.

LC Commitment Amount: With respect to any Pre-funded Letter of Credit, the amount which the Issuer could be required to pay to the Pre-funded LOC Agent Bank in respect thereof (including, for the avoidance of doubt, any portion thereof which the Issuer has collateralized or deposited into a trust or with the Pre-funded LOC Agent Bank for the purpose of making such payments).

Lien: With respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

Loan: Any obligation for the payment or repayment of borrowed money that is documented by a term loan agreement, revolving loan agreement or other similar credit agreement.

Maintenance Covenant: A covenant by any Obligor to comply with one or more financial covenants during each reporting period, whether or not such Obligor has taken any specified action.

Majority Noteholders: The Holders of more than 50% of the Aggregate Outstanding Amount of the Class A Notes.

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Margin Stock: The meaning specified under Regulation U.

Master Participation and Assignment Agreement: The Master Participation and Assignment Agreement dated as of May 23, 2013 between the Issuer and the Sole Shareholder in respect of the purchase of Portfolio Assets as identified therein.

Material Adverse Effect: A material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Issuer, (b) the ability of the Issuer or the Sole Shareholder to perform any of its obligations under the Notes or any other Transaction Document to which it is a party or (c) the rights of or benefits available to any of the Holders or the Trustee under the Notes or any of the other Transaction Documents.

Maturity: With respect to any Note, the date on which the unpaid principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or otherwise.

Maximum RCN Facility Funding Commitment: As defined in the Revolving Credit Note Agreement.

Monthly Period: Each period from, and including, the 15th calendar day of each calendar month (each, a Monthly Date) to, but excluding, the next following Monthly Date, except that (a) the initial Monthly Period will commence on, and include, the Closing Date and will end on, but exclude, the 15^th day of June 2013 and (b) the final Monthly Period will end on, but exclude, the date on which the Notes are paid in full.

Moody’s: Moody’s Investors Service, Inc. and any successor thereto.

Moody’s Industry Classification: The industry classifications set forth in Schedule 2 hereto, as such industry classifications shall be updated at the option of the Collateral Manager if Moody’s publishes revised industry classifications.

Non-Permitted ERISA Holder: As defined in Section 2.11(c).

Non-Permitted Holder: As defined in Section 2.11(b).

Non-USD Currency: Any lawful coin or currency other than Dollars.

Noteholder Reporting Obligations: The obligations set forth in Section 2.12(b).

Note Register: The meaning specified in Section 2.5(a).

Note Registrar: The meaning specified in Section 2.5(a).

Notes: The Class A Notes and the Class A-R Notes, collectively.

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Obligor: The issuer, obligor or guarantor in respect of a Portfolio Asset or Eligible Investment or other loan or security, whether or not Collateral.

Offer: As defined in Section 10.6(c).

Officer: (a) With respect to the Issuer or any entity that is a corporation, any director, Chairman of the Board of Directors or any Person authorized thereby to take any and all actions necessary to consummate the transactions contemplated by the Transaction Documents; (b) with respect to any other entity that is a partnership, any general partner thereof or any Person authorized by such entity; (c) with respect to any other entity that is a limited liability company, any member thereof or any Person authorized by such entity; and (d) with respect to the Trustee and any bank or trust company acting as trustee of an express trust or as custodian or agent, any vice president or assistant vice president of such entity or any officer customarily performing functions similar to those performed by a vice president or assistant vice president of such entity.

offshore transaction: The meaning specified in Regulation S.

Opinion of Counsel: A written opinion addressed to the Trustee (or upon which the Trustee is permitted to rely) and the Issuer, in form and substance reasonably satisfactory to the Trustee, of a nationally or internationally recognized and reputable law firm. Whenever an Opinion of Counsel is required hereunder, such Opinion of Counsel may rely on opinions of other counsel who are so admitted and so satisfactory, which opinions of other counsel shall accompany such Opinion of Counsel and shall either be addressed to the Trustee or shall state that the Trustee shall be entitled to rely thereon.

Other Plan Law: Any State, local, Federal or non-U.S. laws or regulations that are substantially similar to the prohibited transaction provisions of ERISA or Section 4975 of the Code.

Outstanding: With respect to the Notes, as of any date of determination, all of the Notes theretofore authenticated and delivered under this Indenture, except:

(i) Notes theretofore canceled by the applicable Note Registrar or delivered to such Note Registrar for cancellation in accordance with the terms of Section 2.9;

(ii) Notes for whose payment funds in the necessary amount have been theretofore irrevocably deposited with the Trustee or any Paying Agent in trust for the Holders of such Notes pursuant to Section 4.1(a)(ii);

(iii) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, unless proof satisfactory to the Trustee is presented that any such Notes are held by a “protected purchaser” (within the meaning of Section 8-303 of the UCC); and

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(iv) Notes alleged to have been mutilated, destroyed, lost or stolen for which replacement Notes have been issued as provided in Section 2.6;

provided that, (A) in determining whether the Holders of the requisite Aggregate Outstanding Amount have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Issuer shall be disregarded and deemed not to be Outstanding; (B) the Aggregate Outstanding Amount of the Class A-R Notes, for purposes of payment of Interest Collections and Principal Collections shall be the Outstanding Class A-R Funded Amount and, for all other purposes, shall be deemed to include the Remaining Unfunded Facility Commitment; and (C) the Class A-R Notes will be deemed to be Outstanding so long as the Commitment Termination Date has not occurred, irrespective of whether there exists an Outstanding Class A-R Funded Amount.

Outstanding Class A-R Funded Amount: The meaning specified in the Revolving Credit Note Agreement.

Par Amount: In relation to any Portfolio Asset, the outstanding principal amount of such Portfolio Asset.

Participation Interest: A participation interest in a Loan originated by a bank or financial institution that, at the time of acquisition, or the Issuer’s commitment to acquire the same, satisfies each of the following criteria: (i) such participation would constitute a Portfolio Asset were it acquired directly, (ii) the selling institution is a lender on the Loan, (iii) the aggregate participation in the Loan granted by such selling institution to any one or more participants does not exceed the principal amount or commitment with respect to which the selling institution is a lender under such Loan, (iv) such participation does not grant, in the aggregate, to the participant in such participation a greater interest than the selling institution holds in the Loan or commitment that is the subject of the participation, (v) the entire purchase price for such participation is paid in full (without the benefit of financing from the selling institution or its affiliates) at the time of the Issuer’s acquisition (or, to the extent of a participation in the unfunded commitment under a Delayed-Draw Loan, at the time of the funding of such Loan), (vi) the participation provides the participant all of the economic benefit and risk of the whole or part of the Loan or commitment that is the subject of the Loan participation and (vii) such participation is documented under a Loan Syndications and Trading Association, Loan Market Association or similar agreement standard for Loan participation transactions among institutional market participants. For the avoidance of doubt, a Participation shall not include a sub-participation interest in any Loan.

Paying Agent: Any Person authorized by the Issuer to pay the principal of or interest on any Notes on behalf of the Issuer as specified in Section 7.2.

Payment Account: The account established pursuant to Section 10.3(a).

Payment Date: Each date occurring eight Business Days after the last day of any Monthly Period.

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Payment Date Report: The meaning specified in Section 10.5(a).

Person: An individual, corporation (including a business trust), partnership, limited partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated association or government or any agency or political subdivision thereof.

Placement Agent: UBS Securities LLC, in its capacity as placement agent under each Placement Agency Agreement.

Placement Agency Agreement: The Class A Placement Agency Agreement and/or the Class A-R Placement Agency Agreement, as applicable.

Plan Asset Regulation: U.S. Department of Labor regulations, 29 C.F.R. §2510.3-101, as modified by Section 3(42) of ERISA.

Portfolio: At any time, all Portfolio Assets held by the Issuer at such time.

Portfolio Asset: Any Loan (or a Participation Interest therein) held by the Issuer.

Portfolio Asset Obligor: In relation to any Portfolio Asset, the borrower or issuer of or obligor on the Portfolio Asset. In addition, “Portfolio Asset Obligor”, unless the context otherwise requires, shall also refer to any guarantor of or other obligor on the Portfolio Asset.

Portfolio Asset Trade Date: The meaning set forth in the definition of “Asset Eligibility Criteria”.

Pre-funded Letter of Credit: A multi-lender credit facility to which the Issuer is party whereby (i) a fronting bank (the Pre-funded LOC Agent Bank) issues or will issue a letter of credit (LC) for account of an Obligor under an Underlying Instrument, (ii) in the event that the LC is drawn, and such Obligor does not reimburse the Pre-funded LOC Agent Bank, each lender is obligated to fund its portion of the facility, (iii) the Pre-funded LOC Agent Bank passes on (in whole or in part) the fees and any other amounts it receives for providing the LC to the lenders and (iv)(a) the related Underlying Instrument requires the Issuer to fully collateralize the Issuer’s obligations to the related Pre-funded LOC Agent Bank or obligate the Issuer to contribute to a trust an aggregate amount equal to the related LC Commitment Amount, (b) either (i) the collateral posted by the Issuer to the related Pre-funded LOC Agent Bank is held by a depository institution meeting the requirement set forth in Section 10.1 at the time such collateral is posted or (ii) the trust in which the contribution by the Issuer is held at is a depository institution that meets the requirement set forth in Section 10.1 and (c) if clause (b)(ii) applies, the Issuer’s contribution to a trust is invested in Eligible Investments only.

Pre-funded LOC Agent Bank: The meaning specified in the definition of the term “Pre-funded Letter of Credit”.

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Principal Balance: Subject to Section 1.2, with respect to (a) any item of Collateral other than a Delayed-Draw Loan, the outstanding principal amount of such Collateral (excluding any capitalized interest) and (b) any Delayed-Draw Loan, the outstanding principal of such Delayed-Draw Loan (excluding any capitalized interest), plus (except as expressly set forth herein) any undrawn commitments that have not been irrevocably reduced or withdrawn with respect to such Delayed-Draw Loan; provided that for all purposes the Principal Balance of any Defaulted Obligation that has remained a Defaulted Obligation for a continuous period of three years after becoming a Defaulted Obligation and has not been sold or terminated during such three year period shall be deemed to be zero.

Principal Collections: With respect to any Monthly Period, (a) all collections of principal on a Portfolio Asset (excluding any capitalized interest) paid in respect of any Portfolio Asset and received by the Issuer during such Monthly Period (whether or not directly from the relevant Portfolio Asset Obligor), including the proceeds of any sale properly attributable to principal (excluding proceeds of any sale properly attributable to capitalized interest) (but not including any amounts deducted or withheld by any Obligor on a Portfolio Asset for or on account of any present or future taxes, duties, assessments or governmental charges with respect to payments by such Obligor on such Portfolio Asset), and (b) with respect to Eligible Investments credited to the Principal Collection Subaccount at any time during such Monthly Period, all interest paid on, and proceeds of, such Eligible Investments; provided that for the purposes of attributing collections to principal and capitalized interest, such attribution shall be made (i) if the Underlying Instruments include provisions for such attribution, then in accordance with such provisions and (ii) if the Underlying Instruments do not include any such provisions, then on a pro rata basis.

Principal Collection Subaccount: The meaning specified in Section 10.2(a).

Priority of Payments: The meaning specified in Section 11.1(a).

Proceeding: Any suit in equity, action at law or other judicial or administrative proceeding.

Purchase Amount: (i) with respect to any Portfolio Asset that is not a Delayed-Draw Loan as of any date of determination, the product of the Purchase Price and the Par Amount and (ii) with respect to any Portfolio Asset that is a Delayed-Draw Loan as of any date of determination, the product of the Purchase Price and the Commitment Amount.

Purchase Price: In relation to any Portfolio Asset, (a) in the case of a Portfolio Asset other than a Delayed-Draw Loan, the original purchase price therefor paid by the Issuer to acquire such Portfolio Asset (expressed as a percentage of par and exclusive of accrued interest and capitalized interest, but inclusive of any costs incurred by the Issuer to acquire such Portfolio Asset) and (b) in the case of a Portfolio Asset that is a Delayed-Draw Loan, the original purchase price therefor paid by the Issuer to acquire such

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Portfolio Asset (expressed as a percentage of par and the Commitment Amount in respect of such Portfolio Asset and exclusive of accrued interest and capitalized interest, but inclusive of any costs incurred by the Issuer to acquire such Portfolio Asset).

Qualified Institutional Buyer: The meaning specified in Rule 144A under the Securities Act.

Qualified Purchaser: The meaning specified in the Investment Company Act.

Realized Gains: Any gain realized by the Issuer from the repayment, sale or other disposition of any Portfolio Asset or any portion thereof by reason of the fact that the net principal proceeds received in respect of such repayment or sale is greater than the Purchase Amount thereof (or, if applicable, the portion of the Purchase Amount attributable to the portion of the Portfolio Asset repaid, sold or otherwise disposed of).

Record Date: With respect to the Global Notes, the date one day prior to the applicable Payment Date and, with respect to the Certificated Notes, the date 15 days prior to the applicable Payment Date.

Registered: In registered form for U.S. Federal income tax purposes and issued after July 18, 1984, provided that a certificate of interest in a grantor trust shall not be treated as Registered unless each of the obligations or securities held by the trust was issued after that date.

Registered Form has the meaning specified in Section 8-102(a)(13) of the UCC.

Registered Office Agreement: The Registered Office Agreement, between the Administrator, the Sole Shareholder and the Issuer dated May 23, 2013, providing for the provision of registered office services to the Issuer, as modified, amended and supplemented from time to time.

Regulation S: Regulation S, as amended, under the Securities Act.

Regulation S Class A-R Note has the meaning set forth in Section 2.2(b).

Regulation S Global Note: The meaning specified in Section 2.2(b)(i).

Regulation U: Regulation U (12 C.F.R. 221) issued by the Board of Governors of the Federal Reserve System.

Remaining Unfunded Facility Commitment: The meaning specified for such term in the Revolving Credit Note Agreement.

Restricted Class A-R Note has the meaning set forth in Section 2.2(b).

Revolving Credit Note Agent: The Bank, as note agent acting on behalf of the Issuer under the Revolving Credit Note Agreement.

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Revolving Credit Note Agreement: The Revolving Credit Note Agreement, dated as of the Amendment and Restatement Date, by and among the Issuer, the Revolving Credit Note Agent, the Trustee and the Holders from time to time of the Class A-R Notes.

Rule 144A: Rule 144A, as amended, under the Securities Act.

Rule 144A Global Note: The meaning specified in Section 2.2(b)(i).

S&P: Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor or successors thereto.

S&P Industry Classification: The S&P Industry Classifications set forth in Schedule 3 hereto, and such industry classifications shall be updated at the option of the Collateral Manager if S&P publishes revised industry classifications.

Sale: The meaning specified in Section 5.17.

Scheduled Distribution: With respect to any Portfolio Asset or Eligible Investment, for each Due Date, the scheduled payment of principal and/or interest and/or capitalized interest due on such Due Date with respect to such Collateral, determined in accordance with the assumptions specified in Section 1.2 hereof.

Second Lien Loan: Any Loan that: (i) is not (and cannot by its terms become) subordinate in right of payment to any other obligation of the Obligor of the Loan; (ii) is secured by a valid first-priority perfected security interest or lien in, to or on specified collateral securing the Obligor’s obligations under the Loan; (iii) the value of the collateral securing the Loan together with other attributes of the Obligor (including, without limitation, its general financial condition, ability to generate cash flow available for debt service and other demands for that cash flow) is adequate (in the commercially reasonable judgment of the Collateral Manager, as certified to the Trustee in writing) to repay the Loan in accordance with its terms and to repay all other Loans of equal seniority secured by a first lien or security interest in the same collateral and (iv) is not secured solely or primarily by common stock or other equity interests; provided that the limitation set forth in this clause (iv) shall not apply with respect to a Loan made to a parent entity that is secured solely or primarily by the stock of one or more of the subsidiaries of such parent entity to the extent that the granting by any such subsidiary of a lien on its own property would violate law or regulations applicable to such subsidiary (whether the obligation secured is such Loan or any other similar type of Indebtedness owing to third parties).

Section 13 Banking Entity: An entity that (i) is defined as a “banking entity” under the Volcker Rule regulations (Section     .2(c)), (ii) provides written certification thereof to the Issuer and the Trustee, and (iii) identifies the Class or Classes of Notes held by such entity and the outstanding principal amount thereof.

Secured Obligations: The meaning assigned in the Granting Clauses hereof.

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Secured Parties: The meaning specified in the Granting Clauses.

Securities Act: The U.S. Securities Act of 1933, as amended.

Securities Intermediary: The meaning specified in Section 8-102(a)(14) of the UCC.

Security Entitlement: The meaning specified in Section 8-102(a)(17) of the UCC.

Selling Institution: The entity obligated to make payments to the Issuer under the terms of a Participation Interest.

Senior Secured Loan: Any Loan that: (i) is not (and by its terms is not permitted to become) subordinate in right of payment to any other debt for borrowed money incurred by the obligor of such Loan and (ii) is secured by a valid first priority perfected security interest or lien on specified collateral (such collateral, together with any other pledged assets, having a value (as reasonably determined by the Collateral Manager at the time of acquisition, which determination will not be questioned based on subsequent events) equal to or greater than the Principal Balance of the Loan) securing the obligor’s obligations under the Loan, which security interest or lien is subject to customary liens.

Side Letter Security Agreement: The letter agreement dated as of May 23, 2012 between the Issuer and the Sole Shareholder in contemplation of the sale from time to time of Portfolio Assets from the Sole Shareholder to the Issuer.

Similar Law: Any Federal, State, local, non-U.S. or other law or regulation that could cause the underlying assets of the Issuer to be treated as assets of the investor in any Note (or any interest therein) by virtue of its interest and thereby subject the Issuer and the Collateral Manager (or other Persons responsible for the investment and operation of the Issuer’s assets) to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.

Sole Shareholder: CM Finance Inc. as successor to CM Finance LLC, a corporation incorporated under the law of the State of Maryland and sole shareholder of the Issuer.

Stated Maturity: With respect to the Notes, the date specified as such in Section 2.3.

Structured Finance Obligation: Any debt obligation secured directly by, or representing ownership of, a pool of consumer receivables, auto loans, auto leases, equipment leases, home or commercial mortgages, corporate debt or sovereign debt obligations, including collateralized bond obligations, collateralized loan obligations, mortgage-backed securities or any similar security or other asset backed security or similar investment or equipment trust certificate or trust certificate of the type generally considered to be a repackaged security.

Subscription Agreements: (i) The agreement dated as of May 23, 2013 as amended as of September 26, 2014 by and between the Issuer and CM Finance Inc. as successor to CM

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Finance LLC relating to the sale of U.S.$98,000,000 of the Class A Notes, (ii) the agreement dated as of May 23, 2013 as amended as of September 26, 2014 by and between the Issuer and UBS AG relating to the sale of U.S.$102,000,000 of the Class A Notes, (iii) the agreement dated as of December 4, 2013 as amended as of September 26, 2014 by and between the Issuer and CM Finance LLC relating to the sale of U.S.$50,000,000 of the Class A-R Notes and (iv) the agreement dated as of December 4, 2013 by and between the Issuer and UBS AG relating to the sale of U.S.$50,000,000 of the Class A-R Notes.

Support Document: Each of the Issuer Account Control Agreement and the Issuer Contribution Agreement.

Synthetic Security: Any U.S. Dollar denominated swap transaction (including any default swap), LCDX, structured bond investment, credit linked note or other derivative investment, which investment contains a probability of default, recovery upon default and expected loss characteristics closely correlated to a reference obligation, but which may provide for a different maturity, interest rate or other non credit characteristics than such reference obligation.

TARGET Settlement Day: Any day on which TARGET (the Trans-European Automated Real-time Gross settlement Express Transfer system) is open.

Tax: Any tax, levy, impost, duty, charge or assessment of any nature (including interest, penalties and additions thereto) imposed by any governmental taxing authority.

Tax Event: An event that occurs if (i) any Obligor under any Portfolio Asset is required to deduct or withhold from any payment under such Portfolio Asset for or on account of any Tax for whatever reason (other than (x) withholding tax on (1) fees received with respect to a Pre-funded Letter of Credit and (2) amendment, waiver, consent and extension fees and (y) withholding tax imposed as a result of the failure by any Holder to comply with its Noteholder Reporting Obligations, so long as the Issuer, within 60 days after the imposition of such withholding tax, exercises its right to demand that such Non-Permitted Holder transfer its interest to a Person that is not a Non-Permitted Holder and, if such Non-Permitted Holder fails to so transfer its Notes, the Issuer (or the Collateral Manager acting for the Issuer) exercises its right to sell such Notes or interest therein to a Person that is not a Non-Permitted Holder) and such Obligor is not required to pay to the Issuer such additional amount as is necessary to ensure that the net amount actually received with respect to any payment under such Portfolio Asset (free and clear of Taxes, whether assessed against such Obligor or the Issuer) will equal the full amount that the Issuer would have received had no such deduction or withholding occurred or (ii) any jurisdiction imposes net income, profits or similar Tax on the Issuer, provided that the sum of (A) the tax or taxes imposed on the Issuer as described in clause (ii) of this definition and (B) the total amount withheld from payments under the Portfolio Assets described in clause (i) of this definition and which are not compensated for by payment of additional amounts is in excess of 5% of the aggregate interest due and payable on the Portfolio Assets for the relevant Monthly Period.

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Transaction Documents: The Indenture, the Issuer Account Control Agreement, Collateral Management Agreement, the Registered Office Agreement, the Collateral Administration Agreement, the Side Letter Security Agreement, each Placement Agency Agreement, each Subscription Agreement, the Revolving Credit Note Agreement and the Issuer Contribution Agreement.

Transfer Agent: The Person or Persons, which may be the Issuer, authorized by the Issuer to exchange or register the transfer of Notes.

Trust Officer: When used with respect to the Trustee, any Officer within the Corporate Trust Office (or any successor group of the Trustee) including any Officer to whom any corporate trust matter is referred at the Corporate Trust Office because of such person’s knowledge of and familiarity with the particular subject and, in each case, having direct responsibility for the administration of this transaction.

Trustee: As defined in the first sentence of this Indenture.

UBS: UBS AG.

UCC: The Uniform Commercial Code as in effect in the State of New York, as amended from time to time.

Uncertificated Security: The meaning specified in Section 8-102(a)(18) of the UCC.

Underlying Instrument: The indenture, credit agreement or other agreement pursuant to which a Portfolio Asset has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such Portfolio Asset or of which the holders of such Portfolio Asset are the beneficiaries.

United States Person: The meaning specified in Section 7701(a)(30) of the Code.

Unregistered Securities: The meaning specified in Section 5.17(c).

U.S. Person or U.S. person: The meaning specified in Regulation S.

Valuation Agent: UBS AG in its capacity as valuation agent, as appointed by the Issuer pursuant to the appointment letter dated the date hereof between the Issuer and UBS AG, and its permitted successors and assigns.

Volcker Rule: Section 13 of the U.S. Bank Holding Company Act of 1956, as amended, and the applicable rules and regulations thereunder.

1.2 Assumptions as to Collateral

In connection with all calculations required to be made pursuant to this Indenture with respect to Scheduled Distributions on any Portfolio Asset or Eligible Investment, or any payments on any other assets included in the Collateral, with respect to the sale of and

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reinvestment in Portfolio Assets, and with respect to the income that can be earned on Scheduled Distributions on such Collateral and on any other amounts that may be received for deposit in the Collection Account, the provisions set forth in this Section 1.2 shall be applied. The provisions of this Section 1.2 shall be applicable to any determination or calculation that is covered by this Section 1.2, whether or not reference is specifically made to Section 1.2, unless some other method of calculation or determination is expressly specified in the particular provision.

(a) All calculations with respect to Scheduled Distributions on the Collateral securing the Notes shall be made on the basis of information as to the terms of each such item of Collateral and upon reports of payments, if any, received on such item of Collateral that are furnished by or on behalf of the Obligor of such item of Collateral and, to the extent they are not manifestly in error, such information or reports may be conclusively relied upon in making such calculations.

(b) For each Monthly Period and as of any date of determination, the Scheduled Distribution on any item of Collateral (other than a Defaulted Obligation, which shall be assumed to have a Scheduled Distribution of zero) shall be the sum of (i) the total amount of payments and collections to be received during such Monthly Period in respect of such item of Collateral (including the proceeds of the sale of such Collateral received and, in the case of sales which have not yet settled, to be received during the Monthly Period and not reinvested in additional Portfolio Assets or Eligible Investments or retained in the Collection Account for subsequent reinvestment pursuant to Section 12.2(b) that, if received as scheduled, will be available in the Collection Account at the end of the Monthly Period and (ii) any such amounts received in prior Monthly Periods that were not disbursed on a previous Payment Date.

(c) All calculations, unless otherwise set forth herein or the context otherwise requires, shall be rounded to the nearest ten-thousandth if expressed as a percentage, and to the nearest one-hundredth if expressed otherwise.

(d) All monetary calculations under this Indenture shall be in Dollars.

(e) Any reference in this Indenture to an amount of the Trustee’s or the Collateral Administrator’s fees calculated with respect to a period at a per annum rate shall be computed on the basis of a 360-day year of twelve 30-day months prorated for the related Monthly Period and shall be based on the aggregate face amount of the Portfolio Assets and the Eligible Investments.

(f) To the extent of any ambiguity in the interpretation of any definition or term contained in this Indenture or to the extent more than one methodology can be used to make any of the determinations or calculations set forth herein, the Collateral Administrator shall request direction from the Collateral Manager as to the interpretation and/or methodology to be used, and the Collateral Administrator shall follow such direction, and together with the Trustee, shall be entitled to conclusively rely thereon without any responsibility or liability therefor.

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(g) For purposes of calculating compliance with any tests hereunder, the trade date (and not the settlement date) with respect to any acquisition or disposition of a Portfolio Asset or Eligible Investment shall be used by the Collateral Administrator to determine whether and when such acquisition or disposition has occurred.

2. THE NOTES

2.1 Forms Generally

The Notes and the Trustee’s or Authenticating Agent’s certificate of authentication thereon (the Certificate of Authentication) shall be in substantially the forms required by this Article 2, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be consistent herewith, determined by the Authorized Representatives of the Issuer executing such Notes as evidenced by their execution of such Notes. Any portion of the text of any such Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of such Note.

2.2 Forms of Notes

(a) The forms of the Notes, including the forms of Certificated Notes, Regulation S Global Notes and Rule 144A Global Notes, shall be as set forth in the applicable part of Exhibit A hereto.

(b) Regulation S Global Notes, Rule 144A Global Notes; Certificated Notes.

(i) The Class A Notes sold to Persons who are not U.S. persons in offshore transactions in reliance on Regulation S shall be issued initially in the form of one permanent global note, in definitive, fully registered form without interest coupons, substantially in the applicable form attached as Exhibit A1 hereto (the Regulation S Global Note), and shall be deposited on behalf of the subscribers for such Class A Notes represented thereby with the Bank as custodian for, and registered in the name of a nominee of, DTC for the respective accounts of Euroclear and Clearstream, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.

(ii) The Class A Notes sold to Persons that are initial purchasers that are also both (A) a Qualified Purchaser or an entity owned (or in the case of Qualified Purchasers, beneficially owned) by one or more Qualified Purchasers and (B)(I) a Qualified Institutional Buyer or (II) an Accredited

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Investor who is purchasing such Class A Notes in a non-public transaction shall be issued initially in the form of one permanent global note, in definitive, fully registered form without interest coupons, substantially in the form attached as Exhibit A1 hereto (the Rule 144A Global Note) and shall be deposited on behalf of the subscribers for such Class A Notes represented thereby with the Bank as custodian for, and registered in the name of a nominee of, DTC, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.

(iii) The aggregate principal amount of the Regulation S Global Note and the Rule 144A Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee or DTC or its nominee, as the case may be, as hereinafter provided.

(iv) The Class A-R Notes offered and sold in offshore transactions in reliance on Regulation S to persons who are not U.S. Persons (each a Regulation S Class A-R Note) shall be issued in the form of one or more certificated securities in definitive, fully Registered Form, without interest coupons and with the applicable legends set forth in Exhibit A3 hereto, as applicable, which shall be registered in the name of the Holder or a nominee thereof and duly executed by the Issuer and authenticated by the Trustee as hereinafter provided. Class A-R Notes offered and sold in the United States pursuant to an exemption from the registration requirements of the Securities Act (each, a Restricted Class A-R Note) shall be issued in the form of one or more certificated securities in definitive, fully registered form, without interest coupons and with the applicable legends set forth in Exhibit A3 hereto, which shall be registered in the name of the Holder or a nominee thereof and duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.

(c) The Issuer in issuing the Notes shall use “CUSIP,” “ISIN” or “private placement” numbers (if then generally in use), and, if so, the Issuer will indicate the “CUSIP,” “ISIN” or “private placement” numbers of the Notes in related materials as a convenience to Holders.

(d) Book Entry Provisions. This Section 2.2(d) shall apply only to Global Notes deposited with or for account of DTC.

The provisions of the “Operating Procedures of the Euroclear System” of Euroclear and the “Terms and Conditions Governing Use of Participants” of Clearstream, respectively, will be applicable to the Global Notes insofar as interests in such Global Notes are held by the Agent Members of Euroclear or Clearstream, as the case may be.

Agent Members shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Bank, as custodian for DTC and DTC may be treated by the Issuer, the Trustee, and any agent of the Issuer or the

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Trustee as the absolute owner of such Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee, or any agent of the Issuer or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note.

2.3 Authorized Amount; Stated Maturity; Denominations

(a) The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is limited to, with respect to the Class A Notes, U.S.$200,000,000 and, with respect to the Class A-R Notes, the Maximum RCN Facility Funding Commitment, excluding (i) Notes issued upon registration of, transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 2.5, 2.6 or 8.5 of this Indenture or (ii) additional notes issued in accordance with Section 2.13 and other applicable provisions of Article 8.

(b) The Notes shall have the designations, aggregate principal amounts and other characteristics as follows:

Class Designation	Class A Note		Class A-R Note
Original Aggregate Principal Amount		U.S.$200,000,000	the Maximum RCN Facility Funding Commitment
Stated Maturity		December 5, 2022	December 5, 2022

The Class A Notes shall be issued in minimum denominations of U.S.$500,000 and integral multiples of U.S.$1,000 in excess thereof and shall only be transferred or resold in compliance with the terms of this Indenture.

The Class A-R Notes shall be issued in minimum denominations of U.S.$500,000 (which may represent a combination of the Outstanding Class A-R Funded Amount, if any, and the Remaining Unfunded Facility Commitment attributable to such Class A-R Notes) and integral multiples of U.S.$1,000 in excess thereof and shall only be transferred or resold in compliance with the terms of this Indenture and the Revolving Credit Note Agreement.

All of the Class A Notes and Class A-R Notes are entitled to receive payments of Interest Proceeds and Principal Proceeds on each Payment Date and on the date of Maturity, in each case, pro rata and pari passu among themselves in accordance with the Priority of Payments.

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2.4 Execution, Authentication, Delivery and Dating

The Notes shall be executed on behalf of the Issuer by one of its Authorized Representatives. The signature of such Authorized Representative on the Notes may be manual or facsimile.

Notes bearing the manual or facsimile signatures of any individual who was at any time an Authorized Representative of the Issuer shall bind the Issuer notwithstanding the fact that such individual has ceased to hold such office prior to the authentication and delivery of such Notes or did not hold such office at the date of issuance of such Notes.

At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Notes executed by the Issuer to the Trustee or the Authenticating Agent for authentication and the Trustee or the Authenticating Agent, upon Issuer Order, shall authenticate and deliver such Notes as provided in this Indenture and not otherwise.

Each Class A Note authenticated and delivered by the Trustee or the Authenticating Agent upon Issuer Order on the Closing Date shall be dated as of the Closing Date. Each Class A-R Note authenticated and delivered by the Trustee or the Authenticating Agent upon Issuer Order on the Amendment and Restatement Date shall be dated as of the Amendment and Restatement Date. All other Notes that are authenticated and delivered after the Closing Date for any other purpose under this Indenture shall be dated the date of their authentication.

Notes issued upon transfer, exchange or replacement of other Notes shall be issued in authorized denominations reflecting the original Aggregate Outstanding Amount of the Notes so transferred, exchanged or replaced, but shall represent only the current Outstanding principal amount of the Notes so transferred, exchanged or replaced. In the event that any Note (including, in the case of the Class A-R Notes, the Remaining Unfunded Facility Commitment) is divided into more than one Note in accordance with this Article 2, the original principal amount of such Note shall be proportionately divided among the Notes delivered in exchange therefor and shall be deemed to be the original aggregate principal amount of such subsequently issued Notes.

No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a Certificate of Authentication, substantially in the form provided for herein, executed by the Trustee or by the Authenticating Agent by the manual signature of one of their Authorized Representatives, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.

2.5 Registration, Registration of Transfer and Exchange

(a) The Trustee is hereby appointed as the registrar of the Class A Notes (the Class A Note Registrar) and the Revolving Credit Note Agent has been appointed as the registrar of the Class A-R Notes under the Revolving Credit Note Agreement (in

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such capacity, the Class A-R Note Registrar and together with the Class A Note Registrar, each a Note Registrar). The Trustee is hereby appointed as a Transfer Agent with respect to the Notes. Each Note Registrar shall keep, on behalf of the Issuer, a register (the Class A Note Register) for the Class A Notes and a register (the Class A-R Note Register and, together with the Class A Note Register, the Note Registers) for the Class A-R Notes, in its Corporate Trust Office in which, subject to such reasonable regulations as it may prescribe, such Note Registrar shall provide for the registration of and the registration of transfers of Class A Notes and the Class A-R Notes. Upon any resignation or removal of either Note Registrar, the Issuer shall promptly appoint a successor or, in the absence of such appointment, assume the duties of such Note Registrar. The Issuer may not terminate the appointment of the Note Registrars or any Transfer Agent or appoint a new Note Registrar or Transfer Agent without the consent of the Majority Noteholders.

If a Person other than the Trustee is appointed as a Class A Note Registrar, the Issuer will give the Trustee prompt written notice of the appointment of a Class A Note Registrar, and of the location, and any change in the location, of the Class A Note Registrar, and the Trustee shall have the right to inspect the Class A Note Register at all reasonable times and to obtain copies thereof and the Trustee shall have the right to rely upon a certificate executed on behalf of the Class A Note Registrar by an Officer thereof as to the names and addresses of the Holders of the Class A Notes and the principal or face amounts and numbers of such Class A Notes. Upon written request at any time, the Class A Note Registrar shall provide to the Issuer, the Collateral Manager or any Holder of a Class A Note a current list of Class A Noteholders as reflected in the Class A Note Register.

If a Person other than the Revolving Credit Note Agent is appointed as a Class A-R Note Registrar, the Issuer will give the Revolving Credit Note Agent prompt written notice of the appointment of a Class A-R Note Registrar, and of the location, and any change in the location, of the Class A-R Note Registrar, and the Revolving Credit Note Agent shall have the right to inspect the Class A-R Note Register at all reasonable times and to obtain copies thereof and the Revolving Credit Note Agent shall have the right to rely upon a certificate executed on behalf of the Class A-R Note Registrar by an Officer thereof as to the names and addresses of the Holders of the Class A-R Notes and the principal or face amounts and numbers of such Class A-R Notes. Upon written request at any time, the Class A-R Note Registrar shall provide to the Issuer, the Collateral Manager or any Holder of a Class A-R Note a current list of Class A-R Noteholders as reflected in the Class A-R Note Register.

Subject to this Section 2.5, upon surrender for registration of transfer of any Notes at the office or agency of the Issuer to be maintained as provided in Section 7.2, the Issuer shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denomination and of a like aggregate principal or face amount.

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At the option of the Holder, Notes may be exchanged for Notes of like terms, in any authorized denominations and of like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Note is surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and deliver, the Notes that the Holder making the exchange is entitled to receive.

All Notes authenticated and delivered upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer, evidencing the same debt (to the extent they evidence debt), and entitled to the same benefits under this Indenture as the Notes surrendered upon such registration of transfer or exchange.

Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the applicable Note Registrar duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.

No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Issuer, the Note Registrars or the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The applicable Note Registrar or the Trustee shall be permitted to request such evidence reasonably satisfactory to it documenting the identity and/or signatures of the transferor and transferee.

Each Note Registrar shall ensure that the applicable Note Register is maintained in a manner such that the Notes are treated as Registered.

(b) No Note may be sold or transferred (including, without limitation, by pledge or hypothecation) unless such sale or transfer is exempt from the registration requirements of the Securities Act, is exempt from the registration requirements under applicable State securities laws and will not cause the Issuer to become subject to the requirement that it register as an investment company under the Investment Company Act.

(c) (i) No Note may be transferred to a Benefit Plan Investor and neither the Issuer, the Trustee nor the Note Registrars will recognize any such transfer to a Person that has represented that it is a Benefit Plan Investor. Each initial purchaser of a Note or an interest therein will be required and deemed to represent and warrant, and each subsequent transferee of a Note or an interest therein will be deemed to have represented and warranted, that: (A) for so long as it holds such Note or interest therein, it is not, and is not acting on behalf of, a Benefit Plan Investor; and (B) if such Person is a governmental, church, non-U.S. or other plan, (i) it is not, and for so long as it holds such Note or interest therein will not be, subject to any Similar Law, and (ii) its acquisition, holding and disposition of its interest in such Note will not constitute or result in a violation of any applicable Other Plan Laws.

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(ii) Each purchaser and subsequent transferee of Notes will be required or deemed to represent that such purchaser or subsequent transferee, as applicable, is not an Affected Bank. Each subsequent transferee of any Notes will be deemed to represent that such purchaser or subsequent transferee, as applicable, is not an Affected Bank. No transfer of any Note to an Affected Bank will be effective, and neither the Issuer, the Trustee nor the Note Registrars will recognize any such transfer, unless such transfer is specifically authorized by the Issuer in writing.

(d) Notwithstanding anything contained herein to the contrary, the Trustee shall not be responsible for ascertaining whether any transfer complies with, or for otherwise monitoring or determining compliance with, the registration provisions of or any exemptions from the Securities Act, applicable State securities laws or the applicable laws of any other jurisdiction, ERISA, the Code or the Investment Company Act; provided that if a certificate is specifically required by the terms of this Section 2.5 to be provided to the Trustee by a prospective transferor or transferee, the Trustee shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the applicable requirements of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.

(e) Transfers of Notes shall only be made in accordance with the following requirements:

(i) Rule 144A Global Note to Regulation S Global Note. If a holder of a beneficial interest in a Rule 144A Global Note deposited with DTC wishes at any time to exchange its interest in such Rule 144A Global Note for an interest in the corresponding Regulation S Global Note, or to transfer its interest in such Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of an interest in the corresponding Regulation S Global Note, such holder (provided that such holder or, in the case of a transfer, the transferee is not a U.S. person and is acquiring such interest in an offshore transaction) may, subject to the immediately succeeding sentence and the rules and procedures of DTC, exchange or transfer, or cause the exchange or transfer of, such interest for an equivalent beneficial interest in the corresponding Regulation S Global Note. Upon receipt by the Class A Note Registrar of (A) instructions given in accordance with DTC’s procedures from an Agent Member directing the Class A Note Registrar to credit or cause to be credited a beneficial interest in the corresponding Regulation S Global Note, but not less than the minimum denomination applicable to such holder’s Notes, in an amount equal to the beneficial interest in the Rule 144A Global Note to be exchanged or transferred, (B) a written order given in accordance with DTC’s

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procedures containing information regarding the participant account of DTC and the Euroclear or Clearstream account to be credited with such increase, (C) a certificate in the form of Exhibit B1 attached hereto given by the holder of such beneficial interest stating that the exchange or transfer of such interest has been made in compliance with the transfer restrictions applicable to the Global Notes, including that the holder or the transferee, as applicable, is not a U.S. person, and in an offshore transaction pursuant to and in accordance with Regulation S, and (D) a written certification in the form of Exhibit B5 attached hereto given by the transferee in respect of such beneficial interest stating, among other things, that such transferee is a non-U.S. person purchasing such beneficial interest in an offshore transaction pursuant to Regulation S, then the Class A Note Registrar shall approve the instructions at DTC to reduce the principal amount of the Rule 144A Global Note and to increase the principal amount of the Regulation S Global Note by the aggregate principal amount of the beneficial interest in the Rule 144A Global Note to be exchanged or transferred, and to credit or cause to be credited to the securities account of the Person specified in such instructions a beneficial interest in the corresponding Regulation S Global Note equal to the reduction in the principal amount of the Rule 144A Global Note.

(ii) Regulation S Global Note to Rule 144A Global Note. If a holder of a beneficial interest in a Regulation S Global Note deposited with DTC wishes at any time to exchange its interest in such Regulation S Global Note for an interest in the corresponding Rule 144A Global Note or to transfer its interest in such Regulation S Global Note to a Person who wishes to take delivery thereof in the form of an interest in the corresponding Rule 144A Global Note, such holder may, subject to the immediately succeeding sentence and the rules and procedures of Euroclear, Clearstream and/or DTC, as the case may be, exchange or transfer, or cause the exchange or transfer of, such interest for an equivalent beneficial interest in the corresponding Rule 144A Global Note. Upon receipt by the Class A Note Registrar of (A) instructions from Euroclear, Clearstream and/or DTC, as the case may be, directing the Class A Note Registrar to cause to be credited a beneficial interest in the corresponding Rule 144A Global Note in an amount equal to the beneficial interest in such Regulation S Global Note, but not less than the minimum denomination applicable to such holder’s Notes to be exchanged or transferred, such instructions to contain information regarding the participant account with DTC to be credited with such increase, (B) a certificate in the form of Exhibit B3 attached hereto given by the holder of such beneficial interest and stating, among other things, that, in the case of a transfer, the Person transferring such interest in such Regulation S Global Note reasonably believes that the Person acquiring such interest in a Rule 144A Global Note is a Qualified Institutional Buyer and also a

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Qualified Purchaser or an entity beneficially owned exclusively by Qualified Purchasers, is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction and (C) a written certification in the form of Exhibit B4 attached hereto given by the transferee in respect of such beneficial interest stating, among other things, that such transferee is a Qualified Institutional Buyer and also a Qualified Purchaser or an entity beneficially owned exclusively by Qualified Purchasers, then such Note Registrar will approve the instructions at DTC to reduce, or cause to be reduced, such Regulation S Global Note by the aggregate principal amount of the beneficial interest in such Regulation S Global Note to be transferred or exchanged and such Note Registrar shall instruct DTC, concurrently with such reduction, to credit or cause to be credited to the securities account of the Person specified in such instructions a beneficial interest in the corresponding Rule 144A Global Note equal to the reduction in the principal amount of such Regulation S Global Note.

(iii) Transfer of Global Note to Certificated Note. A Holder of a beneficial interest in a Global Note may not transfer its interest in such Global Note to a Person who wishes to take delivery thereof in the form of a corresponding Certificated Note. A Holder of a beneficial interest in a Global Note may not exchange such interest for a corresponding Certificated Note unless it satisfies the requirements of Section 2.10.

(iv) Transfer of Certificated Notes to Certificated Notes. Upon receipt by the applicable Note Registrar of (A) a Holder’s Certificated Note properly endorsed for assignment to the transferee, and (B) a certificate substantially in the form of Exhibit B2 executed by the transferee, such Note Registrar shall cancel such Certificated Note in accordance with Section 2.9, record the transfer in the applicable Note Register in accordance with Section 2.5(a) and upon execution by the Issuer and authentication and delivery by the Trustee, deliver one or more Certificated Notes bearing the same designation as the Certificated Note endorsed for transfer, registered in the names specified in the assignment described in clause (A) above, in principal amounts designated by the transferee (the aggregate of such principal amounts being equal to the aggregate principal amount of the Certificated Note surrendered by the transferor), and in authorized denominations.

(v) Transfer of Certificated Notes to Global Notes. If a Class A Noteholder wishes at any time to transfer its interest in a Certificated Note to a Person who wishes to take delivery thereof in the form of a Global Note, such Class A Noteholder may, subject to the immediately succeeding sentence and the rules and procedures of Euroclear, Clearstream and/or DTC, as the case may be, exchange or transfer, or

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cause the exchange or transfer of, such Certificated Note for a beneficial interest in an applicable Global Note. Upon receipt by the Class A Note Registrar of (A) a Holder’s Certificated Note properly endorsed for assignment to the transferee, (B) a certificate substantially in the form of Exhibit B1 (in the case of transfer to a Regulation S Global Note) or Exhibit B3 (in the case of transfer to a Rule 144A Global Note) attached hereto executed by the transferor and a certificate substantially in the form of Exhibit B4 (in case of transfer to a Rule 144A Global Note) or Exhibit B5 (in case of transfer to a Regulation S Global Note) attached hereto executed by the transferee, (C) instructions given in accordance with Euroclear, Clearstream or DTC’s procedures, as the case may be, from an Agent Member to instruct DTC to cause to be credited a beneficial interest in the applicable Global Note in an amount equal to the Certificated Notes to be transferred or exchanged, and (D) a written order given in accordance with DTC’s procedures containing information regarding the participant’s account at DTC and/or Euroclear or Clearstream to be credited with such increase, the Class A Note Registrar shall cancel such Certificated Note in accordance with Section 2.9, record the transfer in the Class A Note Register in accordance with Section 2.5(a) and approve the instructions at DTC, concurrently with such cancellation, to credit or cause to be credited to the securities account of the Person specified in such instructions a beneficial interest in the applicable Global Note equal to the principal amount of the Certificated Note transferred or exchanged.

(f) Legends. Any Note issued upon the transfer, exchange or replacement of Notes shall bear such applicable legend substantially as set forth in the applicable part of Exhibit A hereto.

(g) Each Person who becomes a beneficial owner of Notes represented by an interest in a Global Note, and any original purchaser of any Notes, by its acquisition of a Note, will be deemed to have represented and agreed as follows:

(i) In connection with the purchase of such Notes:

(A) none of the Issuer, the Sole Shareholder, the Collateral Manager, the Placement Agent, the Valuation Agent, the Trustee, the Collateral Administrator or any of their respective Affiliates is acting as a fiduciary or financial or investment advisor for such beneficial owner;

(B) such beneficial owner is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of the Issuer, the Sole Shareholder, the Collateral Manager, the Trustee, the Collateral Administrator, the Placement Agent, the Valuation Agent, or any of their respective Affiliates;

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(C) such beneficial owner has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent it has deemed necessary and has made its own investment decisions (including decisions regarding the suitability of any transaction pursuant to this Indenture) based upon its own judgment and upon any advice from such advisors as it has deemed necessary and not upon any view expressed by the Issuer, the Sole Shareholder, the Collateral Manager, the Placement Agent, the Valuation Agent, the Trustee, the Collateral Administrator or any of their respective Affiliates;

(D) such beneficial owner (1) in the case of an initial purchaser, is both (x) a Qualified Purchaser, or an entity owned (or in the case of Qualified Purchasers, beneficially owned) by one or more Qualified Purchasers, and (y)(I) a Qualified Institutional Buyer or (II) an Accredited Investor who is purchasing such Notes in a non-public transaction and (2) in the case of a Person who becomes a beneficial owner subsequent to the Closing Date (in the case of the Class A Notes) or the Amendment and Restatement Date (in the case of the Class A-R Notes), is both (x) a Qualified Purchaser, or an entity owned (or in the case of Qualified Purchasers, beneficially owned) by one or more Qualified Purchasers, and (y) a Qualified Institutional Buyer that is not a broker-dealer which owns and invests on a discretionary basis less than U.S.$25,000,000 in securities of issuers that are not affiliated persons of the dealer and is not a plan referred to in paragraph (a)(1)(i)(d) or (a)(1)(i)(e) of Rule 144A under the Securities Act or a trust fund referred to in paragraph (a)(1)(i)(f) of Rule 144A under the Securities Act that holds the assets of such a plan, if investment decisions with respect to the plan are made by beneficiaries of the plan, who is purchasing the Notes in reliance on the exemption from Securities Act registration provided by Rule 144A thereunder;

(E) such beneficial owner is acquiring its interest in such Notes for its own account for investment and not with a view to the resale, distribution or other disposition thereof in violation of the Securities Act;

(F) such beneficial owner was not formed for the purpose of investing in such Notes;

(G) such beneficial owner understands that the Issuer may receive a list of participants holding interests in the Notes from one or more book-entry depositories;

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(H) such beneficial owner will hold and transfer at least the minimum denomination of such Notes;

(I) such beneficial owner is a sophisticated investor and is purchasing the Notes with a full understanding of all of the terms, conditions and risks thereof, and is capable of and willing to assume those risks;

(J) such beneficial owner will provide notice of the relevant transfer restrictions to subsequent transferees, including that such beneficial owners are relying on the exemption from registration under the Securities Act provided by Rule 144A thereunder;

(K) none of such beneficial owner or any of its affiliates (as such term is defined in Rule 501(b) of Regulation D under the Securities Act) or any other Person acting on any of their behalf has engaged or will engage, in connection with such Notes, in any form of (i) general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act or (ii) directed selling efforts within the meaning of Rule 902(c) of Regulation S thereunder;

(L) such beneficial owner has not solicited and will not solicit offers for such Notes, and has not arranged and will not arrange commitments to purchase such Notes, except in accordance with this Indenture and any applicable U.S. Federal and State securities laws and the securities laws of any other jurisdiction in which such Notes have been offered; and

(M) if such beneficial owner is not a United States person, it is not acquiring any Note as part of a plan to reduce, avoid or evade U.S. Federal income tax.

(ii) Each Person who purchases a Note or any interest therein will be required or deemed to represent, warrant and agree that (A) for so long as it holds such Note or interest therein, such Person is not, and is not acting on behalf of, a Benefit Plan Investor, and (B) if such Person is a governmental, church, non-U.S. or other plan which is subject to any Other Plan Law, (1) it is not, and for so long as it holds such Notes or interest therein it will not be, subject to any Similar Law, and (2) its purchase, holding and disposition of such Note will not constitute or result in a violation of any applicable Other Plan Laws.

(iii) Such beneficial owner understands that such Notes are being offered only in a transaction not involving any public offering in the United States of America within the meaning of the Securities Act, such Notes have not been and will not be registered under the Securities Act, and, if in the

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future such beneficial owner decides to offer, resell, pledge or otherwise transfer such Notes, such Notes may be offered, resold, pledged or otherwise transferred only in accordance with the provisions of this Indenture and the legend on such Notes, including any requirement for written certifications. In particular, such beneficial owner understands that the Notes may be transferred only to a Person that is either (a) both (1)(x) a Qualified Purchaser, or (y) an entity owned (or in the case of Qualified Purchasers, beneficially owned) by one or more Qualified Purchasers and (2) a Qualified Institutional Buyer that is not a broker-dealer which owns and invests on a discretionary basis less than U.S.$25,000,000 in securities of issuers that are not affiliated persons of the dealer and is not a plan referred to in paragraph (a)(1)(i)(d) or (a)(1)(i)(e) of Rule 144A under the Securities Act or a trust fund referred to in paragraph (a)(1)(i)(f) of Rule 144A under the Securities Act that holds the assets of such a plan, if investment decisions with respect to the plan are made by beneficiaries of the plan, who is purchasing the Notes in reliance on the exemption from Securities Act registration provided by Rule 144A or (b) a Person that is not a U.S. Person and is acquiring the Notes in an offshore transaction in reliance on the exemption from registration provided by Regulation S thereunder. Such beneficial owner acknowledges that no representation has been made as to the availability of any exemption under the Securities Act or any State securities laws for resale of such Notes. Such beneficial owner understands that the Issuer has not been registered under the Investment Company Act, and that the Issuer is exempt from registration as such by virtue of Section 3(c)(7) of the Investment Company Act.

(iv) Such beneficial owner is aware that, except as otherwise provided in this Indenture, any Class A Notes being sold to it in reliance on Regulation S will be represented by a Regulation S Global Note and that beneficial interests therein may be held only through DTC for the respective accounts of Euroclear or Clearstream.

(v) Such beneficial owner will provide notice to each Person to whom it proposes to transfer any interest in the Notes of the transfer restrictions and representations set forth in this Section 2.5, including the Exhibits referenced herein, Sections 2.11 and 2.12 hereunder, and the legends on the Notes.

(vi) Such beneficial owner understands that the Issuer, the Sole Shareholder, the Collateral Manager, the Trustee, the Placement Agent, the Valuation Agent, and their respective counsel will rely upon the accuracy and truth of the foregoing representations and agreements, and such beneficial owner hereby consents to such reliance.

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(h) Each Person who becomes an owner of a Certificated Note will be required to make the representations and agreements set forth in Exhibit B2.

(i) Any purported transfer of a Note not in accordance with this Section 2.5 shall be null and void and shall not be given effect for any purpose whatsoever.

(j) The Note Registrars, the Trustee and the Issuer shall be entitled to conclusively rely on any transferor and transferee certificate delivered pursuant to this Section 2.5 and shall be able to presume conclusively the continuing accuracy thereof, in each case without further inquiry or investigation.

2.6 Mutilated, Defaced, Destroyed, Lost or Stolen Note

If (a) any mutilated or defaced Note is surrendered to a Transfer Agent, or if there shall be delivered to the Issuer, the Trustee and the relevant Transfer Agent evidence to their reasonable satisfaction of the destruction, loss or theft of any Note, and (b) there is delivered to the Issuer, the Trustee and such Transfer Agent such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Issuer, the Trustee or such Transfer Agent that such Note has been acquired by a protected purchaser, the Issuer shall execute and, upon Issuer Order, the Trustee shall authenticate and deliver to the Holder, in lieu of any such mutilated, defaced, destroyed, lost or stolen Note, a new Note, of like tenor (including the same date of issuance) and equal principal or face amount, registered in the same manner, dated the date of its authentication, bearing interest from the date to which interest has been paid on the mutilated, defaced, destroyed, lost or stolen Note and bearing a number not contemporaneously outstanding.

If, after delivery of such new Note, a protected purchaser of the predecessor Note presents for payment, transfer or exchange such predecessor Note, the Issuer, the Transfer Agent and the Trustee shall be entitled to recover such new Note from the Person to whom it was delivered or any Person taking therefrom, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer, the Trustee and the Transfer Agent in connection therewith.

In case any such mutilated, defaced, destroyed, lost or stolen Note has become due and payable, the Issuer in their discretion may, instead of issuing a new Note pay such Note without requiring surrender thereof except that any mutilated or defaced Note shall be surrendered.

Upon the issuance of any new Note under this Section 2.6, the Issuer may require the payment by the Holder thereof of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

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Every new Note issued pursuant to this Section 2.6 in lieu of any mutilated, defaced, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer and such new Note shall be entitled, subject to the second paragraph of this Section 2.6, to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section 2.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, defaced, destroyed, lost or stolen Notes.

2.7 Payment of Principal and Interest and Other Amounts; Principal and Interest Rights Preserved

(a)

(i) Interest on the Notes shall accrue on the outstanding principal amount (or, in the case of the Class A-R Notes, the Outstanding Class A-R Funded Amount) of the Notes for each day during any Monthly Period in amount equal to (i) all Interest Collections received during such Monthly Period divided by (ii) the actual number of days during such Monthly Period. Interest Collections received by the Issuer will be credited to the Interest Collection Subaccount. Interest Collections that are received in a Monthly Period will be payable to the Holders on the related Payment Date.

(ii) Any Class A-R Noteholder that has deposited a prefunding amount in a Class A-R Prepayment Account pursuant to and in accordance with the Revolving Credit Note Agreement shall be entitled to receive an amount equal to earnings in respect of Eligible Investments in such Class A-R Prepayment Account (or subaccount, if applicable) received during the preceding Monthly Period (such amount, the Eligible Investment Income for the applicable Monthly Period with respect to such Class A-R Prepayment Account), and the Trustee shall withdraw the Eligible Investment Income from each Class A-R Prepayment Account on the last day of each Monthly Period and distribute it to the relevant Class A-R Noteholder on the applicable Payment Date without regard to the Priority of Payments.

(iii) All of the Class A-R Notes are entitled to receive payments pari passu among themselves except as otherwise expressly provided for herein or in the Revolving Credit Note Agreement.

(iv) The Outstanding Class A-R Funded Amount shall be increased by Borrowings under the Revolving Credit Note Agreement. The Outstanding Class A-R Funded Amount will be decreased by repayments pursuant to (A) the Priority of Payments or (B) Sections 2.2 and 2.5 of the Revolving Credit Note Agreement.

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(b) Principal Collections received by the Issuer will be credited to the Principal Collection Subaccount. Principal Collections that are received in a Monthly Period will, at the election of the Collateral Manager acting on behalf of the Issuer, either be invested in Eligible Investments to be credited to the Collection Account pursuant to Section 10.2 or reinvested in Portfolio Assets that satisfy the requirements of Section 12.2. No payments of principal will be payable on any Class A Notes or Class A-R Notes prior to their Stated Maturity except (i) upon the occurrence of an Enforcement Event, and (ii) so long as no Event of Default has occurred and is continuing, on any Business Day, as determined by the Issuer at the direction of the Collateral Manager in accordance with Sections 2.2 and 2.5 of the Revolving Credit Note Agreement.

(c) All payments in respect of interest on and principal of the Notes will be made in accordance with the Priority of Payments and Article 13 and, with respect to principal of the Class A-R Notes, Sections 2.2 and 2.5 of the Revolving Credit Note Agreement.

(d) The Paying Agent shall require the previous delivery of properly completed and signed applicable tax certifications (generally, in the case of U.S. Federal income tax, either (i) in the case of a United States Person, an Internal Revenue Service Form W-9 (or applicable successor form) or (ii) in the case of a Person that is not a United States Person, (A) if an Event of Default has occurred and is continuing, the applicable Internal Revenue Service Form W-8 (or applicable successor form) and (B) at any other time, an Internal Revenue Service Form W-8IMY to which an Internal Revenue Service Form W-9 in respect of the beneficial owner is attached (or, in each case, the applicable successor form)), any information requested pursuant to the Noteholder Reporting Obligations, or any other certification acceptable to it to enable the Issuer, the Trustee and any Paying Agent to determine their duties and liabilities with respect to any taxes or other charges that they may be required to pay, deduct or withhold from payments in respect of such Note or the Holder or beneficial owner of such Note under any present or future law or regulation of the Cayman Islands, the United States of America, any other jurisdiction or any political subdivision thereof or taxing authority therein or to comply with any reporting or other requirements under any such law or regulation. The Issuer shall not be obligated to pay any additional amounts to the Holders or beneficial owners of the Notes as a result of deduction or withholding for or on account of any present or future taxes, duties, assessments or governmental charges with respect to the Notes.

(e) Payments in respect of interest on and principal of any Note shall be made by the Trustee, in Dollars to DTC or its nominee with respect to a Global Note and to the Holder or its nominee with respect to a Certificated Note, by wire transfer, as directed by the Holder, in immediately available funds to a Dollar account maintained by DTC or its nominee with respect to a Global Note, and to the Holder or its nominee with respect to a Certificated Note; provided that (1) in the case of a Certificated Note, the Holder thereof shall have provided written wiring

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instructions to the Trustee on or before the related Record Date and (2) if appropriate instructions for any such wire transfer are not received by the related Record Date, then such payment shall be made by check drawn on a U.S. bank mailed to the address of the Holder specified in the applicable Note Register. Upon final payment due on the Maturity of a Note, the Holder thereof shall present and surrender such Note at the Corporate Trust Office of the Trustee or at the office of any Paying Agent on or prior to such Maturity; provided that in the absence of notice to the Issuer or the Trustee that the applicable Note has been acquired by a protected purchaser, such final payment shall be made without presentation or surrender, if the Trustee and the Issuer shall have been furnished such security or indemnity as may be required by them to save each of them harmless and an undertaking thereafter to surrender such certificate. None of the Issuer, the Trustee, the Collateral Manager, and any Paying Agent will have any responsibility or liability for any aspects of the records maintained by DTC, Euroclear, Clearstream or any of the Agent Members relating to or for payments made thereby on account of beneficial interests in a Global Note. In the case where any final payment of principal and interest is to be made on any Note (other than on the Stated Maturity thereof), the Trustee, in the name and at the expense of the Issuer shall, not more than 30 nor less than 10 days prior to the date on which such payment is to be made, mail (by first class mail, postage prepaid) to the Persons entitled thereto at their addresses appearing on the applicable Note Register a notice which shall specify the date on which such payment will be made, the amount of such payment per U.S.$1,000 aggregate principal amount of Notes and the place where Notes may be presented and surrendered for such payment.

(f) Payments to Holders shall be made ratably in the proportion that the Aggregate Outstanding Amount of the Notes registered in the name of each such Holder on the applicable Record Date bears to the Aggregate Outstanding Amount of all Notes on such Record Date.

(g) Notwithstanding any other provision of this Indenture or any other document to which the Issuer may be party, the obligations of the Issuer under the Notes and this Indenture or any other document to which either the Issuer may be party are limited recourse obligations of the Issuer payable solely from the Collateral and following realization of the Collateral, and application of the proceeds thereof in accordance with this Indenture, all obligations of and any claims against the Issuer hereunder or in connection herewith after such realization shall be extinguished and shall not thereafter revive. No recourse shall be had against any Officer, director, employee, shareholder or incorporator of the Issuer, the Collateral Manager or their respective Affiliates, successors or assigns for any amounts payable under the Notes or this Indenture. It is understood that the foregoing provisions of this paragraph (g) shall not (i) prevent recourse to the Collateral for the sums due or to become due under any security, instrument or agreement which is part of the Collateral; or (ii) constitute a waiver, release or

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discharge of any indebtedness or obligation evidenced by the Notes or secured by this Indenture until such Collateral has been realized. It is further understood that the foregoing provisions of this paragraph (g) shall not limit the right of any Person to name the Issuer as a party defendant in any Proceeding or in the exercise of any other remedy under the Notes or this Indenture, so long as no judgment in the nature of a deficiency judgment or seeking personal liability shall be asked for or (if obtained) enforced against any such Person.

(h) Subject to the foregoing provisions of this Section 2.7, each Note delivered under this Indenture and upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to unpaid interest and principal (or other applicable amount) that were carried by such other Note.

2.8 Persons Deemed Owners

The Issuer and the Trustee, and any agent of the Issuer or the Trustee shall treat as the owner of each Note (a) for the purpose of receiving payments on such Note (whether or not such Note is overdue), the Person in whose name such Note is registered on the applicable Note Register at the close of business on the applicable Record Date and (b) on any other date for all other purposes whatsoever (whether or not such Note is overdue), the Person in whose name such Note is then registered on the applicable Note Register, and none of the Issuer the Trustee or any agent of the Issuer or the Trustee shall be affected by notice to the contrary.

2.9 Cancellation

All Notes surrendered for payment, registration of transfer, exchange, or mutilated, defaced or deemed lost or stolen, shall be promptly canceled by the Trustee and may not be reissued or resold. No Note may be surrendered (including any surrender in connection with any abandonment, donation, gift, contribution or other event or circumstance) except for payment as provided herein under Section 2.6 or 2.7(e), or for registration of transfer, exchange or for replacement in connection with any Note mutilated, defaced or deemed lost or stolen. Any such Notes shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee. No Notes shall be authenticated or registered in lieu of or in exchange for any Notes canceled as provided in this Section 2.9, except as expressly permitted by this Indenture. All canceled Notes held by the Trustee shall be destroyed or held by the Trustee in accordance with its standard retention policy unless the Issuer shall direct by an Issuer Order received prior to destruction that they be returned to it.

2.10 DTC Ceases to be Depository

(a) A Global Note deposited with DTC pursuant to Section 2.2 shall be transferred in the form of a corresponding Certificated Note to the beneficial owners thereof only if (A) such transfer complies with Section 2.5 of this Indenture and (B) either (x) (i) DTC notifies the Issuer that it is unwilling or unable to continue as

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depository for such Global Note or (ii) DTC ceases to be a Clearing Agency registered under the Exchange Act and, in each case, a successor depository is not appointed by the Issuer within 90 days after such event or (y) an Event of Default has occurred and is continuing and such transfer is requested by the Holder of such Global Note.

(b) Any Global Note that is transferable in the form of a corresponding Certificated Note to the beneficial owner thereof pursuant to this Section 2.10 shall be surrendered by DTC to the Trustee’s office located in the Borough of Manhattan, the City of New York to be so transferred, in whole or from time to time in part, without charge, and the Issuer shall execute and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of definitive physical certificates (pursuant to the instructions of DTC) in authorized denominations. Any Certificated Note delivered in exchange for an interest in a Global Note shall, except as otherwise provided by Section 2.5, bear the legends set forth in the applicable Exhibit A and shall be subject to the transfer restrictions referred to in such legends.

(c) Subject to the provisions of sub-Section (b) of this Section 2.10, the Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which such Holder is entitled to take under this Indenture or the Notes.

(d) In the event of the occurrence of either of the events specified in sub-Section (a) of this Section 2.10, the Issuer will promptly make available to the Trustee a reasonable supply of Class A Notes in the form of Certificated Notes.

In the event that Certificated Notes are not so issued by the Issuer to such beneficial owners of interests in Global Notes as required by sub-Section (a) of this Section 2.10, the Issuer expressly acknowledges that the beneficial owners shall be entitled to pursue any remedy that the Holders of a Global Note would be entitled to pursue in accordance with Article 5 of this Indenture (but only to the extent of such beneficial owner’s interest in the Global Note) as if corresponding Certificated Notes had been issued; provided that the Trustee shall be entitled to rely upon any certificate of ownership provided by such beneficial owners and/or other forms of reasonable evidence of such ownership (including a certificate in the form of Exhibit E).

2.11 Non-Permitted Holders or Violation of ERISA Representations or Noteholder Reporting Obligations

(a) Notwithstanding anything to the contrary elsewhere in this Indenture, any transfer of a beneficial interest in any Note to a person that is not (i) a Qualified Institutional Buyer and (ii) a Qualified Purchaser (or an entity beneficially owned exclusively by Qualified Purchasers) and that is not made pursuant to an

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applicable exemption under the Securities Act and the Investment Company Act shall be null and void and any such purported transfer of which the Issuer or the Trustee shall have notice may be disregarded by the Issuer, the Trustee and the Note Registrars for all purposes.

(b) If (x) any person that is not permitted to acquire an interest in a Note or Notes (including in such form) pursuant to Section 2.11(a) shall become the beneficial owner of an interest in such Note or Notes or (y) any Holder of Notes shall fail to comply with the Noteholder Reporting Obligations (any such Person, a Non-Permitted Holder), the Issuer shall, promptly after discovery that such Person is a Non-Permitted Holder by the Issuer or the Trustee (and notice by the Trustee (if a Trust Officer of the Trustee obtains actual knowledge) to the Issuer if the Trustee makes the discovery), send notice to such Non-Permitted Holder demanding that such Non-Permitted Holder transfer its interest in the Notes held by such Person to a Person that is not a Non-Permitted Holder within 30 days after the date of such notice. If such Non-Permitted Holder fails to so transfer such Notes, the Issuer or the Collateral Manager acting for the Issuer shall have the right, without further notice to the Non-Permitted Holder, to sell such Notes or interest in such Notes to a purchaser selected by the Issuer that is not a Non-Permitted Holder on such terms as the Issuer may choose. The Issuer, or the Collateral Manager acting on behalf of the Issuer, may select the purchaser by soliciting one or more bids from one or more brokers or other market professionals that regularly deal in securities similar to the Notes and sell such Notes to the highest such bidder, provided that the Collateral Manager, its Affiliates and accounts, funds, clients or portfolios established and controlled by the Collateral Manager or any of its Affiliates shall be entitled to bid in any such sale (to the extent any such entity is not a Non-Permitted Holder). However, the Issuer or the Collateral Manager may select a purchaser by any other means determined by it in its sole discretion. The Holder of each Note, the Non-Permitted Holder and each other Person in the chain of title from the Holder to the Non-Permitted Holder, by its acceptance of an interest in the Notes, agrees to cooperate with the Issuer, the Collateral Manager and the Trustee to effect such transfers. The proceeds of such sale, net of any commissions, expenses and taxes due in connection with such sale shall be remitted to the Non-Permitted Holder. The terms and conditions of any sale under this Section 2.11(b) shall be determined in the sole discretion of the Issuer, and none of the Issuer, the Trustee, the Note Registrars or the Collateral Manager or any of their Affiliates shall be liable to any Person having an interest in the Notes sold as a result of any such sale or the exercise of such discretion.

(c) Any transfer of a beneficial interest in a Note to a Person who is a Benefit Plan Investor or acting on behalf of or using the assets of any Benefit Plan Investor to acquire such Note (any such Person, a Non-Permitted ERISA Holder) shall be null and void and any such purported transfer of which the Issuer or the Trustee shall have notice may be disregarded by the Issuer, the Trustee and the Note Registrars for all purposes.

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(d) If any Non-Permitted ERISA Holder shall become the beneficial owner of an interest in any Note, the Issuer shall, promptly after discovery that such Person is a Non-Permitted ERISA Holder by the Issuer or upon notice from the Trustee (if a Trust Officer of the Trustee obtains actual knowledge), if the Trustee makes the discovery and who agrees to notify the Issuer of such discovery, send notice to such Non-Permitted ERISA Holder demanding that such Non-Permitted ERISA Holder transfer all or any portion of the Notes held by such Person to a Person that is not a Non-Permitted ERISA Holder (and that is otherwise eligible to hold such Notes or an interest therein) within 20 days after the date of such notice. If such Non-Permitted ERISA Holder fails to so transfer such Notes the Issuer or the Collateral Manager acting for the Issuer shall have the right, without further notice to the Non-Permitted ERISA Holder, to sell such Notes or interest in such Notes to a purchaser selected by the Issuer that is not a Non-Permitted ERISA Holder (and that is otherwise eligible to hold such Notes or an interest therein) on such terms as the Issuer may choose. The Issuer, or the Collateral Manager acting on behalf of the Issuer, may select the purchaser by soliciting one or more bids from one or more brokers or other market professionals that regularly deal in securities similar to the Notes and sell such Notes to the highest such bidder, provided that the Collateral Manager, its Affiliates and accounts, funds, clients or portfolios established and controlled by the Collateral Manager or any of its Affiliates shall be entitled to bid in any such sale (to the extent any such entity is not a Non-Permitted ERISA Holder). However, the Issuer or the Collateral Manager may select a purchaser by any other means determined by it in its sole discretion. The Holder of each Note, the Non-Permitted ERISA Holder and each other Person in the chain of title from the Holder to the Non-Permitted ERISA Holder, by its acceptance of an interest in the Notes agrees to cooperate with the Issuer, the Collateral Manager and the Trustee to effect such transfers. The proceeds of such sale, net of any commissions, expenses and taxes due in connection with such sale shall be remitted to the Non-Permitted ERISA Holder. The terms and conditions of any sale under this Section 2.11(d) shall be determined in the sole discretion of the Issuer, and none of the Issuer, the Trustee, the Note Registrars or the Collateral Manager or any of their Affiliates shall be liable to any Person having an interest in the Notes sold as a result of any such sale or the exercise of such discretion.

2.12 Tax Certification and Noteholder Reporting Obligations

(a) Each Holder and beneficial owner of a Note, by acceptance of such Note or an interest in such Note, shall be deemed to understand and acknowledge that failure to provide the Issuer, the Trustee or any Paying Agent with the properly completed and signed applicable tax certifications (generally, in the case of U.S. Federal income tax, either (i) in the case of a United States Person, an Internal Revenue Service Form W-9 (or applicable successor form) or (ii) in the case of a Person that is not a United States Person, (A) if an Event of Default has occurred and is continuing, the applicable Internal Revenue Service Form W-8 (or

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applicable successor form) and (B) at any other time, an Internal Revenue Service Form W-8IMY to which an Internal Revenue Service Form W-9 in respect of the beneficial owner is attached (or, in each case, the applicable successor form)) or the failure to meet its Noteholder Reporting Obligations may result in withholding from payments in respect of such Note, including U.S. Federal withholding or back-up withholding.

(b) If a payment made to a Holder under this Indenture is subject to U.S. federal withholding tax imposed by Sections 1471 through 1474 of the Code (FATCA) then any Holder that may be subject to such withholding shall deliver to the Issuer (or its authorized agent), the Trustee and any Paying Agent at the time or times prescribed by law and at such time or times reasonably requested by the Issuer (or its authorized agent), the Trustee or a Paying Agent, documentation necessary for the Issuer, Trustee or Paying Agent to determine their obligations under FATCA and shall update any such information or documentation provided upon learning that any such information or documentation previously provided has become obsolete or incorrect or is otherwise required (the foregoing requirements of this Section 2.12(b), the Noteholder Reporting Obligations).

2.13 Additional Issuance of Notes

At the direction of the Collateral Manager, the Issuer may issue and sell, pursuant to a supplemental indenture issued in accordance with Section 8.2 and the other applicable provisions of Article 8, additional notes of any one or more new classes of notes that are fully subordinated to the existing Notes (or to the most junior class of securities of the Issuer issued pursuant to this Indenture, if any class of securities issued pursuant to this Indenture other than the Notes is then Outstanding) and/or additional Notes and use the proceeds to purchase additional Portfolio Assets or as otherwise permitted under this Indenture; provided that, in the case of additional issuances of notes of any one or more new classes of notes and/or additional Notes pursuant to this Indenture, the following conditions are met:

(a) each Holder shall have provided its prior written consent to such issuance;

(b) the terms of each additional note issued must be substantially identical to the respective terms of previously issued notes (except that the interest due on such additional notes will accrue from the issue date of such additional notes and interest, seniority of payments and certain consent or approval rights hereunder may differ among notes that are subordinated to the existing Notes);

(c) receipt by the Trustee of an Opinion of Counsel that such issuance shall not cause the Issuer, the Sole Shareholder or the pool of Collateral to become an investment company required to be registered under the Investment Company Act;

(d) the proceeds of any additional notes (net of fees and expenses incurred in connection with such issuance) shall be treated as Principal Collections and used to purchase additional Portfolio Assets, to invest in Eligible Investments or to apply pursuant to the Priority of Payments;

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(e) an opinion of tax counsel of nationally recognized standing in the United States experienced in such matters shall be delivered to the Trustee to the effect that in the case of additional Notes, such issuance would not cause the Holders or beneficial owners of previously issued Notes to be deemed to have sold or exchanged such Notes under Section 1001 of the Code; and

(f) any additional notes issued as described above will, to the extent reasonably practicable, be offered first to Holders of Notes in such amounts as are necessary to preserve their pro rata holdings of Notes.

2.14 Borrowings under the Revolving Credit Note Agreement

(a) On or prior to the Commitment Termination Date, the Issuer (or the Collateral Manager on behalf of the Issuer) may request Borrowings under the Revolving Credit Note Agreement by submitting a Borrowing Request in the form required by the Revolving Credit Note Agreement to the Revolving Credit Note Agent and the Class A-R Noteholders.

(b) Each Borrowing Request shall (i) be made in writing and delivered to the Revolving Credit Note Agent and the Class A-R Noteholders in accordance with the Revolving Credit Note Agreement, (ii) contain details of the applicable Borrowing requested in the form attached as Exhibit A to the Revolving Credit Note Agreement and (iii) be required to satisfy the conditions applicable to a Borrowing as set forth in the Revolving Credit Note Agreement.

(c) Transfers of the Class A-R Notes are subject to the terms and restrictions set forth in this Indenture and the Revolving Credit Note Agreement.

3. CONDITIONS PRECEDENT

3.1 Conditions to Issuance of Notes on Closing Date

The Notes to be issued on the Closing Date may be registered in the names of the respective Holders thereof and may be executed by the Issuer and delivered to the Trustee for authentication and thereupon the same shall be authenticated and delivered by the Trustee upon Issuer Order and upon receipt by the Trustee of the following:

(a) Officers’ Certificate of the Issuer Regarding Limited Liability Company Matters. An Officer’s certificate of the Issuer (A) evidencing the authorization of the execution and delivery on behalf of the Issuer of (1) the Transaction Documents to which the Issuer is a party and (2) such related documents as may be required for the purpose of the transactions contemplated therein and (B) certifying that (1) the attached copy of the Authorizing Resolution and

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Constitutive Documents is, in each case, a true and complete copy thereof, (2) such authorizations have not been amended or rescinded and are in full force and effect on and as of the Closing Date, (3) the Officers of the Issuer authorized to execute and deliver such documents hold the offices and have the signatures indicated thereon and (4) all Portfolio Asset Obligors on all Portfolio Assets have been directed to make all payments under the relevant Underlying Instrument in respect of such Portfolio Asset directly to the Collection Account.

(b) Officers’ Certificate of the Sole Shareholder Regarding Corporate Matters. An Officer’s certificate of the Sole Shareholder (A) evidencing the authorization by Authorizing Resolution of the execution and delivery of (1) the Transaction Documents to which it is a party and (2) such related documents as may be required for the purpose of the transactions contemplated therein and (B) certifying that (1) the attached copy of the Authorizing Resolution and Constitutive Documents is in each case a true and complete copy thereof, (2) such resolutions have not been amended or rescinded and are in full force and effect on and as of the Closing Date, and (3) the Officers of the Sole Shareholder or its manager authorized to execute and deliver such documents hold the offices and have the signatures indicated thereon.

(c) Governmental Approvals. From the Issuer either (A) a certificate of the Issuer, or other official document, evidencing the due authorization, approval or consent of any governmental body or bodies, at the time having jurisdiction in the premises, together with an Opinion of Counsel of the Issuer that no other authorization, approval or consent of any governmental body is required for the valid issuance of the Notes or (B) an Opinion of Counsel of the Issuer that no such authorization, approval or consent of any governmental body is required for the valid issuance of the Notes except as has been given.

(d) U.S. Counsel Opinions. Opinion of Nixon Peabody LLP, counsel to the Trustee and the Collateral Administrator, and Bingham McCutchen LLP, counsel to the Issuer, Sole Shareholder and Collateral Manager, each dated the Closing Date, substantially in the respective forms of Exhibit C and Exhibit D attached hereto.

(e) Cayman Counsel Opinion. An opinion of Appleby (Cayman) Ltd., Cayman Islands counsel to the Issuer, dated the Closing Date, substantially in the form of Exhibit E attached hereto.

(f) Officers’ Certificates of Issuer Regarding Indenture. A certificate of the Issuer stating that, to the undersigned officer’s knowledge, the Issuer is not in default under this Indenture and that the issuance of the Notes applied for by it will not result in a default or a breach of any of the terms, conditions or provisions of, or constitute a default under, its organizational documents, any indenture or other agreement or instrument to which it is a party or by which it is bound, or any order of any court or administrative agency entered in any Proceeding to which it is a party or by which it may be bound or to which it may be subject; that

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all conditions precedent provided in this Indenture relating to the authentication and delivery of the Notes applied for by it have been complied with; and that all expenses due or accrued with respect to the issuance and sale of such Notes or relating to actions taken on or in connection with the Closing Date have been paid or reserves therefor have been made. The Officer’s certificate of the Issuer shall also state that all of its representations and warranties contained herein are true and correct as of the Closing Date.

(g) Transaction Documents. An executed counterpart of each Transaction Document.

(h) Grant of Portfolio Assets. The Grant by the Issuer pursuant to the Granting Clauses of this Indenture of all of the Issuer’s right, title and interest in and to the Portfolio Assets pledged to the Trustee for inclusion in the Collateral on the Closing Date shall be effective, and Delivery of such Collateral (including any promissory note and all other Underlying Instruments related thereto to the extent received by the Issuer) as contemplated by Section 3.2 shall have been effected.

(i) Certificate of the Issuer Regarding Collateral. A certificate of an Authorized Representative of the Issuer, dated as of the Closing Date, to the effect that:

(i) in the case of each Portfolio Asset pledged to the Trustee, on the Closing Date and immediately prior to the Delivery thereof on the Closing Date;

(A) the Issuer is the owner of each Portfolio Asset free and clear of any liens, claims or encumbrances of any nature whatsoever except for (i) those which are being released on the Closing Date and (ii) those Granted pursuant to this Indenture;

(B) the Issuer has acquired its ownership in each Portfolio Asset in good faith without notice of any adverse claim, except as described in paragraph (A) above;

(C) the Issuer has not assigned, pledged or otherwise encumbered any interest in any such Portfolio Asset (or, if any such interest has been assigned, pledged or otherwise encumbered, it has been released or will be released on the Closing Date) other than interests Granted pursuant to this Indenture;

(D) the Issuer has full right to Grant a security interest in and assign and pledge each Portfolio Asset to the Trustee;

(E) Schedule 1 hereto is a complete list of the Portfolio Assets as of the Closing Date and the information set forth with respect to such Portfolio Asset in Schedule 1 hereto is correct; and

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(F) upon Grant by the Issuer, the Trustee has (or will have, upon the filing of the Financing Statement(s) contemplated in Section 7.5 of this Indenture and the execution and delivery of the Issuer Account Control Agreement) a first priority perfected security interest in the Portfolio Assets and other Collateral, except as permitted by this Indenture; and

(ii) each Portfolio Asset that the Collateral Manager on behalf of the Issuer purchased or committed to purchase on or prior to the Closing Date satisfies, or will upon its acquisition satisfy, the requirements of Section 12.2(a).

(j) Accounts. Evidence of the establishment of each of the Accounts.

(k) [Reserved]

(l) Withholding Certificates. From each Holder acquiring Notes on the Closing Date, either (A) a properly completed and duly executed Internal Revenue Service Form W-9 or (B) a properly completed and duly executed Internal Revenue Service Form W-8IMY to which are attached forms described in clause (A) in respect of each beneficial owner of the Notes.

(m) Other Documents. Such other documents as the Trustee may reasonably require.

3.2 Custodianship; Delivery of Portfolio Assets and Eligible Investments

(a) The Issuer, shall deliver or cause to be delivered to a custodian appointed by the Issuer, which shall be a Securities Intermediary (the Custodian), all Collateral in accordance with the definition of “Deliver”. Initially, the Custodian shall be the Bank. Any successor custodian shall be a State or national bank or trust company that has capital and surplus of at least U.S.$200,000,000 acting as a Securities Intermediary. The Trustee or the Custodian, as applicable, shall hold (i) all Portfolio Assets, Eligible Investments, Cash and other investments purchased in accordance with this Indenture and (ii) all other Collateral otherwise Delivered to the Trustee or the Custodian, as applicable, by or on behalf of the Issuer, in the relevant Account established and maintained pursuant to Article 10; as to which in each case the Trustee shall have entered into the Issuer Account Control Agreement (or an agreement substantially in the form thereof, in the case of a successor custodian) providing, inter alia, that the establishment and maintenance of such Account will be governed by a law of a jurisdiction satisfactory to the Issuer and the Trustee.

(b) Each time that the Collateral Manager on behalf of the Issuer directs or causes the acquisition of any Portfolio Asset, Eligible Investment or other investment, the Collateral Manager (on behalf of the Issuer) shall, if the Portfolio Asset or Eligible Investment is required to be, but has not already been, transferred to the

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relevant Account, cause the Portfolio Asset, Eligible Investment or other investment to be Delivered to the Custodian to be held in the Custodial Account, or in the case of any Eligible Investment, in the Account in which the funds used to purchase the investment are held in accordance with Article 10, for the benefit of the Trustee in accordance with this Indenture. The security interest of the Trustee in the funds or other property used in connection with the acquisition shall, immediately and without further action on the part of the Trustee, be released. The security interest of the Trustee shall nevertheless come into existence and continue in the related Portfolio Asset or Eligible Investment so acquired, including all interests of the Issuer in to any contracts related to and proceeds of such Portfolio Asset or Eligible Investment.

3.3 Application of Proceeds of Issuance

The Issuer shall apply the proceeds of issuance of the Notes (a) for the purchase of Portfolio Assets, (b) to fund the Expense Account and the Delayed-Draw/Committed Proceeds Account pursuant to and in accordance with Sections 10.3(c) and 10.3(d), respectively, and (c) to fund Eligible Investments.

4. SATISFACTION AND DISCHARGE

4.1 Satisfaction and Discharge of Indenture

This Indenture shall be discharged and shall cease to be of further effect except as to (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of Holders to receive payments of principal thereof and interest thereon, (iv) the rights, obligations and immunities of the Trustee hereunder, (v) the rights, obligations and immunities of the Collateral Manager hereunder and under the Collateral Management Agreement, (vi) the rights, obligations and immunities of the Collateral Administrator hereunder and under the Collateral Administration Agreement, and (vii) the rights of Holders as beneficiaries hereof with respect to the property deposited with the Trustee and payable to all or any of them (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture) when:

(a) either:

(i) all Notes theretofore authenticated and delivered to Holders (other than (A) Notes which have been mutilated, defaced, destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.6, (B) Notes for whose payment Cash has theretofore irrevocably been deposited in trust and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 7.3, and (C) Notes in respect of which final payment has been made without presentation or surrender pursuant to Section 2.7(e) have been delivered to the Trustee for cancellation; or

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(ii) all Notes not theretofore delivered to the Trustee for cancellation (A) have become due and payable, or (B) will become due and payable at their Stated Maturity within one year, and the Issuer has irrevocably deposited or caused to be deposited with the Trustee, in trust for such purpose, Cash or non-callable direct obligations of the United States of America; provided that the obligations are entitled to the full faith and credit of the United States of America or are debt obligations which are rated “Aaa” by Moody’s and “AAA” by S&P, in an amount sufficient, as verified by a firm of Independent certified public accountants which are nationally recognized, to pay and discharge the entire indebtedness on such Notes, for principal and interest to the date of such deposit (in the case of Notes which have become due and payable), or to their Stated Maturity, as the case may be, and shall have Granted to the Trustee a valid perfected security interest in such Eligible Investment that is of first priority or free of any adverse claim, as applicable, and shall have furnished an Opinion of Counsel with respect thereto; provided that this sub-section (ii) shall not apply if an election to act in accordance with the provisions of Section 5.5(a) shall have been made and not rescinded;

(b) the Issuer has paid or caused to be paid all other sums then due and payable hereunder and the Transaction Documents (including any amounts then due and payable pursuant to the Collateral Administration Agreement and the Collateral Management Agreement) by the Issuer and no other amounts are scheduled to be due and payable by the Issuer;

(c) the Issuer has delivered to the Trustee Officers’ certificates and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; and

(d) the Issuer has delivered to the Trustee a certificate stating that (i) there is no Collateral that remains subject to the lien of this Indenture and (ii) all funds on deposit in the Accounts have been distributed in accordance with the terms of this Indenture (including the Priority of Payments) or have otherwise been irrevocably deposited in trust with the Trustee for such purpose.

Notwithstanding the satisfaction and discharge of this Indenture, the rights and obligations of the Issuer, the Trustee and, if applicable, the Holders, as the case may be, under Sections 2.7, 4.2, 5.4(d), 5.9, 5.18, 6.6, 6.7, 7.1 and 7.3 shall survive.

4.2 Application of Trust Cash

All Cash and obligations deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by it in accordance with the provisions of the Notes, the Revolving Credit Note Agreement and this Indenture, including, without limitation, the Priority of Payments, to the payment of principal and interest, either directly or through any Paying Agent, as the Trustee may determine; and such Cash and obligations shall be held in a segregated account identified as being held in trust for the benefit of the Secured Parties.

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4.3 Repayment of Cash Held by Paying Agent

In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all Cash then held by any Paying Agent other than the Trustee under the provisions of this Indenture shall, upon demand of the Issuer, be paid to the Trustee to be held and applied pursuant to Section 7.3 hereof and in accordance with the Priority of Payments and thereupon such Paying Agent shall be released from all further liability with respect to such Cash.

5. REMEDIES

5.1 Events of Default

Event of Default, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) the Issuer shall default in the payment of any principal, interest or other amount owing under the Notes when due (whether at Stated Maturity, by acceleration, upon optional or mandatory prepayment or otherwise) and such default shall continue for at least three Business Days after notice thereof to the Issuer by any Holder; or

(b) the failure (i) on any Payment Date to disburse amounts available in the Payment Account in accordance with the Priority of Payments and the continuation of such failure for a period of three Business Days, or (ii) by the Sole Shareholder to make any equity contribution or other amount owing to the Issuer pursuant to the Issuer Contribution Agreement and the continuation of such failure for a period of three Business Days; or

(c) any representation, warranty or certification made herein or pursuant hereto or in or pursuant to any Support Document (or in any modification or supplement hereto or thereto) by the Issuer or the Sole Shareholder shall prove to have been false or misleading as of the time made in any material respect; provided, however, that if any such representation, warranty or certification is (i) remediable and (ii) not the result of fraud or willful misconduct on the part of the Issuer or Sole Shareholder, such representation, warranty or certification continues unremedied for a period of 30 days after the Issuer becomes aware of such false or misleading representation, warranty or certification; or

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(d) (i) the Issuer shall default in the performance of any of its other obligations hereunder or (ii) the Issuer or the Sole Shareholder shall default in the performance of any of its obligations under any Support Document, and in each case such default (A) has a material adverse effect on the Holders of the Notes and (B) if remediable, continues unremedied for a period of 10 days after notice thereof to the Issuer by any Holder; or

(e) the Issuer or the Sole Shareholder shall (1) be dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) become insolvent or unable to pay its debts or fail or admit in writing its inability generally to pay its debts as they become due; (3) make a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institute or have instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition shall be presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) have a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seek or become subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) have a secured party take possession of all or substantially all its assets or have a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party shall maintain possession, or any such process shall not be dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) cause or become subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or

(f) the Issuer or the Sole Shareholder shall consolidate or amalgamate with, or merge with or into, or transfer all or substantially all its assets to, another Person and, at the time of such consolidation, amalgamation, merger or transfer:

(i) the resulting, surviving or transferee Person shall fail to assume all the obligations of the Issuer or the Sole Shareholder under the Notes or any Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement satisfactory to the Holders of all Notes then Outstanding;

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(ii) the benefits of any Support Document shall fail to extend (without the unanimous consent of the Holders of all Notes then Outstanding) to the performance by such resulting, surviving or transferee Person of its obligations under such Support Document; or

(iii) the creditworthiness of the resulting, surviving or transferee Person shall be materially weaker than that of the Issuer or the Sole Shareholder, as the case may be, immediately prior to such advance; or

(g) any Transaction Document shall cease to be in full force or effect or the Issuer or the Sole Shareholder shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, any Transaction Document to which it is a party; or

(h) the Constitutive Documents of the Issuer shall be amended, supplemented or otherwise modified, or shall be terminated, without the consent of each Holder, except for any amendment, supplement or other modification that could not reasonably be expected to have a Material Adverse Effect; or

(i) any of the Issuer, the Sole Shareholder or the pool of Collateral becomes an investment company required to be registered under the Investment Company Act; or

(j) any default, event of default or other similar condition or event (however described) in respect of Sole Shareholder under any obligation for the payment of Indebtedness under any agreement or instrument in an amount greater than U.S.$10,000,000 has resulted in such Indebtedness becoming, or becoming capable at such time of being declared, due and payable under, such agreement or instrument (including as a result of the early termination thereof), before it would otherwise have been due and payable; or

(k) an “Event of Default” or “Additional Termination Event” occurs and is continuing under the ISDA Master Agreement with respect to which the Sole Shareholder is the “Defaulting Party” or “Affected Party” (as each such term is defined therein).

Upon obtaining knowledge of the occurrence of an Event of Default, each of (i) the Issuer, (ii) the Trustee, (iii) the Revolving Credit Note Agent and (iv) the Collateral Manager shall notify each other. Upon the occurrence of an Event of Default known or made known pursuant to the foregoing to a Trust Officer of the Trustee, the Trustee shall, not later than one Business Day thereafter, notify the Holders (as their names appear on the Note Registers), each Paying Agent and DTC of such Event of Default in writing (unless such Event of Default has been waived as provided in Section 5.14).

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5.2 Acceleration of Maturity; Rescission and Annulment

(a) If an Event of Default occurs and is continuing (other than an Event of Default specified in Section 5.1(e)), the Trustee may, and shall (upon the written direction of the Majority Noteholders), by notice to the Issuer, declare the principal of all Notes (including, in the case of the Class A-R Notes, the Outstanding Class A-R Funded Amount (including any future additions to such Outstanding Class A-R Funded Amount as a result of additional Borrowings under the Revolving Credit Note Agreement)) to be immediately due and payable, and upon any such declaration such principal, together with all accrued and unpaid interest thereon and other amounts payable hereunder, shall become immediately due and payable. If an Event of Default specified in Section 5.1(e) occurs, such accelerations shall automatically occur without any declaration or other act on the part of the Trustee or any Holder.

(b) At any time after such a declaration of acceleration of maturity has been made and before a judgment or decree for payment of the Cash due has been obtained by the Trustee as hereinafter provided in this Article 5, such declaration may not be rescinded except by the Majority Noteholders.

No such rescission shall affect any subsequent Default or impair any right consequent thereon.

5.3 Collection of Indebtedness and Suits for Enforcement by Trustee

The Issuer covenants that if a default shall occur in respect of the payment of any principal of or interest when due and payable on any Note, the Issuer will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holder of such Note, the whole amount, if any, then due and payable on such Note for principal and interest with interest upon the overdue principal and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel.

If the Issuer fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may, and shall upon direction of the Majority Noteholders, institute a Proceeding for the collection of the sums so due and unpaid, may prosecute such Proceeding to judgment or final decree, and may enforce the same against the Issuer or the Sole Shareholder and collect the Cash adjudged or decreed to be payable in the manner provided by law out of the Collateral.

If an Event of Default has occurred and is continuing, the Trustee may in its discretion, and shall upon written direction of the Majority Noteholders, proceed to protect and enforce its rights and the rights of the Secured Parties by such appropriate Proceedings as the Trustee shall deem most effectual (if no such direction is received by the Trustee) or as the Trustee may be directed by the Majority Noteholders, to protect and enforce any

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such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Trustee by this Indenture or by law.

Subject always to the provisions of Section 5.8, in case there shall be pending Proceedings relative to the Issuer or the Sole Shareholder under the Bankruptcy Law or any other applicable bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or the Sole Shareholder or their respective property or such other obligor or its property, or in case of any other comparable Proceedings relative to the Issuer or the Sole Shareholder, or the creditors or property of the Issuer or the Sole Shareholder, the Trustee, regardless of whether the principal of any Note shall then be due and payable as therein expressed or by declaration or otherwise and regardless of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.3, shall be entitled and empowered, by intervention in such Proceedings or otherwise:

(a) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes upon direction by the Majority Noteholders and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all reasonable expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Holders allowed in any Proceedings relative to the Issuer or the Sole Shareholder or to the creditors or property of the Issuer or the Sole Shareholder;

(b) unless prohibited by applicable law and regulations, to vote on behalf of the Holders upon the direction of the Majority Noteholders, in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency Proceedings or Person performing similar functions in comparable Proceedings; and

(c) to collect and receive any Cash or other property payable to or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Holders and of the Trustee on their behalf; and any trustee, receiver or liquidator, custodian or other similar official is hereby authorized by each of the Holders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Holders to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other reasonable expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith.

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Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holders, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holders, as applicable, in any such Proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.

In any Proceedings brought by the Trustee on behalf of the Holders of the Notes (and any such Proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the Holders of the Notes.

Notwithstanding anything in this Section 5.3 to the contrary, the Trustee may not sell or liquidate the Collateral or institute Proceedings in furtherance thereof pursuant to this Section 5.3 except according to the provisions specified in Section 5.5(a).

5.4 Remedies

(a) If an Event of Default shall have occurred and be continuing, and the Notes have been declared or have become due and payable (an Acceleration Event) and such Acceleration Event and its consequences have not been rescinded and annulled, the Issuer agrees that the Trustee may, and shall, upon written direction of the Majority Noteholders, to the extent permitted by applicable law, exercise one or more of the following rights, privileges and remedies:

(i) with respect to each Portfolio Asset, the Trustee (at the direction of the Majority Noteholders) may direct each Portfolio Asset Obligor thereon under the relevant Underlying Instrument to pay all amounts payable under such Underlying Instrument to (or to the order of) the Trustee in satisfaction of all payment obligations thereunder;

(ii) the Trustee in its discretion may, in its name or in the name of the Issuer or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for the Portfolio Assets and other Collateral but shall be under no obligation to do so;

(iii) the Trustee may set-off any amounts payable by the Issuer with respect to any obligations against any Collateral in the form of Cash; and

(iv) institute Proceedings for the collection of all amounts then payable on the Notes or otherwise payable under this Indenture, whether by declaration or otherwise, enforce any judgment obtained, and collect from the Portfolio Assets and other Collateral any Cash adjudged due;

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(v) sell or cause the sale of all or a portion of the Portfolio Assets and other Collateral or rights or interests therein, at one or more public or private sales called and conducted in any manner permitted by law and in accordance with Section 5.17 hereof;

(vi) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Portfolio Assets and other Collateral;

(vii) exercise any remedies of a secured party under the UCC and take any other appropriate action to protect and enforce the rights and remedies of the Trustee and the Holders of the Notes hereunder (including exercising all rights of the Trustee under any Support Document); and

(viii) exercise any other rights and remedies that may be available at law or in equity;

provided that the Trustee may not sell or liquidate the Collateral or institute Proceedings in furtherance thereof pursuant to this Section 5.4 except according to the provisions of Section 5.5(a).

The Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking firm of national reputation (the cost of which shall be payable as an Administrative Expense) in structuring and distributing securities similar to the Notes, which may be the Valuation Agent, as to the feasibility of any action proposed to be taken in accordance with this Section 5.4 and as to the sufficiency of the proceeds and other amounts receivable with respect to the Collateral to make the required payments of principal of and interest on the Notes which opinion shall be conclusive evidence as to such feasibility or sufficiency.

(b) If an Event of Default as described in Section 5.1(d) hereof shall have occurred and be continuing the Trustee shall be entitled, and at the direction of the Majority Noteholders shall, institute (or cause the Issuer to institute, in which case the Issuer shall comply with any instruction of the Trustee with respect to such Proceeding) a Proceeding solely to compel performance of the covenant or agreement or to cure the representation or warranty, the breach of which gave rise to the Event of Default under such Section, and enforce any equitable decree or order arising from such Proceeding.

(c) Upon any sale, whether made under the power of sale hereby given or by virtue of judicial Proceedings, any Secured Party may bid for and purchase the Collateral or any part thereof and, upon compliance with the terms of sale, may hold, retain, possess or dispose of such property in its or their own absolute right without accountability.

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Upon any sale, whether made under the power of sale hereby given or by virtue of judicial Proceedings, the receipt of Cash by the Trustee, or of the Officer making a sale under judicial Proceedings, shall be a sufficient discharge to the purchaser or purchasers at any sale for its or their purchase, and such purchaser or purchasers shall not be obliged to see to the application thereof.

Any such sale, whether under any power of sale hereby given or by virtue of judicial Proceedings, shall bind the Issuer, the Trustee and the Holders of the Notes, shall operate to divest all right, title and interest whatsoever, either at law or in equity, of each of them in and to the property sold, and shall be a perpetual bar, both at law and in equity, against each of them and their successors and assigns, and against any and all Persons claiming through or under them.

(d) Notwithstanding any other provision of this Indenture, none of the Trustee, the Secured Parties or the Holders may, prior to the date which is one year (or if longer, any applicable preference period) and one day after the payment in full of all Notes and any other debt obligations of the Issuer that have been rated upon issuance by any rating agency at the request of the Issuer, institute against, or join any other Person in instituting against, the Issuer any bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation Proceedings, or other Proceedings under Cayman Islands, U.S. Federal or State bankruptcy or similar laws. Nothing in this Section 5.4 shall preclude, or be deemed to estop, the Trustee, any Secured Party or any Holder (i) from taking any action prior to the expiration of the aforementioned period in (A) any case or Proceeding voluntarily filed or commenced by the Issuer or (B) any involuntary insolvency Proceeding filed or commenced by a Person other than the Trustee, such Secured Party or such Holder, respectively, or (ii) from commencing against the Issuer or any of its properties any legal action which is not a bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation Proceeding.

5.5 Optional Preservation of Collateral

(a) Notwithstanding anything to the contrary herein, if an Event of Default shall have occurred and be continuing, the Trustee shall retain the Collateral securing the Notes intact, collect and cause the collection of the proceeds thereof and make and apply all payments and deposits and maintain all accounts in respect of the Collateral and the Notes in accordance with the Priority of Payments and the provisions of Article 10 and Article 12 unless either:

(i) (A) the Trustee, pursuant to Section 5.5(c), determines that the anticipated proceeds of a sale or liquidation of the Collateral (after deducting the reasonable expenses of such sale or liquidation) would be sufficient to discharge in full (1) the Outstanding Class A-R Funded Amount and any other amounts due and unpaid in respect of the Class A-R Notes, (2) the amounts then due (or, in the case of interest, accrued) and unpaid on the Class A Notes for principal and interest, and in the case of clauses (1) and

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(2), all other amounts that, pursuant to the Priority of Payments, are required to be paid prior to such payments on such Notes (including amounts due and owing as Administrative Expenses); and (B) the Majority Noteholders agree with such determination; or

(ii) the Majority Noteholders direct the sale and liquidation of the Collateral.

The Trustee shall give written notice of the retention of the Collateral to the Issuer with a copy to the Collateral Manager and to the Revolving Credit Note Agent. So long as such Event of Default is continuing, any such retention pursuant to this Section 5.5(a) may be rescinded at any time when the conditions specified in clause (i) or (ii) exist.

(b) Nothing contained in Section 5.5(a) shall be construed to require the Trustee to sell the Collateral securing the Notes if the conditions set forth in clause (i) or (ii) of Section 5.5(a) are not satisfied. Nothing contained in Section 5.5(a) shall be construed to require the Trustee to preserve the Collateral securing the Notes if prohibited by applicable law.

(c) In determining whether the condition specified in Section 5.5(a)(i) exists, the Trustee shall compute the anticipated proceeds of sale or liquidation on the basis of the Current Price of each Portfolio Asset. In addition, for the purposes of determining issues relating to the execution of a sale or liquidation of the Collateral and the execution of a sale or other liquidation thereof in connection with a determination whether the condition specified in Section 5.5(a)(i) exists, the Trustee may retain and rely on an opinion of an Independent investment banking firm of national reputation (the cost of which shall be payable as an Administrative Expense).

The Trustee shall deliver to the Holders and the Collateral Manager a report stating the results of any determination required pursuant to Section 5.5(a)(i) no later than 10 days after such determination is made. The Trustee shall make the determinations required by Section 5.5(a)(i) within 30 days after an Event of Default and at the request of the Majority Noteholders at any time during which the Trustee retains the Collateral pursuant to Section 5.5(a)(i).

(d) This Section 5.5 shall in all respects be subject to the application of Section 12.1(c). In the event of any conflicting notice or instruction delivered to the Trustee pursuant to Section 12.1(c) and pursuant to this Section 5, the notice or instruction delivered to the Trustee pursuant to Section 12.1(c) shall govern and the Trustee shall follow, and entitled to rely upon, such notice or instruction delivered to the Trustee pursuant to Section 12.1(c).

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5.6 Trustee May Enforce Claims Without Possession of Notes

All rights of action and claims under this Indenture or under any of the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any trial or other Proceeding relating thereto, and any such action or Proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be applied as set forth in Section 5.7 hereof.

5.7 Application of Cash Collected

Any Cash collected by the Trustee with respect to the Notes pursuant to this Article 5 and any Cash that may then be held or thereafter received by the Trustee with respect to the Notes hereunder shall be applied, in accordance with the provisions of Section 11.1(a)(iii), at the date or dates fixed by the Trustee (each such date to occur on a Payment Date). Upon the final distribution of all proceeds of any liquidation effected hereunder, the provisions of Section 4.1(b) shall be deemed satisfied for the purposes of discharging this Indenture pursuant to Article 4.

5.8 Limitation on Suits

No Holder of any Note shall have any right to institute any Proceedings, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(a) such Holder has previously given to the Trustee written notice of an Event of Default;

(b) the Majority Noteholders shall have made written request to the Trustee to institute Proceedings in respect of such Event of Default in its own name as Trustee hereunder and such Holder or Holders have provided the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities to be incurred in compliance with such request;

(c) the Trustee, for 30 days after its receipt of such notice, request and provision of such indemnity, has failed to institute any such Proceeding; and

(d) no direction inconsistent with such written request has been given to the Trustee during such 30-day period by the Majority Noteholders; it being understood and intended that no one or more Holders of Notes shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders subject to and in accordance with the Priority of Payments.

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5.9 Unconditional Rights of Holders to Receive Principal and Interest

Subject to Section 2.7(g), but notwithstanding any other provision of this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note, as such principal, interest and other amounts become due and payable in accordance with the Priority of Payments, as the case may be, and, subject to the provisions of Section 5.8, to institute proceedings for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

5.10 Restoration of Rights and Remedies

If the Trustee or any Holder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case the Issuer, the Trustee and the Holder shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holder shall continue as though no such Proceeding had been instituted.

5.11 Rights and Remedies Cumulative

No right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

5.12 Delay or Omission Not Waiver

No delay or omission of the Trustee or any Holder of Notes to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein or of a subsequent Event of Default. Every right and remedy given by this Article 5 or by law to the Trustee or to the Holders of the Notes may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders of the Notes.

5.13 Control by Majority Noteholders

Notwithstanding any other provision of this Indenture, the Majority Noteholders shall have the right following the occurrence, and during the continuance of, an Event of

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Default to cause the institution of and direct the time, method and place of conducting any Proceeding for any remedy available to the Trustee; provided that:

(a) such direction shall not conflict with any rule of law or with any express provision of this Indenture;

(b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction; provided that subject to Section 6.1, the Trustee need not take any action that it determines might involve it in liability (unless the Trustee has received the indemnity as set forth in sub-Section (c) below);

(c) the Trustee shall have been provided with indemnity reasonably satisfactory to it; and

(d) notwithstanding the foregoing, any direction to the Trustee to undertake a Sale of the Collateral must satisfy the requirements of Section 5.5.

5.14 Waiver of Past Defaults

Prior to the time a judgment or decree for payment of the Cash due has been obtained by the Trustee, as provided in this Article 5, Holders of the Notes may waive any past Event of Default or any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default and its consequences; provided that any such Event of Default or occurrence in respect of a covenant or provision hereof cannot be modified or amended without the waiver or consent of each Holder.

In the case of any such waiver, the Issuer, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto. The Trustee shall promptly give written notice of any such waiver to the Collateral Manager, the Revolving Credit Note Agent and each Holder.

Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.

5.15 Undertaking for Costs

All parties to this Indenture agree, and each Holder of any Note by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith

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of the claims or defenses made by such party litigant; but the provisions of this Section 5.15 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in Aggregate Outstanding Amount of the Notes, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on any Note on or after the applicable Stated Maturity.

5.16 Waiver of Stay or Extension Laws

The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any valuation, appraisement, redemption or marshalling law or rights, in each case wherever enacted, now or at any time hereafter in force, which may affect the covenants, the performance of or any remedies under this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law or rights, and covenant that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted or rights created.

5.17 Sale of Collateral

(a) The power to effect any sale or other disposition (a Sale) of any portion of the Collateral pursuant to Sections 5.4 and 5.5 shall not be exhausted by any one or more Sales as to any portion of such Collateral remaining unsold, but shall continue unimpaired until the entire Collateral shall have been sold or all amounts secured by the Collateral shall have been paid. The Trustee may upon notice to the Holders, and shall, upon direction of the Majority Noteholders, from time to time postpone any Sale by public announcement made at the time and place of such Sale. The Trustee hereby expressly waives its rights to any amount fixed by law as compensation for any Sale; provided that the Trustee shall be authorized to deduct the reasonable costs, charges and expenses incurred by it in connection with such Sale from the proceeds thereof notwithstanding the provisions of Section 6.7.

(b) The Trustee, the Collateral Manager or any of the Collateral Manager’s Affiliates may bid for and acquire any portion of the Collateral in connection with a public Sale thereof, and may pay all or part of the purchase price by crediting against amounts owing on the Notes in the case of the Collateral or other amounts secured by the Collateral, all or part of the net proceeds of such Sale after deducting the reasonable costs, charges and expenses incurred by the Trustee, the Collateral Manager or an Affiliate of the Collateral Manager, as the case may be, in connection with such Sale notwithstanding the provisions of Section 6.7 hereof. The Notes need not be produced in order to complete any such Sale, or in order for the net proceeds of such Sale to be credited against amounts owing on the Notes. The Trustee and the Collateral Manager may hold, lease, operate, manage or otherwise deal with any property so acquired in any manner permitted by law in accordance with this Indenture and the Collateral Management Agreement, respectively.

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(c) If any portion of the Collateral consists of securities issued without registration under the Securities Act (Unregistered Securities), the Trustee may seek an Opinion of Counsel, or, if no such Opinion of Counsel can be obtained and with the consent of the Majority Noteholders, seek a no action position from the Securities and Exchange Commission or any other relevant Federal or State regulatory authorities, regarding the legality of a public or private Sale of such Unregistered Securities.

(d) The Trustee shall execute and deliver an appropriate instrument of conveyance transferring its interest in any portion of the Collateral in connection with a Sale thereof. In addition, the Trustee is hereby irrevocably appointed the agent and attorney in fact of the Issuer to transfer and convey its interest in any portion of the Collateral in connection with a Sale thereof, and to take all action necessary to effect such Sale. No purchaser or transferee at such a sale shall be bound to ascertain the Trustee’s authority, to inquire into the satisfaction of any conditions precedent or see to the application of any Cash.

5.18 Action on the Notes

The Trustee’s right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking or obtaining of or application for any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Trustee or the Holders shall be impaired by the recovery of any judgment by the Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Collateral or upon any of the assets of the Issuer.

6. THE TRUSTEE

6.1 Certain Duties and Responsibilities

(a) Except during the continuance of an Event of Default:

(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided that in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they

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substantially conform to the requirements of this Indenture and shall promptly, but in any event within three Business Days in the case of an Officer’s certificate furnished by the Collateral Manager, notify the party delivering the same if such certificate or opinion does not conform. If a corrected form shall not have been delivered to the Trustee within 15 days after such notice from the Trustee, the Trustee shall so notify the Holders.

(b) In case an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Majority Noteholders, or such other percentage as permitted by this Indenture, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) this sub-Section (c) shall not be construed to limit the effect of sub-Section (a) of this Section 6.1;

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it shall be proven that the Trustee was negligent in ascertaining the pertinent facts;

(iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Issuer or the Collateral Manager in accordance with this Indenture and/or the Majority Noteholders (or such other percentage as may be required by the terms hereof) relating to the time, method and place of conducting any Proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;

(iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers contemplated hereunder, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risk or liability is not reasonably assured to it (if the amount of such funds or risk or liability is reasonably expected not to exceed the amount available for payment to the Trustee pursuant to Section 6.7(a) on the immediately succeeding Payment Date net of the amounts specified in Section 6.7(a), the Trustee shall be deemed to be reasonably assured of such repayment) unless such risk or liability relates to the performance of its ordinary services, including mailing of notices under Article 5, under this Indenture; and

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(v) in no event shall the Trustee be liable for special, indirect or consequential loss or damage (including lost profits) even if the Trustee has been advised of the likelihood of such damages and regardless of such action.

(d) For all purposes under this Indenture, the Trustee shall not be deemed to have notice or knowledge of any Event of Default described in Sections 5.1(e) or 5.1(i) unless a Trust Officer assigned to and working in the Corporate Trust Office has actual knowledge thereof or unless written notice of any event which is in fact such an Event of Default or Default is received by the Trustee at the Corporate Trust Office, and such notice references the Notes generally, the Issuer, the Collateral or this Indenture. For purposes of determining the Trustee’s responsibility and liability hereunder, whenever reference is made in this Indenture to such an Event of Default or a Default, such reference shall be construed to refer only to such an Event of Default or Default of which the Trustee is deemed to have notice as described in this Section 6.1.

(e) Upon the Trustee receiving written notice from the Collateral Manager that an event constituting “Cause” as defined in the Collateral Management Agreement has occurred, the Trustee shall, not later than one Business Day thereafter, notify the Holders (as their names appear in the Note Registers).

(f) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.1.

6.2 Notice of Default

Promptly (and in no event later than three Business Days) after the occurrence of any Default actually known to a Trust Officer of the Trustee or after any declaration of acceleration has been made or delivered to the Trustee pursuant to Section 5.2, the Trustee shall transmit by mail to the Issuer, Collateral Manager, the Revolving Credit Note Agent and all Holders of Notes, as their names and addresses appear on the Note Registers, notice of all Defaults hereunder known to the Trustee, unless such Default shall have been cured or waived.

6.3 Certain Rights of Trustee

Except as otherwise provided in Section 6.1:

(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

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(b) any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request or Issuer Order, as the case may be;

(c) whenever in the administration of this Indenture the Trustee shall (i) deem it desirable that a matter of fact be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer’s certificate or (ii) be required to determine the value of any Collateral or funds hereunder or the cash flows projected to be received therefrom, the Trustee may, in the absence of bad faith on its part, rely on reports of nationally recognized accountants, investment bankers or other Persons qualified to provide the information required to make such determination, including nationally recognized dealers in securities of the type being valued and securities quotation services;

(d) as a condition to the taking or omitting of any action by it hereunder, the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in reliance thereon;

(e) the Trustee shall be under no obligation to exercise or to honor any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have provided to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities which might reasonably be incurred by it in compliance with such request or direction;

(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, note or other paper or document, but the Trustee, in its discretion, may, and upon the written direction of Holders of at least 25% of the Outstanding Notes shall, make such further inquiry or investigation into such facts or matters as it may see fit or as it shall be directed, and the Trustee shall be entitled, on reasonable prior notice to the Issuer and the Collateral Manager, to examine the books and records relating to the Notes and the Collateral, personally or by agent or attorney, during the Issuer’ or the Collateral Manager’s normal business hours; provided that the Trustee shall, and shall cause its agents to, hold in confidence all such information, except (i) to the extent disclosure may be required by law by any regulatory or governmental authority and (ii) to the extent that the Trustee, in its sole discretion, may determine that such disclosure is consistent with its obligations hereunder; provided, further, that the Trustee may disclose on a confidential basis any such information to its agents, attorneys and auditors in connection with the performance of its responsibilities hereunder;

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(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys; provided that the Trustee shall not be responsible for any misconduct or negligence on the part of any non-Affiliated agent appointed and supervised, or non-Affiliated attorney appointed, with due care by it hereunder;

(h) Subject to Section 6.1(b), the Trustee shall not be liable for any action it takes or omits to take in good faith that it reasonably believes to be authorized or within its rights or powers hereunder;

(i) nothing herein shall be construed to impose an obligation on the part of the Trustee to recalculate, evaluate or verify or independently determine the accuracy of any report, certificate or information received from the Issuer or Collateral Manager (unless and except to the extent otherwise expressly set forth herein); provided that nothing in this clause (i) shall supersede or modify the responsibilities and duties of the Collateral Administrator under the Collateral Administration Agreement;

(j) to the extent any defined term hereunder, or any calculation required to be made or determined by the Trustee hereunder, is dependent upon or defined by reference to generally accepted accounting principles (as in effect in the United States of America) (GAAP), the Trustee shall be entitled to request and receive (and rely upon) instruction from the Issuer or, in the absence of its receipt of timely instruction therefrom, shall be entitled to obtain from an Independent accountant at the expense of the Issuer, as to the application of GAAP in such connection, in any instance;

(k) the Trustee shall not be liable for the actions or omissions of the Collateral Manager, the Issuer and any Paying Agent (other than the Trustee) and without limiting the foregoing, the Trustee shall not be under any obligation to monitor, evaluate or verify compliance by the Collateral Manager with the terms of the Collateral Management Agreement, or to verify or independently determine the accuracy of information received by the Trustee from the Collateral Manager (or from any selling institution, agent bank, trustee or similar source) with respect to the Collateral;

(l) notwithstanding any term hereof (or any term of the UCC that might otherwise be construed to be applicable to a “securities intermediary” as defined in the UCC) to the contrary, neither the Trustee nor the Custodian shall be under a duty or obligation in connection with the acquisition or Grant by the Issuer to the Trustee of any item constituting the Collateral, or to evaluate the sufficiency of the documents or instruments delivered to it by or on behalf of the Issuer in connection with its Grant or otherwise, or in that regard to examine any Underlying Instrument, in each case, in order to determine compliance with applicable requirements of and restrictions on transfer in respect of such Collateral;

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(m) in the event the Bank is also acting in the capacity of Paying Agent, Note Registrar, Transfer Agent, Collateral Administrator or Custodian, the rights, protections, benefits, immunities and indemnities afforded to the Trustee pursuant to this Article 6 shall also be afforded to the Bank acting in such capacities;

(n) any permissive right of the Trustee to take or refrain from taking actions enumerated in this Indenture shall not be construed as a duty;

(o) to the extent permitted by applicable law, the Trustee shall not be required to give any bond or surety in respect of the execution of this Indenture or otherwise;

(p) the Trustee shall not be deemed to have notice or knowledge of any matter unless a Trust Officer has actual knowledge thereof or unless written notice thereof is received by the Trustee at the Corporate Trust Office and such notice references the Notes generally, the Issuer or this Indenture. Whenever reference is made in this Indenture to a Default or an Event of Default such reference shall, insofar as determining any liability on the part of the Trustee is concerned, be construed to refer only to a Default or an Event of Default of which the Trustee is deemed to have knowledge in accordance with this paragraph;

(q) the Trustee shall not be responsible for delays or failures in performance resulting from acts beyond its control;

(r) to help fight the funding of terrorism and money laundering activities, the Trustee will obtain, verify, and record information that identifies individuals or entities that establish a relationship or open an account with the Trustee. The Trustee will ask for the name, address, tax identification number and other information that will allow the Trustee to identify the individual or entity who is establishing the relationship or opening the account. The Trustee may also ask for formation documents such as articles of incorporation, an offering memorandum, or other identifying documents to be provided. In accordance with the U.S. Unlawful Internet Gambling Act (the Gambling Act), the Issuer may not use the Accounts or other facilities of the Bank in the United States to process “restricted transactions” as such term is defined in U.S. 31 CFR Section 132.2(y). Therefore, neither the Issuer nor any Person who has an ownership interest in or control over the Accounts may use it to process or facilitate payments for prohibited internet gambling transactions. For more information about the Gambling Act, including the types of transactions that are prohibited, please refer to the following link: HTTP://WWW.FEDERALRESERVE.GOV/NEWSEVENTS/PRESS/BCREG/20081112B.HTM;

(s) the protections and immunities afforded to the Trustee pursuant to this Indenture and the rights of the Trustee under Section 6.3, 6.4 and 6.5 also shall be afforded to the Collateral Administrator, except to the extent they are inconsistent with the terms of the Collateral Administration Agreement;

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(t) in making or disposing of any investment permitted by this Indenture, the Trustee is authorized to deal with itself (in its individual capacity) or with any one or more of its Affiliates, in each case on an arm’s-length basis, whether it or such Affiliate is acting as a subagent of the Trustee or for any third person or dealing as principal for its own account. If otherwise qualified, obligations of the Bank or any of its Affiliates shall qualify as Eligible Investments hereunder;

(u) the Trustee or its Affiliates are permitted to receive additional compensation that could be deemed to be in the Trustee’s economic self-interest for (i) serving as investment adviser, administrator, shareholder, servicing agent, custodian or subcustodian with respect to certain of the Eligible Investments, (ii) using Affiliates to effect transactions in certain Eligible Investments and (iii) effecting transactions in certain Eligible Investments. Such compensation is not payable or reimbursable under Section 6.7 of this Indenture; and

(v) the Trustee shall have no duty (i) to see to any recording, filing, or depositing of this Indenture or any supplemental indenture or any financing statement or continuation statement evidencing a security interest, or to see to the maintenance of any such recording, filing or depositing or to any rerecording, refiling or redepositing of any thereof or (ii) to maintain any insurance.

(w) The Trustee is hereby authorized and directed to execute in its capacity as Trustee and deliver in the form presented to it all Transaction Documents to which it is a party, as Trustee.

6.4 Not Responsible for Recitals or Issuance of Notes

The recitals contained herein and in the Notes, other than the Certificate of Authentication thereon, shall be taken as the statements of the Issuer; and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or sufficiency of this Indenture (except as may be made with respect to the validity of the Trustee’s obligations hereunder), the Collateral or the Notes. The Trustee shall not be accountable for the use or application by the Issuer of the Notes or the proceeds thereof or any Cash paid to the Issuer pursuant to the provisions hereof.

6.5 May Hold Notes

The Trustee, any Paying Agent, Note Registrar or any other agent of the Issuer, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuer or any of their Affiliates with the same rights it would have if it were not Trustee, Paying Agent, Note Registrar or such other agent.

6.6 Cash Held in Trust

Cash held by the Trustee hereunder shall be held in trust to the extent required herein. The Trustee shall be under no liability for interest on any Cash received by it hereunder

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except to the extent of income or other gain on investments which are deposits in or certificates of deposit of the Bank in its commercial capacity and income or other gain actually received by the Trustee on Eligible Investments.

6.7 Compensation and Reimbursement

(a) Subject to Section 6.7(b) below, the Issuer agrees:

(i) to pay the Trustee on each Payment Date reasonable compensation, as set forth in a separate fee letter, for all services rendered by it hereunder and under the other Transaction Documents (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(ii) except as otherwise expressly provided herein, to reimburse the Trustee in a timely manner upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture or other Transaction Document (including, without limitation, securities transaction charges and the reasonable compensation and expenses and disbursements of its agents and legal counsel and of any accounting firm or investment banking firm employed by the Trustee pursuant to Section 5.4, 5.5 or 6.3(c) except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith) but with respect to securities transaction charges, only to the extent any such charges have not been waived during a Monthly Period due to the Trustee’s receipt of a payment from a financial institution with respect to certain Eligible Investments, as specified by the Collateral Manager;

(iii) to indemnify the Trustee and its Officers, directors, employees and agents for, and to hold them harmless against, any loss, liability or expense incurred without negligence, willful misconduct or bad faith on their part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending themselves (including reasonable attorney’s fees and costs) against any claim or liability in connection with the exercise or performance of any of their powers or duties hereunder and under any other Transaction Document; and

(iv) to pay the Trustee reasonable additional compensation together with its expenses (including reasonable counsel fees) for any collection action taken pursuant to Section 6.13 hereof.

(b) The Trustee shall receive amounts pursuant to this Section 6.7 and any other amounts payable to it under this Indenture only as provided in Section 10.3(c) and only to the extent that funds are available for the payment thereof. Subject to

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Section 6.9, the Trustee shall continue to serve as Trustee under this Indenture notwithstanding the fact that the Trustee shall not have received amounts due it hereunder; provided that nothing herein shall impair or affect the Trustee’s rights under Section 6.9. No direction by the Holders shall affect the right of the Trustee to collect amounts owed to it under this Indenture. If on any date when a fee shall be payable to the Trustee pursuant to this Indenture insufficient funds are available for the payment thereof, any portion of a fee not so paid shall be deferred and payable on such later date on which a fee shall be payable and sufficient funds are available therefor.

(c) The Trustee hereby agrees not to cause the filing of a petition in bankruptcy against the Issuer until at least one year and one day, or, if longer, the applicable preference period then in effect plus one day, after the payment in full of all Notes (and any other debt obligations of the Issuer that have been rated upon issuance by any rating agency at the request of the Issuer) issued under this Indenture.

(d) The Issuer’s payment obligations to the Trustee under this Section 6.7 shall be secured by the lien of this Indenture, and shall survive the discharge of this Indenture and the resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of a Default or an Event of Default under Section 5.1(e), the expenses are intended to constitute expenses of administration under the Bankruptcy Code or any other applicable Federal or State bankruptcy, insolvency or similar law.

6.8 Corporate Trustee Required; Eligibility

There shall at all times be a Trustee hereunder which shall be an Independent organization or entity organized and doing business under the laws of the United States of America or of any State thereof, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least U.S.$200,000,000, subject to supervision or examination by Federal or State authority, having a rating of at least “Baa1” by Moody’s and at least “BBB+” by S&P and having an office within the United States of America. If such organization or entity publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 6.8, the combined capital and surplus of such organization or entity shall be deemed to be its combined capital and surplus as set forth in its most recent published report of condition. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.8, it shall resign immediately in the manner and with the effect hereinafter specified in this Article 6.

6.9 Resignation and Removal; Appointment of Successor

(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article 6 shall become effective until the acceptance of appointment by the successor Trustee under Section 6.10.

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(b) The Trustee may resign at any time by giving not less than 30 days’ written notice thereof to the Issuer, the Collateral Manager, the Revolving Credit Note Agent and the Holders of the Notes. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees satisfying the requirements of Section 6.8 by written instrument, in duplicate, executed by an Authorized Representative of the Issuer, one copy of which shall be delivered to the Trustee so resigning and one copy to the successor Trustee or Trustees, together with a copy to each Holder and the Collateral Manager; provided that such successor Trustee shall be appointed only upon the written consent of each Holder or, at any time when an Event of Default shall have occurred and be continuing, by an Act of the Majority Noteholders. If no successor Trustee shall have been appointed and an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee or any Holder, on behalf of itself and all others similarly situated, may petition any court of competent jurisdiction for the appointment of a successor Trustee satisfying the requirements of Section 6.8.

(c) The Trustee may be removed at any time by an Act of Holders of 100% of the Aggregate Outstanding Amount of Notes delivered to the Trustee and to the Issuer.

(d) If at any time:

(i) the Trustee shall cease to be eligible under Section 6.8 and shall fail to resign after written request therefor by the Issuer or by any Holder; or

(ii) the Trustee shall become incapable of acting or shall be adjudged as bankrupt or insolvent or a receiver or liquidator of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in any such case (subject to Section 6.9(a)), (A) the Issuer, by Issuer Order, may remove the Trustee, or (B) subject to Section 5.15, any Holder may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of the Trustee for any reason (other than resignation), the Issuer, by Issuer Order, shall promptly appoint a successor Trustee, provided that any such appointment shall be subject to the prior consent of each Holder. If the Issuer shall fail to appoint a successor Trustee within 60 days after such resignation, removal or incapability or the occurrence of such vacancy, a successor Trustee may be appointed by Holders of 100% of the Aggregate Outstanding Amount of Notes by written instrument delivered to the

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Issuer and the retiring Trustee. The successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede any successor Trustee proposed by the Issuer. If no successor Trustee shall have been so appointed by the Issuer or Holders of 100% of the Aggregate Outstanding Amount of Notes and shall have accepted appointment in the manner hereinafter provided, subject to Section 5.15, any Holder may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(f) The Issuer shall give prompt notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first class mail, postage prepaid, to the Collateral Manager, the Holders of the Notes as their names and addresses appear in the Note Registers. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. If the Issuer fail to mail such notice within ten days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be given at the expense of the Issuer.

(g) If the Bank shall resign or be removed as Trustee, the Bank shall also resign or be removed as Custodian, Paying Agent, Note Registrar and any other capacity in which the Bank is then acting pursuant to this Indenture or any other Transaction Document.

6.10 Acceptance of Appointment by Successor

Every successor Trustee appointed hereunder shall meet the requirements of Section 6.8 and shall execute, acknowledge and deliver to the Issuer and the retiring Trustee an instrument accepting such appointment. Upon delivery of the required instruments, the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, duties and obligations of the retiring Trustee; but, on request of the Issuer or the Majority Noteholders or the successor Trustee, such retiring Trustee shall, upon payment of its charges then unpaid, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and Cash held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.

6.11 Merger, Conversion, Consolidation or Succession to Business of Trustee

Any organization or entity into which the Trustee may be merged or converted or with which it may be consolidated, or any organization or entity resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any organization or entity succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such organization or entity

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shall be otherwise qualified and eligible under this Article 6, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any of the Notes has been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes.

6.12 Co-Trustees

At any time or times, for the purpose of meeting the legal requirements of any jurisdiction in which any part of the Collateral may at the time be located, the Issuer and the Trustee shall have power to appoint one or more Persons to act as co-trustee, jointly with the Trustee, of all or any part of the Collateral, with the power to file such proofs of claim and take such other actions pursuant to Section 5.6 herein and to make such claims and enforce such rights of action on behalf of the Holders, as such Holders themselves may have the right to do, subject to the other provisions of this Section 6.12.

The Issuer shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint a co-trustee. If the Issuer does not join in such appointment within 15 days after the receipt by them of a request to do so, the Trustee shall have the power to make such appointment.

Should any written instrument from the Issuer be required by any co-trustee so appointed, more fully confirming to such co-trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Issuer. The Issuer agrees to pay as Administrative Expenses, to the extent funds are available therefor under the Priority of Payments, for any reasonable fees and expenses in connection with such appointment.

Every co-trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms:

(a) the Notes shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, Cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised, solely by the Trustee;

(b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by the appointment of a co-trustee shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee jointly as shall be provided in the instrument appointing such co-trustee;

(c) the Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Issuer evidenced by an Issuer Order, may accept the resignation of or remove any co-trustee appointed under this Section 6.12, and in

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case an Event of Default has occurred and is continuing, the Trustee shall have the power to accept the resignation of, or remove, any such co-trustee without the concurrence of the Issuer. A successor to any co-trustee so resigned or removed may be appointed in the manner provided in this Section 6.12;

(d) no co-trustee hereunder shall be personally liable by reason of any act or omission of the Trustee hereunder;

(e) the Trustee shall not be liable by reason of any act or omission of a co-trustee; and

(f) any Act of Holders delivered to the Trustee shall be deemed to have been delivered to each co-trustee.

6.13 Certain Duties of Trustee Related to Delayed Payment of Proceeds

In the event that the Collateral Administrator provides the Trustee with notice that a payment with respect to any item of Collateral has not been received on its Due Date, (a) the Trustee shall promptly notify the Issuer and the Collateral Manager in writing and (b) unless within three Business Days (or the end of the applicable grace period for such payment, if any) after such notice (x) such payment shall have been received by the Trustee or (y) the Trustee has received notice from the Collateral Manager that it is taking action in respect of such payment, the Trustee shall request the issuer of or obligor on such item of Collateral, the trustee under the related Underlying Instrument or the paying agent designated by either of them, as the case may be, to make such payment as soon as practicable after such request but in no event later than three Business Days after the date of such request. In the event that such payment is not made within such time period, the Trustee, subject to the provisions of clause (iv) of Section 6.1(c), shall take such action as the Collateral Manager shall direct. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture. In the event that the Issuer or the Collateral Manager requests a release of any Collateral and/or delivers an additional Portfolio Asset in connection with any such action under the Collateral Management Agreement, such release and/or substitution shall be subject to Section 10.6 and Article 12 of this Indenture, as the case may be. Notwithstanding any other provision hereof, the Trustee shall deliver to the Issuer or its designee any payment with respect to any additional Portfolio Asset or other Collateral received after the Due Date thereof to the extent the Issuer previously made provisions for such payment satisfactory to the Trustee in accordance with this Section 6.13 and such payment shall not be deemed part of the Collateral. The foregoing shall not preclude any other exercise of any right or remedy by the Issuer with respect to any default or event of default arising under a Portfolio Asset.

6.14 Authenticating Agents

Upon the request of the Issuer, the Trustee shall, and if the Trustee so chooses the Trustee may, appoint one or more Authenticating Agents with power to act on its behalf and subject to its direction in the authentication of Notes in connection with issuance,

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transfers and exchanges under Sections 2.4, 2.5, 2.6 and 8.6, as fully to all intents and purposes as though each such Authenticating Agent had been expressly authorized by such Sections to authenticate such Notes. For all purposes of this Indenture, the authentication of Notes by an Authenticating Agent pursuant to this Section 6.14 shall be deemed to be the authentication of Notes by the Trustee.

Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, without the execution or filing of any further act on the part of the parties hereto or such Authenticating Agent or such successor corporation.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and the Issuer. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Issuer. Upon receiving such notice of resignation or upon such a termination, the Trustee shall promptly appoint a successor Authenticating Agent and shall give written notice of such appointment to the Issuer.

Unless the Authenticating Agent is also the same entity as the Trustee, the Issuer agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services, and reimbursement for its reasonable expenses relating thereto as an Administrative Expense. The provisions of Sections 2.8, 6.4 and 6.5 shall be applicable to any Authenticating Agent.

6.15 Withholding

All payments made to a Holder under this Indenture shall be made without any deduction or withholding for or on account of any present or future Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If any withholding Tax is imposed on the Issuer’s payment (or allocations of income) under the Notes by any such applicable law, such Tax shall reduce the amount otherwise distributable to the relevant Holder. The Trustee is hereby authorized and directed to retain from amounts otherwise distributable to any Holder sufficient funds for the payment of any Tax that is legally owed or required to be withheld by the Issuer by law or pursuant to the Issuer’s agreement with a governmental authority (but such authorization shall not prevent the Trustee from contesting any such Tax in appropriate proceedings and withholding payment of such Tax, if permitted by law, pending the outcome of such proceedings) and to timely remit such amounts to the appropriate taxing authority. The amount of any withholding Tax imposed by law or pursuant to the Issuer’s agreement with a governmental authority with respect to any Note shall be treated as having been paid as interest or principal on such Note to the relevant Holder at the time such amounts are withheld by the Trustee. If there is a possibility that withholding Tax is payable with respect to a distribution, the Paying

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Agent or the Trustee may, in its sole discretion, withhold such amounts in accordance with this Section 6.15. If any Holder or beneficial owner wishes to apply for a refund of any such withholding Tax, the Trustee shall reasonably cooperate with such Person in providing readily available information so long as such Person agrees to reimburse the Trustee for any out-of-pocket expenses incurred. Nothing herein shall impose an obligation on the part of the Trustee to determine the amount of any Tax or withholding obligation on the part of the Issuer or in respect of the Notes.

6.16 Fiduciary for Holders Only; Agent for each other Secured Party

With respect to the security interest created hereunder, the delivery of any Collateral to the Trustee is to the Trustee as trustee for the Holders and agent for each other Secured Party. In furtherance of the foregoing, the possession by the Trustee of any Collateral, the endorsement to or registration in the name of the Trustee of any Collateral (including without limitation as entitlement holder of the Custodial Account) are all undertaken by the Trustee in its capacity as trustee for the Holders, and agent for each other Secured Party. The Trustee shall not by reason of this Indenture be deemed to be acting as fiduciary for the Collateral Manager, provided that the foregoing shall not limit any of the express obligations of the Trustee under this Indenture.

6.17 Representations and Warranties of the Bank

The Bank hereby represents and warrants as follows:

(a) Organization. The Bank has been duly organized and is validly existing as a trust company with trust powers under the laws of the Commonwealth of Massachusetts and has the power to conduct its business and affairs as a trustee, paying agent, registrar, transfer agent, custodian and calculation agent.

(b) Authorization; Binding Obligations. The Bank has the corporate power and authority to perform the duties and obligations of Trustee, Paying Agent, Note Registrar, Transfer Agent and Custodian under this Indenture. The Bank has taken all necessary corporate action to authorize the execution, delivery and performance of this Indenture, and all of the documents required to be executed by the Bank pursuant hereto. This Indenture has been duly authorized, executed and delivered by the Bank and constitutes the legal, valid and binding obligation of the Bank enforceable in accordance with its terms subject, as to enforcement, (i) to the effect of bankruptcy, insolvency or similar laws affecting generally the enforcement of creditors’ rights as such laws would apply in the event of any bankruptcy, receivership, insolvency or similar event applicable to the Bank and (ii) to general equitable principles (whether enforcement is considered in a proceeding at law or in equity).

(c) Eligibility. The Bank is eligible under Section 6.8 to serve as Trustee hereunder.

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(d) No Conflict. Neither the execution, delivery and performance of this Indenture, nor the consummation of the transactions contemplated by this Indenture, (i) is prohibited by, or requires the Bank to obtain any consent, authorization, approval or registration under, any law, statute, rule, regulation, judgment, order, writ, injunction or decree that is binding upon the Bank or any of its properties or assets, or (ii) will violate any provision of, result in any default or acceleration of any obligations under, result in the creation or imposition of any lien pursuant to, or require any consent under, any material agreement to which the Bank is a party or by which it or any of its property is bound.

7. COVENANTS

7.1 Payment of Principal and Interest

The Issuer will duly and punctually pay the principal of and interest on the Notes, in accordance with the terms of such Notes, the Revolving Credit Note Agreement and this Indenture pursuant to the Priority of Payments.

Amounts properly withheld under the Code or other applicable law or pursuant to the Issuer’s agreement with a governmental authority by any Person from a payment under a Note shall be considered as having been paid by the Issuer to the relevant Holder for all purposes of this Indenture.

7.2 Maintenance of Office or Agency

The Issuer hereby appoints the Trustee as a Paying Agent for payments on the Notes and the Issuer hereby appoints the Trustee at its applicable Corporate Trust Office, as the Issuer’s agent where Notes may be surrendered for registration of transfer or exchange. The Issuer may at any time and from time to time appoint additional paying agents; provided that no paying agent shall be appointed in a jurisdiction which subjects payments on the Notes to withholding tax solely as a result of such Paying Agent’s activities. If at any time the Issuer shall fail to maintain the appointment of a paying agent, or shall fail to furnish the Trustee with the address thereof, presentations and surrenders may be made (subject to the limitations described in the preceding sentence), and Notes may be presented and surrendered for payment, to the Trustee at its main office.

The Issuer irrevocably consents to service of process on the Issuer by registered or certified mail or hand delivery to the address for notices to the Issuer specified in Section 14.3. Nothing in this Indenture will affect the right of any party to this Indenture to serve process in any other manner permitted by law.

The Issuer shall at all times maintain duplicate copies of the Note Registers at the Corporate Trust Office. The Issuer shall give prompt written notice to the Trustee and the Holders of the appointment or termination of any such agent and of the location and any change in the location of any such office or agency.

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7.3 Cash for Note Payments to be Held in Trust

All payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Payment Account shall be made on behalf of the Issuer by the Trustee or a Paying Agent.

When the Issuer shall have a Paying Agent that is not also a Note Registrar, it shall furnish, or cause the applicable Note Registrar to furnish, no later than the fifth calendar day after each Record Date a list, if necessary, in such form as such Paying Agent may reasonably request, of the names and addresses of the Holders and of the certificate numbers of individual Notes held by each such Holder.

Whenever the Issuer shall have a Paying Agent with respect to the Notes other than the Trustee, it shall, on or before the Business Day next preceding each Payment Date, direct the Trustee to deposit on such Payment Date with such Paying Agent, if necessary, an aggregate sum sufficient to pay the amounts then becoming due (to the extent funds are then available for such purpose in the Payment Account), such sum to be held in trust for the benefit of the Persons entitled thereto and (unless such Paying Agent is the Trustee) the Issuer shall promptly notify the Trustee of its action or failure so to act. Any Cash deposited with a Paying Agent (other than the Trustee) in excess of an amount sufficient to pay the amounts then becoming due on the Notes with respect to which such deposit was made shall be paid over by such Paying Agent to the Trustee for application in accordance with Article 10.

The initial Paying Agent shall be as set forth in Section 7.2. Any additional or successor Paying Agents shall be appointed by Issuer Order with written notice thereof to the Trustee. The Issuer shall not appoint any Paying Agent that is not, at the time of such appointment, a depository institution or trust company subject to supervision and examination by Federal and/or State and/or national banking authorities. The Issuer shall cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee and if the Trustee acts as Paying Agent, it hereby so agrees, subject to the provisions of this Section 7.3, that such Paying Agent will:

(a) allocate all sums received for payment to the Holders of Notes for which it acts as Paying Agent on each Payment Date among such Holders in the proportion specified in the applicable Payment Date Report to the extent permitted by applicable law;

(b) hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided;

(c) if such Paying Agent is not the Trustee, immediately resign as a Paying Agent and forthwith pay to the Trustee all sums held by it in trust for the payment of Notes if at any time it ceases to meet the standards set forth above required to be met by a Paying Agent at the time of its appointment;

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(d) if such Paying Agent is not the Trustee, immediately give the Trustee notice of any default by the Issuer (or any other obligor upon the Notes) in the making of any payment required to be made; and

(e) if such Paying Agent is not the Trustee, during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Issuer Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Issuer or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Issuer or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such Cash.

Except as otherwise required by applicable law, any Cash deposited with the Trustee or any Paying Agent (with respect to Notes) in trust for any payment on any Note and remaining unclaimed for two years after such amount has become due and payable shall be paid to the Issuer on Issuer Order; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment of such amounts (but only to the extent of the amounts so paid to the Issuer) and all liability of the Trustee or such Paying Agent with respect to such trust Cash shall thereupon cease. The Trustee or such Paying Agent, before being required to make any such release of payment, may, but shall not be required to, adopt and employ, at the expense of the Issuer any reasonable means of notification of such release of payment, including, but not limited to, mailing notice of such release to Holders whose right to or interest in Cash due and payable but not claimed is determinable from the records of any Paying Agent, at the last address of record of each such Holder.

7.4 Existence of Issuer

(a) The Issuer shall, to the maximum extent permitted by applicable law, maintain in full force and effect its existence and rights as a company incorporated under the laws of the Cayman Islands, and shall obtain and preserve its qualification to do business as a foreign entity in each jurisdiction in which such qualifications are or shall be necessary to protect the validity and enforceability of this Indenture, the Notes, or any of the Collateral; provided that (x) the Issuer shall be entitled to change its jurisdiction of incorporation from the Cayman Islands to any other jurisdiction reasonably selected by the Issuer so long as (i) the Issuer has received a legal opinion (upon which the Trustee may conclusively rely) to the effect that such change is not disadvantageous in any material respect to the Holders, (ii) the Issuer has taken all necessary steps to ensure that Trustee’s security interest in the

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Collateral continues in effect and has received an Opinion of Counsel similar to closing date opinion given by counsel to the Issuer to the effect that, after giving effect to such change, Trustee has a first priority perfected security interest in the Collateral and that the Issuer shall not be subject to any obligations for payment of Taxes that it would not have been subject to but for such change of jurisdiction, (iii) written notice of such change shall have been given by the Trustee to the Holders and the Collateral Manager, and (iv) on or prior to the 15th Business Day following receipt of such notice the Trustee shall not have received written notice from Holders of at least 25% of the Outstanding Notes objecting to such change and (y) the Issuer shall be entitled to take any action required by this Indenture within the United States notwithstanding any provision of this Indenture requiring the Issuer to take such action outside of the United States so long as prior to taking any such action the Issuer receives a legal opinion from nationally recognized legal counsel to the effect that it is not necessary to take such action outside of the United States or any political subdivision thereof in order to prevent the Issuer from becoming subject to United States federal, state or local income taxes on a net income basis or any material other taxes to which the Issuer would not otherwise be subject.

(b) The Issuer shall ensure that all limited liability company or other formalities regarding its existence (including holding regular members’, managers’ or other similar meetings) are followed. The Issuer shall not take any action or conduct its affairs in a manner, that is likely to result in its separate existence being ignored (other than for U.S. Federal income tax purposes) or in its assets and liabilities being substantively consolidated with any other Person in a bankruptcy, reorganization or other insolvency proceeding. Without limiting the foregoing, (i) the Issuer shall not have any subsidiaries, (ii) the Issuer shall not (A) have any employees, (B) engage in any transaction with any Person that would constitute a conflict of interest (provided that its entering into and performance of its obligations under the Transaction Documents shall not be deemed to be a transaction that would constitute a conflict of interest) or (C) pay distributions to its equity owners other than in accordance with the terms of this Indenture and its Constitutive Documents and (iii) the Issuer shall (A) maintain books and records separate from any other Person, (B) maintain its accounts separate from those of any other Person, (C) not commingle its assets with those of any other Person, (D) conduct its own business in its own name, (E) maintain separate financial statements, (F) pay its own liabilities out of its own funds, (G) maintain an arm’s length relationship with its Affiliates, (H) use separate stationery, invoices and checks, (I) hold itself out as a separate Person and (J) correct any known misunderstanding regarding its separate identity.

7.5 Protection of Collateral

(a) The Issuer will take such action as is necessary to maintain the perfection and priority of the security interest of the Trustee in the Collateral; provided that the Issuer shall be entitled to rely on any Opinion of Counsel delivered pursuant to

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Section 7.6 and any Opinion of Counsel with respect to the same subject matter delivered pursuant to Section 3.1(d) to determine what actions are necessary, and shall be fully protected in so relying on such an Opinion of Counsel, unless the Issuer has actual knowledge that the procedures described in any such Opinion of Counsel are no longer adequate to maintain such perfection and priority. The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and file or authorize the filing of all such Financing Statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action as may be necessary or advisable or desirable to secure the rights and remedies of the Holders of the Notes hereunder and to:

(i) Grant more effectively all or any portion of the Collateral;

(ii) maintain, preserve and perfect any Grant made or to be made by this Indenture including, without limitation, the first priority nature of the lien or carry out more effectively the purposes hereof;

(iii) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture (including any and all actions necessary or desirable as a result of changes in law or regulations);

(iv) enforce any of the Collateral or other instruments or property included in the Collateral;

(v) preserve and defend title to the Collateral and the rights therein of the Trustee and the Holders of the Notes in the Collateral against the claims of all Persons and parties; or

(vi) pay or cause to be paid any and all taxes levied or assessed upon all or any part of the Collateral.

The Issuer hereby authorizes the Trustee to prepare and file any Financing Statement, continuation statement and all other instruments, and take all other actions, required pursuant to this Section 7.5. Such designation shall not impose upon the Trustee, or release or diminish, the Issuer’s obligations under this Section 7.5. The Issuer further authorizes, and shall cause the Issuer’s United States counsel to file, a Financing Statement that names the Issuer as debtor and the Trustee as secured party and that describes “all personal property of the Debtor now owned or hereafter acquired, other than ‘Excepted Property’” (and that defines Excepted Property in accordance with its definition herein) or words of similar effect as the Collateral in which the Trustee has a Grant.

(b) The Issuer shall enforce all of its material rights and remedies under each Transaction Document to which it is a party.

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7.6 Opinions as to Collateral

On or before May 31 in each calendar year, commencing in 2014, the Issuer shall furnish to the Trustee an Opinion of Counsel relating to the security interest granted by the Issuer to the Trustee, stating that, as of the date of such opinion, the lien and security interests created by this Indenture with respect to the Collateral remain in effect and that no further action (other than as specified in such opinion) needs to be taken to ensure the continued effectiveness of such lien over the next year.

7.7 Performance of Obligations

(a) The Issuer shall not take any action that would release any Person from any of such Person’s covenants or obligations under any instrument included in the Collateral, except (i) in the case of enforcement action taken with respect to any Defaulted Obligation in accordance with the provisions hereof or (ii) actions by the Collateral Manager under the Collateral Management Agreement and in conformity with this Indenture or as otherwise required hereby (including consenting to any amendment or modification to the documents governing any Portfolio Asset); provided, however, that the Issuer shall not be required to take any action following the release of any Obligor under any Portfolio Asset to the extent such release is completed pursuant to the Underlying Instruments related to such Portfolio Asset in accordance with their terms.

(b) The Issuer may, with the prior written consent of each Holder (except in the case of the Collateral Management Agreement and the Collateral Administration Agreement, in which case no consent shall be required), contract with other Persons, including the Collateral Manager, the Trustee and the Collateral Administrator for the performance of actions and obligations to be performed by the Issuer hereunder and under the Collateral Management Agreement by such Persons. Notwithstanding any such arrangement, the Issuer shall remain primarily liable with respect thereto. In the event of such contract, the performance of such actions and obligations by such Persons shall be deemed to be performance of such actions and obligations by the Issuer; and the Issuer will punctually perform, and use their best efforts to cause the Collateral Manager, the Trustee, the Collateral Administrator and such other Person to perform, all of their obligations and agreements contained in the Collateral Management Agreement, this Indenture, the Collateral Administration Agreement or any such other agreement.

7.8 Negative Covenants

(a) The Issuer will not at any time from and after the Closing Date:

(i) sell, transfer, exchange or otherwise dispose of, or pledge, mortgage, hypothecate or otherwise encumber (or permit such to occur or suffer such to exist), any part of the Collateral, except as expressly permitted by this Indenture;

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(ii) claim any credit on, make any deduction from, or dispute the enforceability of payment of the principal or interest payable (or any other amount) in respect of the Notes (other than amounts withheld or deducted in accordance with the Code or any applicable laws of the Cayman Islands or other applicable jurisdiction);

(iii) incur or assume or guarantee any Indebtedness, other than the Notes, this Indenture and the transactions contemplated hereby;

(iv) issue any additional class of securities or any additional membership interests;

(v) permit the validity or effectiveness of this Indenture or any Support Document or any Grant hereunder or thereunder to be impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to this Indenture or the Notes except as may be permitted hereby;

(vi) except as permitted by this Indenture, take any action that would permit the lien of this Indenture not to constitute a valid first priority security interest in the Collateral;

(vii) amend the Collateral Management Agreement (except pursuant to the terms thereof and Article 15 of this Indenture) or the Issuer Contribution Agreement;

(viii) dissolve or liquidate in whole or in part, except as permitted hereunder or required by applicable law;

(ix) other than as otherwise expressly provided herein, pay any distributions other than in accordance with the Priority of Payments;

(x) permit the formation of any subsidiaries;

(xi) conduct business under any name other than its own;

(xii) have any employees (other than directors to the extent they are employees);

(xiii) sell, transfer, exchange or otherwise dispose of Collateral, or enter into an agreement or commitment to do so or enter into or engage in any business with respect to any part of the Collateral, except as expressly permitted by this Indenture;

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(xiv) apply proceeds of the issuance of Notes for any purpose other than as described in Section 3.3; or

(xv) enter into any Hedge Agreement.

(b) The Issuer will not be party to any agreements without including customary “non-petition” and “limited recourse” provisions therein (and shall not amend or eliminate such provisions in any agreement to which it is party), except for any agreements related to the purchase and sale of any Portfolio Assets or Eligible Investments which contain customary purchase or sale terms or which are documented using customary loan trading documentation.

(c) The Issuer may not acquire any of the Notes (including any Notes surrendered or abandoned).

(d) The Issuer shall not hold Cash in any accounts other than the Accounts and shall not permit any Interest Collections or Principal Collections to be paid into any account except the Collection Account. In the event that any Interest Collections or Principal Collections are paid to any account other than the Collection Account, the Issuer shall procure that such funds are promptly transferred to the Collection Account.

(e) In the event that, for any reason, the Issuer receives Cash denominated in a Non-USD Currency (from any source), the Issuer shall promptly exchange (or cause the Trustee to exchange at the spot rate of exchange customarily offered by the Trustee for such purposes) such Cash into Dollars and credit such USD funds to the appropriate Account.

7.9 Statement as to Compliance

On or before May 31 in each calendar year commencing in 2014, or immediately if there has been a Default under this Indenture, the Issuer shall deliver to the Trustee (to be forwarded by the Trustee to the Collateral Manager and each Holder making a written request therefor) a certificate of the Issuer that, having made reasonable inquiries of the Collateral Manager, and to the best of the knowledge, information and belief of the Issuer, there did not exist, as at a date not more than five days prior to the date of the certificate, nor had there existed at any time prior thereto since the date of the last certificate (if any), any Default hereunder or, if such Default did then exist or had existed, specifying the same and the nature and status thereof, including actions undertaken to remedy the same, and that the Issuer has complied with all of its obligations under this Indenture or, if such is not the case, specifying those obligations with which it has not complied.

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7.10 Issuer May Not Consolidate Except on Certain Terms

The Issuer will not consolidate or merge with or into any other Person or transfer or convey all or substantially all of its assets to any Person, in each case without the prior consent of each Holder.

7.11 Successor Substituted

Upon any consolidation or merger, or transfer or conveyance of all or substantially all of the assets of the Issuer, in accordance with Section 7.10 in which the Issuer is not the surviving corporation, the successor entity shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein. In the event of any such consolidation, merger, transfer or conveyance, the Person named as the “Issuer” in the first paragraph of this Indenture or any successor which shall theretofore have become such in the manner prescribed in this Article 7 may be dissolved, wound up and liquidated at any time thereafter, and such Person thereafter shall be released from its liabilities as obligor and maker on all the Notes and from its obligations under this Indenture.

7.12 No Other Business

The Issuer shall not have any employees and shall not engage in any business or activity other than issuing, paying and redeeming the Notes issued pursuant to this Indenture and the Revolving Credit Note Agreement, acquiring, holding, selling, exchanging, redeeming and pledging, solely for its own account, Portfolio Assets, Eligible Investments and any other Collateral, and other activities incidental thereto, including entering into, and performing its obligations under, the Transaction Documents to which it is a party and other documents contemplated thereby and/or incidental thereto. The Issuer shall not hold itself out as originating loans, lending funds or securities, making a market in loans or other assets or selling loans or other assets to customers or as willing to enter into, assume, offset, assign or otherwise terminate positions in derivative financial instruments with customers. The Issuer shall not hold itself out as a derivatives dealer willing to enter into either side of, or to offer to enter into, assume, offset, assign or otherwise terminate positions in (i) interest rate, currency, equity, or commodity swaps or caps or (ii) derivative financial instruments (including options, forward contracts, short positions and similar instruments) in any commodity, currency, share of stock, partnership or trust, note, bond, debenture or other evidence of indebtedness, swap or cap. The Issuer shall not amend, or permit the amendment of, its Constitutive Documents without prior written consent of the Trustee and each Holder (unless such amendment could not reasonably be expected to materially adversely affect any of the Issuer, the Holders, the Collateral or the interests of the Trustee and Issuer therein and notice thereof has been given to the Trustee and the Valuation Agent).

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7.13 Acquisition of Portfolio Assets

No Portfolio Asset may be acquired by the Issuer at any time unless (a) such Portfolio Asset, and the acquisition thereof, complies with the requirements of Section 12.2 and (b) the purchase of such Portfolio Asset is financed with (i) proceeds of the issuance of the Notes or any additional issuance pursuant to Section 2.13 or (ii) Principal Collections.

7.14 Reporting

At any time when the Issuer is not subject to Section 13 or 15(d) of the Exchange Act and are not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request of a Holder or beneficial owner of a Note, the Issuer shall promptly furnish or cause to be furnished Rule 144A Information to such Holder or beneficial owner, to a prospective purchaser of such Note designated by such Holder or beneficial owner, or to the Trustee for delivery to such Holder or beneficial owner or a prospective purchaser designated by such Holder or beneficial owner, as the case may be, in order to permit compliance by such Holder or beneficial owner with Rule 144A under the Securities Act in connection with the resale of such Note. “Rule 144A Information” shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto).

7.15 Certain Tax Matters

(a) The Issuer represents that (i) it is treated as an entity disregarded from its owner, the Sole Shareholder, for U.S. Federal income tax purposes and (ii) the Sole Shareholder is treated as a U.S. person not classified as a corporation for U.S. Federal tax purposes. The Issuer shall not take any action, and shall not permit or cause the Sole Shareholder to take any action, that would result in the Issuer being classified other than as a disregarded entity for U.S. Federal tax purposes.

(b) The Issuer will treat each purchase of Portfolio Assets as a “purchase” for tax accounting and reporting purposes.

(c) The Issuer shall file, or cause to be filed, any tax returns, including information tax returns, required by any governmental authority.

(d) Notwithstanding anything herein to the contrary, the Collateral Manager, the Issuer, the Trustee, the Collateral Administrator, the Placement Agent, the Holders and beneficial owners of the Notes and each employee, representative or other agent of those Persons, may disclose to any and all Persons, without limitation of any kind, the U.S. tax treatment and tax structure of the transactions contemplated by this Indenture and all materials of any kind, including opinions or other tax analyses, that are provided to those Persons. This authorization to disclose the U.S. tax treatment and tax structure does not permit disclosure of information identifying the Collateral Manager, the Issuer, the Trustee, the Collateral Administrator, the Placement Agent, the Holders or any other party to

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the transactions contemplated by this Indenture, the issuance and sale of the Notes or the pricing (except to the extent such information is relevant to U.S. tax structure or tax treatment of such transactions).

(e) Each of the Collateral Manager, the Issuer, the Trustee, the Collateral Administrator, the Holders and each beneficial owner of the Notes agrees, for U.S. federal income tax purposes, (i) not to treat the Notes as a partnership interest or any other equity interest in the Issuer, (ii) to treat the Issuer as the beneficial owner of the Portfolio Assets; and to report the investment by the Holders in the Notes consistently with such treatment on all tax and information returns and other written communications with any taxing authority.

(f) The Issuer shall not be obligated to pay any additional amounts to Holders or beneficial owners of Notes in respect of any Portfolio Asset as a result of deduction or withholding by an Obligor on such Portfolio Asset for or on account of any present or future taxes, duties, assessments or governmental charges in respect of such Portfolio Asset.

7.16 Side Letter Security Agreement

The Issuer shall, at the direction of the Majority Noteholders, exercise its rights and remedies under the Side Letter Security Agreement in accordance with their instructions.

8. SUPPLEMENTAL INDENTURES

8.1 Supplemental Indentures Without Consent of Holders of Notes

(a) Without the consent of any Holders (except any consent required by clause (iii) or (vi) below), but only with the prior written consent of the Collateral Manager, the Issuer and the Trustee, at any time and from time to time may, with an Opinion of Counsel (which may be based on an Officer’s certificate provided by the Issuer or the Collateral Manager on behalf of the Issuer) being provided to the Issuer or the Trustee that the Holders of the Notes would not be materially and adversely affected thereby (except in the case of clause (iii) or (vi) below for which no such Opinion of Counsel shall be required), enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:

(i) to evidence the succession of another Person to the Issuer and the assumption by any such successor Person of the covenants of the Issuer herein and in the Notes;

(ii) to add to the covenants of the Issuer or the Trustee for the benefit of the Secured Parties;

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(iii) to convey, transfer, assign, mortgage or pledge any property to or with the Trustee or add to the conditions, limitations or restrictions on the authorized amount, terms and purposes of the issue, authentication and delivery of the Notes, provided that, if the Holders would be materially and adversely affected by such supplemental indenture entered into pursuant to this clause (iii), the consent to such supplemental indenture has been obtained from each Holder;

(iv) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Sections 6.9, 6.10 and 6.12 hereof;

(v) to correct or amplify the description of any property at any time subject to the lien of this Indenture, or to better assure, convey and confirm unto the Trustee any property subject or required to be subjected to the lien of this Indenture (including, without limitation, any and all actions necessary or desirable as a result of changes in law or regulations, whether pursuant to Section 7.5 or otherwise) or to subject to the lien of this Indenture any additional property;

(vi) to modify the restrictions on and procedures for resales and other transfers of Notes to reflect any changes in ERISA or other applicable law or regulation (or the interpretation thereof) or to enable the Issuer to rely upon any exemption from registration under the Securities Act or the Investment Company Act or to remove restrictions on resale and transfer to the extent not required thereunder, provided that, if the Holders of any Class would be materially and adversely affected by such supplemental indenture entered into pursuant to this clause (vi), the consent to such supplemental indenture has been obtained from each Holder of such Class;

(vii) otherwise to correct any inconsistency or cure any ambiguity, omission or manifest errors in this Indenture;

(viii) to take any action necessary or advisable to prevent the Issuer or the Trustee from becoming subject to (or otherwise reducing) withholding or other taxes, fees or assessments, including by achieving FATCA Compliance;

(ix) to change the name of the Issuer in connection with the change in name or identity of the Collateral Manager or as otherwise required pursuant to a contractual obligation or to avoid the use of a trade name or trademark in respect of which the Issuer does not have a license;

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(x) to amend, modify or otherwise accommodate changes to this Indenture to comply with any rule or regulation enacted by regulatory agencies of the United States federal government after the Closing Date that are applicable to the Notes or the transactions contemplated by this Indenture; or

(xi) to make any modification or amendment determined by the Issuer or the Collateral Manager (in consultation with legal counsel of national reputation experienced in such matters) as necessary or advisable (A) for any Class of Notes to not be considered an “ownership interest” as defined for purposes of the Volcker Rule or (B) for the Issuer to not otherwise be considered a “covered fund” as defined for purposes of the Volcker Rule, in each case so long (1) as any such modification or amendment would not have a material adverse effect on any Class of Notes, as evidenced by an Opinion of Counsel (which may be supported as to factual (including financial and capital markets) matters by any relevant certificates and other documents necessary or advisable in the judgment of the counsel delivering the opinion), and (2) such modification or amendment is approved in writing by a supermajority (662/3% based on the aggregate principal amount of Notes held by Section 13 Banking Entities) of Holders that are Section 13 Banking Entities (voting as a single class).

8.2 Supplemental Indentures With Consent of Holders of Notes

The Trustee and the Issuer shall not execute any indenture supplemental hereto to add any provisions to, or change in any manner or eliminate any of the provisions of, this Indenture or modify in any manner the rights of the Holders of any Class under this Indenture without the written consent of each Holder of such Class and the Collateral Manager, except as otherwise permitted under Section 8.1.

8.3 Execution of Supplemental Indentures

(a) The Trustee shall join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise, except to the extent required by law.

(b) With respect to any supplemental indenture permitted by Section 8.1, the Trustee and the Issuer shall be entitled to receive and conclusively rely upon an Opinion of Counsel (stating that the supplemental indenture is authorized or permitted by the Indenture and all conditions precedent have been satisfied) as to matters of law (which does not include whether or not the Holders of any Class would be materially and adversely affected by a supplemental indenture), which may be supported as to factual (including financial and capital markets) matters by any

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relevant certificates and other documents necessary or advisable in the judgment of counsel delivering such Opinion of Counsel) or, with respect to matters of fact (including whether or not the Holders of any Class would be materially and adversely affected by a supplemental indenture), a certificate of the Issuer, the Collateral Manager, any investment banking firm or other Independent expert familiar with the market for the Notes pursuant to Section 8.4; provided that, for any supplemental indenture (other than any supplemental indenture entered into pursuant to sub-clauses (iii) and (vi) of Section 8.1(a) for which the consent of the Holders of the Notes would not otherwise be required except as expressly set forth in such clauses) if Holders of at least 25% of the Outstanding Notes of any Class have provided notice to the Trustee at least one Business Day prior to the execution of such supplemental indenture that the Holders of such Class would be materially and adversely affected thereby, the Trustee shall not be entitled so to rely upon a certificate of the Issuer, the Collateral Manager, any investment banking firm or other Independent expert as to whether or not the Holders of such Class would be materially and adversely affected by such supplemental indenture and the Trustee shall not enter into such supplemental indenture without the prior written consent of each Holder of such Class. Such determination shall be conclusive and binding on all present and future Holders. In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article 8 or the modifications thereby of the trusts created by this Indenture, the Trustee and the Issuer shall be entitled to receive, and (subject to Sections 6.1 and 6.3) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and that all conditions precedent thereto have been satisfied. Neither the Trustee nor the Issuer shall be liable for any reliance made in good faith upon such an Opinion of Counsel or a certificate of the Issuer, the Collateral Manager, any investment banking firm or other Independent expert pursuant to Section 8.4.

(c) At the cost of the Issuer, for so long as any Notes shall remain Outstanding, not later than 15 Business Days prior to the execution of any proposed supplemental indenture pursuant to Section 8.1, the Trustee shall deliver to the Collateral Manager, the Revolving Credit Note Agent, the Collateral Administrator and the Holders a notice attaching a copy of such supplemental indenture and indicating the proposed date of execution of such supplemental indenture. Following such delivery by the Trustee, if any changes are made to such supplemental indenture other than to correct typographical errors or to adjust formatting, then at the cost of the Issuer, for so long as any Notes shall remain Outstanding, not later than 5 Business Days prior to the execution of such proposed supplemental indenture (provided that the execution of such proposed supplemental indenture shall not in any case occur earlier than the date 15 Business Days after the initial distribution of such proposed supplemental indenture pursuant to the first sentence of this Section 8.3(c)), the Trustee shall deliver to the Collateral Manager, the Revolving Credit Note Agent, the Collateral Administrator and the Holders a copy of such

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supplemental indenture as revised, indicating the changes that were made. At the cost of the Issuer, the Trustee shall provide to the Holders a copy of the executed supplemental indenture after its execution. Any failure of the Trustee to publish or deliver such copy of the executed supplemental indenture shall not in any way impair or affect the validity of any such supplemental indenture.

(d) It shall not be necessary for any consent or Act of any Holders of Notes to approve the particular form of any proposed supplemental indenture, but it shall be sufficient, if the consent of any such Holders to such proposed supplemental indenture is required, that such Act or consent shall approve the substance thereof.

(e) The Issuer agrees that it will not permit to become effective any supplement or modification to this Indenture which would (i) increase the duties or liabilities of, reduce or eliminate any right or privilege of (including as a result of an effect on the amount or priority of any fees or other amounts payable to the Collateral Manager), or adversely change the economic consequences to, the Collateral Manager, (ii) modify the restrictions on the Sales of Portfolio Assets or (iii) expand or restrict the Collateral Manager’s discretion, and the Collateral Manager shall not be bound thereby unless the Collateral Manager shall have consented in advance thereto in writing.

8.4 Determination of Effect on Holders

(a) Unless notified prior to the execution of a supplemental indenture by Holders of at least 25% of the Outstanding Notes of any Class that the Holders of the Notes of such Class would be materially and adversely affected as set forth in Section 8.3(b), the determination of whether any Holder is materially adversely affected by any proposed supplemental indenture under this Article 8 shall be made based on a certificate of any of the Issuer, the Collateral Manager, any investment banking firm or other Independent expert familiar with the market for the Notes as to the economic effect of the proposed supplemental indenture. Such determination shall be conclusive and binding on all present and future Holders.

(b) The Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise, except to the extent required by law.

(c) The Trustee shall not be liable for any such determination made in good faith and in reliance upon any certificate referred to in Section 8.4(a), if applicable, and an Opinion of Counsel delivered to the Trustee as described in Section 8.3.

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8.5 Effect of Supplemental Indentures

Upon the execution of any supplemental indenture under this Article 8, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore and thereafter authenticated and delivered hereunder shall be bound thereby.

8.6 Reference in Notes to Supplemental Indentures

Notes authenticated and delivered, including as part of a transfer, exchange or replacement pursuant to Article 2 of Notes originally issued hereunder, after the execution of any supplemental indenture pursuant to this Article 8 may, and if required by the Issuer shall, bear a notice in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Issuer shall so determine, new Notes, so modified as to conform in the opinion of the Trustee and the Issuer to any such supplemental indenture, may be prepared and executed by the Issuer and, upon Issuer Order, authenticated and delivered by the Trustee in exchange for Outstanding Notes.

9. [RESERVED]

10. ACCOUNTS, ACCOUNTINGS AND RELEASES

10.1 Collection of Cash

Except as otherwise expressly provided herein, the Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all Cash and other property payable to or receivable by the Trustee pursuant to this Indenture, including all payments due on the Collateral, in accordance with the terms and conditions of such Collateral. The Trustee shall segregate and hold all such Cash and property received by it in trust for the Holders of the Notes and shall apply it as provided in this Indenture. Each Account shall be established and maintained with (a) a Federal or state-chartered depository institution rated (1) at least “A-1” by S&P (or at least “A+” by S&P if such institution has no short-term rating) and if such institution’s rating falls below “A-1” by S&P (or below “A+” by S&P if such institution has no short-term rating), the assets held in such Account shall be moved within 60 calendar days to another institution that is rated at least “A-1” by S&P (or at least “A+” by S&P if such institution has no short-term rating) and (2) at least “P-1” by Moody’s (or at least “A1” by Moody’s if such institution has no short-term rating) and if such institution’s rating falls below “P-1” by Moody’s (or below “A1” by Moody’s if such institution has no short-term rating), the assets held in such Account shall be moved within 60 calendar days to another institution that is rated at least “P-1” by Moody’s (or at least “A1” by Moody’s if such institution has no short-term rating) or (b) in segregated securities accounts with the corporate trust department of a Federal or state-chartered deposit institution subject to regulations regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal Regulation Section 9.10(b). Such institution shall have a combined capital and surplus of at least U.S.$200,000,000. All Cash deposited in the

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Accounts shall be invested only in Eligible Investments or Portfolio Assets in accordance with the terms of this Indenture. To avoid the consolidation of the Collateral of the Issuer with the general assets of the Bank under any circumstances, the Trustee shall comply, and shall cause the Custodian to comply, with all law applicable to it as a national bank with trust powers holding segregated trust assets in a fiduciary capacity; provided that the foregoing shall not be construed to prevent the Trustee or Custodian from investing the Collateral of the Issuer in Eligible Investments described in clause (ii) of the definition thereof that are obligations of the Bank.

10.2 Collection Account

(a) In accordance with this Indenture and the Issuer Account Control Agreement, the Trustee shall, prior to the Closing Date, cause to be established by the Custodian two segregated securities accounts, one of which will be designated the “Interest Collection Subaccount” and one of which will be designated the “Principal Collection Subaccount” (and which together will comprise the Collection Account), each in the name of the Issuer, subject to the security interest of State Street Bank and Trust Company, as Trustee, for the benefit of the Secured Parties and each of which shall be maintained with the Custodian in accordance with the Issuer Account Control Agreement. The Trustee shall from time to time deposit into the Interest Collection Subaccount, in addition to the deposits required pursuant to Section 10.4(a), immediately upon receipt thereof or upon transfer from the Expense Account or Payment Account, (i) all proceeds received from the disposition of any Collateral to the extent such proceeds constitute “Interest Collections” and (ii) all other Interest Collections. The Trustee shall deposit immediately upon receipt thereof all other amounts remitted to the Collection Account into the Principal Collection Subaccount, including in addition to the deposits required pursuant to Section 10.4(a), all Principal Collections (unless simultaneously reinvested in additional Portfolio Assets in accordance with Section 10.2(c) and Article 12 or in Eligible Investments). The Issuer may deposit into the Principal Collection Subaccount for the benefit of the Secured Parties, in addition to any amount required hereunder to be deposited therein, Cash received from time to time from any Class A-R Noteholder as a capital contribution to the Issuer, and such deposits shall be designated as Principal Collections. All Cash deposited from time to time in the Collection Account pursuant to this Indenture shall be held by the Trustee as part of the Collateral and shall be applied to the purposes herein provided. Subject to Section 10.2(c), amounts in the Collection Account shall be reinvested pursuant to Section 10.4(a).

(b) The Trustee, within one Business Day after receipt of any distribution or other proceeds in respect of the Collateral which are not Cash, shall so notify the Issuer and the Valuation Agent, and the Issuer shall use its commercially reasonable efforts to, within five Business Days after receipt of such notice from the Trustee (or as soon as practicable thereafter), sell such distribution or other proceeds for Cash in an arm’s length transaction and deposit the proceeds thereof in the Collection Account; provided that the Issuer need not be required to sell such

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distributions or other proceeds if it delivers an Issuer Order or an Officer’s certificate to the Trustee and the Valuation Agent certifying that such distributions or other proceeds constitute (i) Portfolio Assets that would have satisfied the requirements of Section 12.2 on the date of receipt thereof had they been acquired directly by the Issuer or (ii) Eligible Investments.

(c) The Collateral Manager on behalf of the Issuer may by Issuer Order direct the Trustee to, and upon receipt of such Issuer Order the Trustee shall, withdraw funds on deposit in the Principal Collection Subaccount representing Principal Collections (together with Interest Collections but only to the extent used to pay for accrued interest or capitalized interest on an additional Portfolio Asset) and reinvest such funds in additional Portfolio Assets or exercise a warrant held in the Collateral, in each case in accordance with the requirements of Article 12 and such Issuer Order.

(d) At any time, the Collateral Manager on behalf of the Issuer may by Issuer Order direct the Trustee to, and upon receipt of such Issuer Order the Trustee shall, withdraw funds on deposit in the Principal Collection Subaccount representing Principal Collections and deposit such funds in the Delayed-Draw/Committed Proceeds Account to the extent necessary for the Issuer to comply with funding requirements on Delayed-Draw Loans and Committed Proceeds Assets.

(e) The Collateral Manager on behalf of the Issuer may by Issuer Order direct the Trustee to, and upon receipt of such Issuer Order the Trustee shall, pay from amounts on deposit in the Principal Collection Subaccount on any Business Day during any Monthly Period any amount required to exercise a warrant or right to acquire securities held in the Collateral in accordance with the requirements of Article 12 and such Issuer Order.

(f) The Trustee shall transfer to the Payment Account, from the Collection Account, for application pursuant to Section 11.1(a), no later than the close of business on the Business Day immediately preceding each Payment Date, the amount set forth to be so transferred in the Payment Date Report for such Payment Date.

(g) The Trustee shall, at the direction of the Issuer (or the Collateral Manager on behalf of the Issuer) and pursuant to and in accordance with Section 2.5(e) of the Revolving Credit Note Agreement, be permitted to transfer the amount of any permitted repayments under the Revolving Credit Note Agreement from the Principal Collection Subaccount to the relevant Class A-R Noteholder’s Class A-R Prepayment Account (or to such account or accounts as such Class A-R Noteholder shall otherwise direct the Trustee in writing).

10.3 Transaction Accounts

(a) Payment Account. In accordance with this Indenture and the Issuer Account Control Agreement, the Trustee shall, prior to the Closing Date, cause to be

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established by the Custodian a single, segregated non-interest bearing securities account in the name of the Issuer, subject to the security interest of State Street Bank and Trust Company, as Trustee, for the benefit of the Secured Parties, which shall be designated as the Payment Account, which shall be maintained with the Custodian in accordance with the Issuer Account Control Agreement. The only permitted withdrawal from or application of funds on deposit in, or otherwise to the credit of, the Payment Account shall be to pay amounts due and payable on the Notes in accordance with their terms and the provisions of this Indenture. The Issuer shall not have any legal, equitable or beneficial interest in the Payment Account. Amounts in the Payment Account shall remain uninvested.

(b) Custodial Accounts. In accordance with this Indenture and the Issuer Account Control Agreement, the Trustee shall, prior to the Closing Date, cause to be established by the Custodian a single, segregated non-interest bearing securities account in the name of the Issuer, subject to the security interest of State Street Bank and Trust Company, as Trustee, for the benefit of the Secured Parties, which shall be designated as the Custodial Account, which shall be maintained with the Custodian in accordance with the Issuer Account Control Agreement. All Portfolio Assets shall be credited to the Custodial Account. The only permitted withdrawals from the Custodial Account shall be in accordance with the provisions of this Indenture. The Trustee agrees to give the Issuer immediate notice if (to the actual knowledge of a Trust Officer of the Trustee) the Custodial Account or any assets or securities on deposit therein, or otherwise to the credit of the Custodial Account, shall become subject to any writ, order, judgment, warrant of attachment, execution or similar process.

(c) Expense Account. In accordance with this Indenture and the Issuer Account Control Agreement, the Trustee shall, prior to the Closing Date, cause to be established by the Custodian a single, segregated non-interest bearing securities account in the name of the Issuer, subject to the security interest of State Street Bank and Trust Company, as Trustee, for the benefit of the Secured Parties, which shall be designated as the Expense Account, which shall be maintained with the Custodian in accordance with the Issuer Account Control Agreement. On the Closing Date, a portion of the proceeds of the Notes in an amount equal to U.S.$270,275 shall be deposited into the Expense Account for use pursuant to this Section 10.3(c). On any Business Day from and including the Closing Date, the Trustee shall apply funds from the Expense Account, as directed by the Collateral Manager, (A) to pay expenses of the Issuer incurred in connection with the establishment of the Issuer and the structuring and consummation of the Offering and the issuance of the Notes and (B) from time to time to pay accrued and unpaid Administrative Expenses of the Issuer. All funds on deposit in the Expense Account will be invested in Eligible Investments at the direction of the Collateral Manager. Any income earned on amounts deposited in the Expense Account will be deposited in the Expense Account upon receipt thereof. All amounts remaining on deposit in the Expense Account at the time when substantially all of the assets

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of the Issuer have been sold or otherwise disposed of will be deposited by the Trustee into the Principal Collection Subaccount for application as Principal Collections on the immediately succeeding Payment Date. If on any date the Trustee obtains knowledge (or is notified by the Collateral Manager or the Valuation Agent) that the aggregate Administrative Expenses payable at any time during a Monthly Period exceeds, or will exceed, the sum of Cash and Eligible Investments then credited to the Expense Account, the Trustee shall so inform the Collateral Manager, the Valuation Agent and the Sole Shareholder and the Sole Shareholder shall be required, pursuant to the Issuer Contribution Agreement and within one Business Day of such notification, to make a capital contribution to the Issuer in an amount at least equal to such shortfall and the Trustee shall credit any such contribution payment to the Expense Account.

In connection with the application of funds from the Expense Account to pay Administrative Expenses of the Issuer, as the case may be, in accordance with this Section 10.3(c), the Trustee shall remit such funds, to the extent available, as directed and designated in an Issuer Order (which may be in the form of standing instructions, including standing instructions to pay Administrative Expenses in such amounts on any Payment Date and to such entities as indicated in the Payment Date Report in respect of such Payment Date) delivered to the Trustee no later than the Business Day prior to the date of payment of such Administrative Expense.

(d) Delayed-Draw/Committed Proceeds Account. Upon the purchase of any Delayed-Draw Loan or Committed Proceeds Asset not listed on Schedule 1 hereto, funds in an amount equal to the sum of (i) the amounts required to fund the purchase of such Committed Proceeds Asset or (ii) the undrawn portion of any such Delayed-Draw Loan, as the case may be, shall be withdrawn from the Principal Collections Subaccount and deposited by the Trustee in a single, segregated non-interest bearing trust account established at the Custodian and held in the name of the Issuer subject to the security interest of the Trustee for the benefit of the Secured Parties (the Delayed Draw/Committed Proceeds Account). On the Closing Date, a portion of the proceeds of the Notes in an amount equal to U.S.$19,250,000 (being the aggregate amount equal to the sum of (i) the amounts required to fund the purchase of the Committed Proceeds Assets listed in Schedule 1 hereto and (ii) the undrawn portion of the Delayed-Draw Loans listed in Schedule 1 hereto) shall be deposited in the Delayed-Draw/Committed Proceeds Account.

Upon the purchase of any Delayed-Draw Loan or Committed Proceeds Asset, funds deposited in the Delayed Draw/Committed Proceeds Account in respect of any such Portfolio Asset will be treated as part of the purchase price therefor. Amounts on deposit in the Delayed Draw/Committed Proceeds Account will be invested in Eligible Investments selected by the Collateral Manager having stated maturities no later than the next Business Day immediately succeeding the date such Eligible Investment was acquired and earnings from all such investments will be deposited in the Interest Collection Subaccount as Interest Collections.

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Any funds in the Delayed Draw/Committed Proceeds Account (other than earnings from Eligible Investments therein) will be available solely to cover (i) with respect to any Delayed-Draw Loan, drawdowns thereunder and (ii) with respect to any Committed Proceeds Asset, the payment of the purchase price (and related acquisition costs, as applicable) therefor; provided that, on any date of determination, any excess of (A) the amounts on deposit in the Delayed Draw/Committed Proceeds Account over (B) the sum of (I) the aggregate unfunded funding obligations under all Delayed-Draw Loans (which excess may occur for any reason, including upon (i) the sale or maturity of a Delayed-Draw Loan, (ii) the occurrence of an event of default with respect to any such Delayed-Draw Loan and the termination of any commitment to fund obligations thereunder or (iii) any other event or circumstance which results in the irrevocable reduction of the undrawn commitments under such Delayed-Draw Loan) and (II) the aggregate amount required to fund the acquisition of the Committed Proceeds Assets pursuant to the terms of the Committed Proceeds Transactions, may be transferred by the Trustee (at the written direction of the Collateral Manager on behalf of the Issuer) from time to time as Principal Collections to the Principal Collection Subaccount.

(e) Class A-R Prepayment Account. If required to do so pursuant to the terms of the Revolving Credit Note Agreement, the Trustee shall cause to be established and maintained by the Custodian a single, segregated non-interest bearing securities account, which shall be designated as a Class A-R Prepayment Account, for each Class A-R Noteholder that elects from time to time to prepay (in whole or in part) its Remaining Unfunded Facility Commitment, which securities account shall be established in the name of the Trustee as Entitlement Holder in trust for the benefit of the Issuer and such Class A-R Noteholder. The Trustee shall deposit any amounts received from a Class A-R Noteholder to prepay (in whole or in part) its Remaining Unfunded Facility Commitment and all proceeds received from the issuance of such Class A-R Noteholder’s Class A-R Notes into such Class A-R Noteholder’s Class A-R Prepayment Account.

The Trustee shall, pursuant to the written directions of a Class A-R Noteholder, invest and reinvest funds standing to the credit of such Class A-R Noteholder’s Class A-R Prepayment Account in Eligible Investments.

Funds and other property on deposit in any Class A-R Prepayment Account shall only be withdrawn from such account, or paid or transferred to the relevant Class A-R Noteholder with respect to such account, pursuant to and in accordance with the Revolving Credit Note Agreement, and shall not be available to the Issuer for payments to any Secured Parties other than such Class A-R Noteholder.

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With respect to any Holder of Class A-R Notes that has deposited its Class A-R Commitment Amount in a Class A-R Prepayment Account pursuant to the Revolving Credit Note Agreement, on each Payment Date and without regard to the Priority of Payments, the Trustee shall pay directly to such Class A-R Noteholder any Eligible Investment Income received on Eligible Investments standing to the credit of the Class A-R Prepayment Account of such Holder during the preceding Due Period. Eligible Investment Income in a Class A-R Prepayment Account shall not be transferred to the Interest Collection Account or treated as Interest Proceeds. None of the Issuer or the Noteholders other than the related Holder of Class A-R Notes shall have any rights to the amounts in a Class A-R Prepayment Account except to satisfy the obligations of the related Holder under the Class A-R Notes to the Issuer.

The Class A-R Noteholder Prepayment Account and the income arising in such account shall be treated for U.S. Federal, state and local tax purposes as the property and the income of the Class A-R Noteholder.

10.4 Reinvestment of Funds in Accounts; Reports by Trustee

(a) By Issuer Order (which may be in the form of standing instructions), the Issuer (or the Collateral Manager on behalf of the Issuer) shall at all times direct the Trustee to, and, upon receipt of such Issuer Order, the Trustee shall, invest all funds on deposit in the Interest Collection Subaccount, the Principal Collection Subaccount and the Expense Account (other than Principal Collections reinvested in Portfolio Assets pursuant to Section 10.2(c)) as so directed in Eligible Investments having stated maturities no later than the Business Day preceding the next Payment Date (or such shorter maturities expressly provided herein). If prior to the occurrence of an Event of Default, the Issuer shall not have given any such investment directions, the Trustee shall seek instructions from the Collateral Manager within three Business Days after transfer of any funds to such accounts. If the Trustee does not thereafter receive written instructions from the Collateral Manager within five Business Days after transfer of such funds to such accounts, it shall invest and reinvest the funds held in such accounts, as fully as practicable, but only in one or more Eligible Investments of the type described in clause (ii) of the definition of “Eligible Investments” maturing no later than the Business Day immediately preceding the next Payment Date (or such shorter maturities expressly provided herein). If after the occurrence of an Event of Default, the Issuer shall not have given such investment directions to the Trustee for three consecutive days, the Trustee shall invest and reinvest such Cash as fully as practicable in Eligible Investments of the type described in clause (ii) of the definition of “Eligible Investments” maturing not later than the earlier of (i) 30 days after the date of such investment (unless putable at par to the Obligor thereof) or (ii) the Business Day immediately preceding the next Payment Date (or such shorter maturities expressly provided herein). Except to the extent expressly provided otherwise herein, all Eligible Investments shall be credited to the same Account (or subaccount, as the case may be) from which Cash was

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applied to acquire such Eligible Investment, all interest and other income from such Eligible Investment shall be deposited in such Account (or subaccount) and any gain realized from, or loss resulting from, such Eligible Investment shall be credited or charged to such Account (or subaccount). The Trustee shall not in any way be held liable by reason of any insufficiency of such accounts which results from any loss relating to any such investment, provided that nothing herein shall relieve the Bank of (i) its obligations or liabilities under any security or obligation issued by the Bank or any Affiliate thereof or (ii) liability for any loss resulting from gross negligence, willful misconduct or fraud on the part of the Bank or any Affiliate thereof.

(b) The Trustee agrees to give the Issuer immediate notice if any Account or any funds on deposit in any Account, or otherwise to the credit of an Account, shall become subject to any writ, order, judgment, warrant of attachment, execution or similar process.

(c) The Trustee shall supply, in a timely fashion, to the Issuer, the Valuation Agent, each Holder and the Collateral Manager any information regularly maintained by the Trustee that the Issuer, the Valuation Agent, each Holder or the Collateral Manager may from time to time reasonably request with respect to the Portfolio Assets, the Accounts and the other Collateral and provide any other requested information reasonably available to the Trustee by reason of its acting as Trustee hereunder and under the other Transaction Documents to which it is party and required to be provided by Section 10.5 or to permit the Collateral Manager to perform its obligations under the Collateral Management Agreement or the Issuer’s obligations hereunder that have been delegated to the Collateral Manager. The Trustee shall promptly forward to the Collateral Manager, each Holder and the Valuation Agent copies of notices and other writings received by it from the Obligor of any Portfolio Asset or from any Clearing Agency with respect to any Portfolio Asset which notices or writings advise the holders of such Portfolio Asset of any rights that the holders might have with respect thereto (including, without limitation, requests to vote with respect to amendments or waivers and notices of prepayments and redemptions) as well as all periodic financial reports received from such Obligor and Clearing Agencies with respect to such Obligor.

(d) In addition to any credit, withdrawal, transfer or other application of funds with respect to any Account set forth in Article 10, any credit, withdrawal, transfer or other application of funds with respect to any Account authorized elsewhere in this Indenture is hereby authorized.

(e) Any account established under this Indenture may include any number of subaccounts deemed necessary or advisable by the Trustee in the administration of the Accounts.

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10.5 Accountings

(a) Payment Date Report. Not later than the eighth Business Day after the last day of each Monthly Period and commencing in June 2013, the Issuer shall compile and make available (or cause the Collateral Administrator to compile and make available) to the Trustee, the Collateral Manager, the Valuation Agent and, upon written request therefor, to any Holder shown on the Note Registers, a monthly payment date report on a trade date basis (each such report a Payment Date Report). The first Payment Date Report shall be delivered in June 2013 as described above and shall be determined with respect to the Monthly Period ending in May 2013. The Payment Date Report for a calendar month shall contain the following information with respect to the Portfolio Assets and Eligible Investments included in the Collateral, and shall be determined as of the Determination Date for such calendar month:

(i) A schedule titled “Distributions” showing: (A) The Aggregate Outstanding Amount of the Class A Notes at the beginning of the Monthly Period and such amount as a percentage of the original Aggregate Outstanding Amount of the Notes; (B) the Outstanding Class A-R Funded Amount at the beginning of the Monthly Period; (C) Interest Collections payable on the next Payment Date; and (D) the amount of Outstanding Class A-R Funded Amount (if any) to be repaid on the next Payment Date.

(ii) The amounts payable pursuant to each clause of Section 11.1(a)(i), each clause of Section 11.1(a)(ii) and each clause of Section 11.1(a)(iii), as applicable, on the related Payment Date.

(iii) For the Collection Account:

(A) the Balance on deposit in the Collection Account at the end of the related Monthly Period;

(B) the amounts of (x) Interest Collections payable from the Interest Collection Subaccount and (y) Principal Collections payable from the Principal Collection Subaccount, in each case to the Payment Account in order to make payments pursuant to Section 11.1(a)(i) and Section 11.1(a)(ii) on the next Payment Date; and

(C) the Balance remaining in the Collection Account immediately after all payments and deposits to be made on such Payment Date.

Upon receipt of each Payment Date Report, the Trustee shall compare the information contained in such Payment Date Report to the information contained in its records with respect to the Collateral and shall, within three Business Days after receipt of such Payment Date Report, notify the Issuer, the Collateral Administrator, the Valuation Agent, the Revolving Credit Note Agent, and the

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Collateral Manager if the information contained in the Payment Date Report does not conform to the information maintained by the Trustee with respect to the Collateral. In the event that any discrepancy exists, the Trustee and the Issuer, or the Collateral Manager on behalf of the Issuer, shall attempt to resolve the discrepancy. If such discrepancy cannot be promptly resolved, the Trustee shall within five Business Days notify the Collateral Manager and the Valuation Agent, and the Valuation Agent shall review such Payment Date Report and the Trustee’s records to determine the cause of such discrepancy. If such review reveals an error in the Payment Date Report or the Trustee’s records, the Payment Date Report or the Trustee’s records shall be revised accordingly and, as so revised, shall be utilized in making all calculations pursuant to this Indenture and notice of any error in the Payment Date Report shall be sent as soon as practicable by the Issuer to all recipients of such report which may be accomplished by making a notation of such error in the subsequent Payment Date Report.

Each Payment Date Report shall constitute instructions to the Trustee to withdraw funds from the Payment Account and pay or transfer such amounts set forth in such Payment Date Report in the manner specified and in accordance with the priorities established in Section 11.1.

(b) [Reserved]

(c) Daily Reporting. Not later than 12:00 p.m. on each Business Day, the Issuer shall cause the Collateral Administrator to compile and make available to the Trustee, the Revolving Credit Note Agent, the Collateral Manager, the Valuation Agent and, upon written request therefor, any Holder shown on the Note Registers, a daily report in a form agreed to by the parties (each such report, a Daily Report). The Daily Report shall contain the following information:

(i) (x) The Aggregate Principal Balance of Portfolio Assets and (y) with respect to each Account, (I) the Aggregate Principal Balance of Eligible Investments and (II) the Cash balance thereof;

(ii) For each Account, the cash balance of, the Eligible Investments credited to, and each credit or debit (specifying the nature, source and amount);

(iii) A schedule showing the amount of Interest Collections received from the date of determination of the immediately preceding Payment Date Report for (A) Interest Collections from Portfolio Assets (with any Interest Collections consisting of Realized Gains reflected as a separate line item) and (B) Interest Collections from Eligible Investments (with any Interest Collections consisting of Realized Gains reflected as a separate line item);

(iv) A schedule titled “Distributions” showing: (A) The Aggregate Outstanding Amount of the Class A Notes and such amount as a percentage of the original Aggregate Outstanding Amount of the Notes;

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(B) (1) the Outstanding Class A-R Funded Amount, (2) the Outstanding Class A-R Funded Amount as a percentage of the original Aggregate Outstanding Amount of the Class A-R Notes, (3) the Class A-R Commitment Amount with respect to each Class A-R Noteholder and (4) the amount of the Remaining Unfunded Facility Commitment; and (C) the Interest Collections payable on the next Payment Date;

(v) Purchases, prepayments, and sales:

(A) The identity, Principal Balance (other than any accrued interest that was purchased with Principal Collections (but excluding any capitalized interest)), Principal Collections and Interest Collections received, and date for (X) each Portfolio Asset that was released for sale or disposition by the Issuer (and the identity and Principal Balance of each Portfolio Asset which the Issuer has entered into a commitment to sell or dispose) pursuant to Section 12.1 since the end of the last Monthly Period and (Y) each prepayment or redemption of a Portfolio Asset; and

(B) The identity, Principal Balance, Principal Collections and Interest Collections expended, and date for each Portfolio Asset that was purchased by the Issuer (and the identity and Purchase Price of each Portfolio Asset which the Issuer has entered into a commitment to purchase) since the end of the last Monthly Period.

(vi) Trade Date;

(vii) Settlement Date;

(viii) Trade Type;

(ix) Par Amount;

(x) Trade Price;

(xi) Counter Bank Name;

(xii) Trade Amount;

(xiii) Trade Quantity;

(xiv) Trade Settled;

(xv) Accrued Interest;

(xvi) Facility Original Amount Global;

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(xvii) Rate Type (fixed versus floating);

(xviii) Par Amount Traded;

(xix) Par Amount Settled;

(xx) Commitment Settled;

(xxi) Commitment Traded;

(xxii) Outstanding Settled;

(xxiii) Moody’s rating;

(xxiv) S&P rating;

(xxv) With respect to any Portfolio Asset not included in Schedule 1 hereto, the following information:

(A) The Obligor(s) thereon (including the issuer ticker, if any);

(B) The CUSIP or security identifier thereof;

(C) The Principal Balance thereof (other than any accrued interest that was purchased with Principal Collections (but excluding any capitalized interest)) with any capitalized interest reflected as a separate line item;

(D) The related interest rate or spread (including any applicable LIBOR floors), the related interest payment period (quarterly, semi-annually, etc.) and if interest may be capitalized;

(E) The stated maturity thereof;

(F) The related Moody’s Industry Classification;

(G) The related S&P Industry Classification;

(H) The country of domicile of the Portfolio Asset Obligor;

(I) An indication as to whether each such Portfolio Asset (1) is a Senior Secured Loan, (2) is a Second Lien Loan, (3) is a Defaulted Obligation, (4) is a DIP Loan, (5) is a Cov-Lite Loan; (6) pays interest less frequently than quarterly; (7) is an unsecured Loan; (8) is a Deferrable Security; and (9) is a Participation Interest (including the name of the applicable Selling Institution);

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(J) The date, if applicable, such Portfolio Asset has become a Defaulted Obligation;

(xxvi) Cash balance of each Account;

(d) Failure to Provide Accounting. If the Trustee is not the Collateral Administrator and shall not have received any accounting provided for in this Section 10.5 on the first Business Day after the date on which such accounting is due to the Trustee, the Trustee shall notify the Collateral Manager who shall use all reasonable efforts to obtain such accounting by the applicable Payment Date. To the extent the Collateral Manager is required to provide any information or reports pursuant to this Section 10.5 as a result of the failure of the Issuer to provide such information or reports, the Collateral Manager shall do so at its own expense.

(e) Required Content of Certain Reports. Each Payment Date Report or Daily Report sent to any Holder or beneficial owner of an interest in a Note shall contain, or be accompanied by, the following notices:

“The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”). The Notes may be beneficially owned only by Persons that (i) (A) are not U.S. persons (within the meaning of Regulation S under the Securities Act) who purchased their beneficial interest in an offshore transaction or (B) (I) are both (1) (x) a Qualified Purchaser, within the meaning of the Investment Company Act of 1940, as amended, and the rules thereunder or (y) an entity owned (or in the case of Qualified Purchasers, beneficially owned) exclusively by Qualified Purchasers and (2) (x) in the case of a Person that is an initial purchaser of the Notes, an Accredited Investor, within the meaning of Rule 105(a) under the Securities Act, or a Qualified Institutional Buyer or (y) in the case of a Person who becomes a beneficial owner subsequent to the date of the Indenture, a Qualified Institutional Buyer that is not a broker-dealer which owns and invests on a discretionary basis less than U.S.$25,000,000 in securities of issuers that are not affiliated persons of the dealer and is not a plan referred to in paragraph (a)(1)(i)(d) or (a)(1)(i)(e) of Rule 144A under the Securities Act or a trust fund referred to in paragraph (a)(1)(i)(f) of Rule 144A under the Securities Act that holds the assets of such a plan, if investment decisions with respect to the plan are made by beneficiaries of the plan, who is purchasing the Notes in reliance on the exemption from Securities Act registration provided by Rule 144A thereunder and (II) can make the representations set forth in Section 2.5 of the Indenture and, if applicable, the appropriate Exhibit B to the Indenture and (c) otherwise comply with the restrictions set forth in the applicable Note legends. In addition, (i) beneficial ownership interests in Rule 144A Global Notes may only be transferred to a Person that is both a Qualified Institutional Buyer and a Qualified Purchaser or a Person beneficially owned exclusively by Qualified Purchasers and (ii) Certificated Notes may only be owned by a Person that is both a Qualified Institutional Buyer and a Qualified Purchaser or a Person

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beneficially owned exclusively by a Person that is both a Qualified Institutional Buyer and a Qualified Purchaser, and, in each case, that can make the representations referred to in clause (b) of the preceding sentence. The Issuer has the right to compel any beneficial owner of a Note that does not meet the qualifications set forth in the preceding sentences to sell its interest in such Note, or may sell such interest on behalf of such owner, pursuant to Section 2.11 of the Indenture.

Each Holder receiving this report agrees to keep all non-public information herein confidential and not to use such information for any purpose other than its evaluation of its investment in the Notes, provided that any Holder may provide such information on a confidential basis to any prospective purchaser of such Holder’s Notes that is permitted by the terms of the Indenture to acquire such Holder’s Notes and that agrees to keep such information confidential in accordance with the terms of the Indenture.”

(f) Availability of Information. The Issuer (or the Trustee on behalf of the Issuer) may post the information contained in a Payment Date Report or Daily Report to a password-protected internet site accessible only to the Holders of the Notes and to the Collateral Manager.

10.6 Release of Collateral

(a) If no Event of Default has occurred and is continuing (in the case of sales pursuant to Sections 12.1(a) and (d)) and subject to Article 12, the Issuer may, by Issuer Order executed by an Authorized Representative of the Collateral Manager, delivered to the Trustee at least one Business Day prior to the settlement date for any sale of any Collateral certifying that the sale of such Collateral is being made in accordance with Section 12.1 hereof and such sale complies with all applicable requirements of Section 12.1, direct the Trustee to release or cause to be released such Collateral from the lien of this Indenture and, upon receipt of such Issuer Order, the Trustee shall deliver any such Collateral, if in physical form, duly endorsed to the broker or purchaser designated in such Issuer Order or, if such Collateral is a Clearing Corporation Security, cause an appropriate transfer thereof to be made, in each case against receipt of the sales price therefor as specified by the Collateral Manager in such Issuer Order; provided that the Trustee may deliver any such Collateral in physical form for examination in accordance with street delivery custom.

(b) Subject to the terms of this Indenture, the Trustee shall upon an Issuer Order (i) deliver any Collateral, and release or cause to be released such Collateral from the lien of this Indenture, which is set for any mandatory call or payment in full to the appropriate paying agent on or before the date set for such call or payment, in each case against receipt of the call or payment in full thereof and (ii) provide notice thereof to the Collateral Manager.

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(c) Upon receiving actual notice of any offer or any request for a waiver, consent, amendment or other modification with respect to any Portfolio Asset, the Trustee on behalf of the Issuer shall notify the Valuation Agent of any Portfolio Asset that is subject to a tender offer, voluntary redemption, exchange offer, conversion or other similar action (an Offer) or such request. Unless the Notes have been accelerated following an Event of Default, the Collateral Manager may direct (x) the Trustee to accept or participate in or decline or refuse to participate in such Offer and, in the case of acceptance or participation, to release from the lien of this Indenture such Portfolio Asset in accordance with the terms of the Offer against receipt of payment therefor, or (y) the Issuer or the Trustee to agree to or otherwise act with respect to such consent, waiver, amendment or modification; provided that in the absence of any such direction, the Trustee shall not respond or react to such Offer or request.

(d) As provided in Section 10.2(a), the Trustee shall deposit any proceeds received by it from the disposition of a Portfolio Asset in the applicable subaccount of the Collection Account, unless simultaneously applied to the purchase of additional Portfolio Assets or Eligible Investments as permitted under and in accordance with the requirements of this Article 10 and Article 12.

(e) The Trustee shall, upon receipt of an Issuer Order at such time as there are no Notes Outstanding and all obligations of the Issuer hereunder have been satisfied, release any remaining Collateral from the lien of this Indenture.

(f) Any security, Portfolio Asset or amounts that are released pursuant to Section 10.6(a), (b) or (c) shall be released from the lien of this Indenture.

10.7 Procedures Relating to the Establishment of Accounts Controlled by the Trustee

Notwithstanding anything else contained herein, the Trustee agrees that with respect to each of the Accounts, it will cause each Securities Intermediary establishing any such Account to enter into an account control agreement and, if the Securities Intermediary is the Bank, shall cause the Bank to comply with the provisions of such account control agreement. The Trustee shall have the right to cause the establishment of such subaccounts of any such Account as it deems necessary or appropriate for convenience of administration.

10.8 Section 3(c)(7) Procedures

(a) DTC Actions. The Issuer will direct (or cause its agent to direct) DTC to take the following steps in connection with the Global Notes (or such other appropriate steps regarding legends of restrictions on the Global Notes under Section 3(c)(7)

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of the Investment Company Act and Rule 144A as may be customary under DTC procedures at any given time):

(i) The Issuer will direct (or cause its agent to direct) DTC to include the marker “3c7” in the DTC 20-character security descriptor and the 48-character additional descriptor for the Global Notes.

(ii) The Issuer will direct (or cause its agent to direct) DTC to cause each physical deliver order ticket that is delivered by DTC to purchasers to contain the 20-character security descriptor. The Issuer will direct (or cause its agent to direct) DTC to cause each deliver order ticket that is delivered by DTC to purchasers in electronic form to contain a “3c7” indicator and a related user manual for participants. Such user manual will contain a description of the relevant restrictions imposed by Section 3(c)(7).

(iii) On or prior to the Closing Date, the Issuer will instruct (or cause its agent to direct) DTC to send a Section 3(c)(7) Notice to all DTC participants in connection with the offering of the Global Notes.

(iv) In addition to the obligations of the Note Registrars set forth in Section 2.5, the Issuer will from time to time (upon the request of the Trustee) make a request (or cause its agent to request) to DTC to deliver to the Issuer a list of all DTC participants holding an interest in the Global Notes.

(v) The Issuer will cause each CUSIP number obtained for a Global Note to have a fixed field containing “3c7” and “144A” indicators, as applicable, attached to such CUSIP number.

(b) Bloomberg Screens, Etc. The Issuer will from time to time request (or cause its agent to request) all third-party vendors to include on screens maintained by such vendors appropriate legends regarding restrictions on the Global Notes under Section 3(c)(7) of the Investment Company Act and Rule 144A.

11. APPLICATION OF CASH

11.1 Disbursements of Cash from Payment Account

(a) Notwithstanding any other provision in this Indenture, the Transaction Documents or the Notes, the Trustee shall disburse amounts transferred from the Collection Account to the Payment Account pursuant to Section 10.2(f) in accordance with the following (the Priority of Payments):

(i) On each Payment Date, unless an Enforcement Event has occurred, all amounts transferred to the Payment Account from the Interest Collection Subaccount shall be applied to the payment of accrued and unpaid interest on the Class A Notes and the Class A-R Notes pro rata according to the respective Aggregate Outstanding Amounts thereof.

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(ii) On the date of Maturity, unless an Enforcement Event has occurred, all amounts transferred to the Payment Account from the Principal Collection Subaccount shall be applied (A) first, pro rata, to the repayment of (1) principal of the Class A Notes until the Class A Notes have been paid in full; and (2) the Outstanding Class A-R Funded Amount until the Outstanding Class A-R Funded Amount has been reduced to zero and (B) second, all remaining Principal Collections shall be paid to the Issuer (in accordance with directions of the Issuer to the Trustee).

(iii) If a declaration of acceleration of the maturity of the Notes has occurred following an Event of Default and such declaration of acceleration has not been rescinded (an Enforcement Event), the Trustee shall apply proceeds in respect of the Portfolio Assets on each date or dates fixed by the Trustee (each such date to occur on a Payment Date), in accordance with clause (i) (in the case of Interest Collections) and clause (ii) (in the case of Principal Collections) of this Section 11.1(a).

(b) [Reserved].

12. SALE OF PORTFOLIO ASSETS; PURCHASE OF ADDITIONAL PORTFOLIO ASSETS

12.1 Sales of Portfolio Assets

(a) The Issuer will not sell or otherwise dispose of any Portfolio Asset unless each of the following conditions is satisfied:

(i) the Sole Shareholder is not in default of any payment obligation or contribution obligation owing under the Issuer Contribution Agreement (provided that this condition shall not apply to dispositions pursuant to Section 12.1(b) or Section 12.1(c)); and

(ii) such sale or other disposition is made solely for consideration consisting of cash and otherwise on arms’ length terms.

(b) Mandatory Dispositions.

(i) If (A) a “Bankruptcy”, “Failure to Pay” or “Restructuring” (each as defined in the ISDA 2003 Credit Derivatives Definitions) occurs with respect to any Portfolio Asset, or such Portfolio Asset becomes a Defaulted Obligation or (B) any Portfolio Asset fails to satisfy any Asset Eligibility Criteria on the applicable Portfolio Asset Trade Date (or is the subject of a breach of a representation, warranty or certification as to the characteristics thereof), then the Issuer shall, within 14 days after the occurrence of such event, dispose of such Portfolio Asset.

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(ii) If on any date of determination by the Valuation Agent the Adjusted Principal Balance of all Portfolio Assets forming part of the Portfolio that are Second Lien Loans exceeds 60% of the Aggregate Outstanding Amount of the Notes as of such date (provided that, for purposes of such determination, the Aggregate Outstanding Amount of the Class A-R Notes shall be the Outstanding Class A-R Funded Amount) (such event, a Second Lien Loan Excess), then the Issuer shall, within five Business Days after the occurrence of such event, dispose of one or more Second Lien Loans as necessary to remedy such Second Lien Loan Excess.

(c) Right of Valuation Agent to Direct Dispositions. If an Event of Default has occurred and is continuing, the Valuation Agent may require the Issuer to sell all or any portion of the Portfolio Assets in the Portfolio, and by notice (or multiple notices, so long as such Event of Default is continuing) to the Trustee (with a copy to the Issuer and Collateral Manager) may direct the Trustee to sell such Portfolio Assets as identified by the Valuation Agent in such notice, and the Trustee shall sell such Portfolio Assets as identified in such notice.

12.2 Acquisition of Portfolio Assets; Eligible Investments

(a) Acquisition of Portfolio Assets. The Issuer will not acquire any Portfolio Asset (other than a Portfolio Asset included in the Portfolio on the Closing Date) unless as of the Portfolio Asset Trade Date (x) such Portfolio Asset satisfies each of the Asset Eligibility Criteria and (y) each of the following conditions is satisfied:

(i) the acquisition of such Portfolio Asset and the purchase price thereof shall be on arm’s length terms;

(ii) the Sole Shareholder is not in default of any payment obligation or contribution obligation owing under the Issuer Contribution Agreement;

(iii) no Event of Default (or any event that, with the giving of notice or the lapse of time or both, would become an Event of Default) shall have occurred and be continuing immediately prior to or immediately after giving effect to such acquisition;

(iv) if such Portfolio Asset is to be acquired from the Sole Shareholder, the acquisition will not cause the aggregate of the Adjusted Principal Balance of all Portfolio Assets that the Issuer has acquired from the Sole Shareholder and forming part of the Portfolio (after giving effect to such proposed acquisition) to exceed 85% of the Aggregate Outstanding Amount of the Class A Notes as of such date; and

(v) if such Portfolio Asset to be acquired is a Second Lien Loan, the acquisition will not cause the aggregate of the Adjusted Principal Balances of all Portfolio Assets forming part of the Portfolio that are Second Lien

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Loans (measured as of the trade date of the proposed acquisition, and after giving effect to such proposed acquisition) to exceed 60% of the Aggregate Outstanding Amount of the Notes as of such date (provided that, for purposes of such determination, the Aggregate Outstanding Amount of the Class A-R Notes shall be the Outstanding Class A-R Funded Amount).

(b) Investment in Eligible Investments. Cash on deposit in any Account (other than the Payment Account) may be invested at any time in Eligible Investments in accordance with Article 10.

(c) Bonds. In no event shall the Issuer acquire any (i) Bonds or (ii) other security that is not a permissible collateral security for purposes of securing asset-backed securities that satisfy the loan securitization exclusion under Section 248.10(c)(8) of the Volcker Rule (12 C.F.R. Part 248).

12.3 Conditions Applicable to All Sale and Purchase Transactions

(a) Any transaction effected under this Article 12 or in connection with the acquisition of additional Portfolio Assets shall be conducted on an arm’s length basis and, if effected with a Person Affiliated with the Collateral Manager (or with an account or portfolio for which the Collateral Manager or any of its Affiliates serves as investment adviser), shall be effected in accordance with the requirements of Section 6(e) of the Collateral Management Agreement on terms no less favorable to the Issuer than would be the case if such Person were not so Affiliated, provided that the Trustee shall have no responsibility to oversee compliance with this clause (a) by the other parties.

(b) Upon any acquisition of a Portfolio Asset pursuant to this Article 12, all of the Issuer’s right, title and interest to the Collateral or Collateral shall be Granted to the Trustee pursuant to this Indenture, such Collateral or Collateral shall be Delivered to the Custodian, and, if applicable, the Custodian shall receive such Collateral or Collateral.

13. RELATIONS AMONG HOLDERS

13.1 Relations among Holders

(a) Each Holder agrees, for the benefit of all Holders, not to cause the filing of a petition in bankruptcy against the Issuer until the payment in full of all Notes (and any other debt obligations of the Issuer that have been rated upon issuance by any rating agency at the request of the Issuer) and the expiration of a period equal to one year and one day or, if longer, the applicable preference period then in effect plus one day, following such payment in full. In the event one or more Holders of Notes cause the filing of a petition in bankruptcy against the Issuer prior to the expiration of such period, any claim that such Holder(s) have against the Issuer or

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with respect to any Collateral (including any proceeds thereof) shall be fully subordinate in right of payment to the claims of each Holder of any Note that does not seek to cause any such filing, with such subordination being effective until each Note held by each Holder of any Note that does not seek to cause any such filing is paid in full in accordance with the Priority of Payments set forth herein (after giving effect to such subordination). The foregoing sentence shall constitute a “subordination agreement” within the meaning of Section 510(a) of the Bankruptcy Code, Title 11 of the United States Code, as amended.

13.2 Standard of Conduct

In exercising any of its or their voting rights, rights to direct and consent or any other rights as a Holder under this Indenture, a Holder or Holders shall not have any obligation or duty to any Person or to consider or take into account the interests of any Person and shall not be liable to any Person for any action taken by it or them or at its or their direction or any failure by it or them to act or to direct that an action be taken, without regard to whether such action or inaction benefits or adversely affects any Holder, the Issuer, or any other Person, except for any liability to which such Holder may be subject to the extent the same results from such Holder’s taking or directing an action, or failing to take or direct an action, in bad faith or in violation of the express terms of this Indenture.

14. MISCELLANEOUS

14.1 Form of Documents Delivered to Trustee

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an Officer of the Issuer or the Collateral Manager may and, where required by the Issuer shall, be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel (provided that such counsel is a nationally or internationally recognized and reputable law firm), unless such Officer knows, or should know that the certificate or opinion or representations with respect to the matters upon which such certificate or opinion is based are erroneous. Any such certificate of an Officer of the Issuer or the Collateral Manager or Opinion of Counsel may and, where required by the Issuer, shall be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, the Issuer, the Collateral Manager or any other Person, stating that the information with respect to such factual matters is in the possession of the Issuer, the Collateral Manager or such other Person, unless such Officer of the Issuer or the Collateral Manager or such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous.

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Any Opinion of Counsel may also be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Officer of the Collateral Manager, the Issuer, stating that the information with respect to such matters is in the possession of the Collateral Manager, the Issuer, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

Whenever in this Indenture it is provided that the absence of the occurrence and continuation of a Default or Event of Default is a condition precedent to the taking of any action by the Trustee at the request or direction of the Issuer, then notwithstanding that the satisfaction of such condition is a condition precedent to the Issuer’s right to make such request or direction, the Trustee shall be protected in acting in accordance with such request or direction if it does not have knowledge of the occurrence and continuation of such Default or Event of Default as provided in Section 6.1(d).

14.2 Acts of Holders

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in writing or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action or actions embodied therein and evidenced thereby) are herein sometimes referred to as the Act of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 14.2.

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Trustee deems sufficient.

(c) The principal amount or face amount, as the case may be, and registered numbers of Notes held by any Person, and the date of such Person’s holding the same, shall be proved by the applicable Note Register.

(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Notes shall bind the Holder (and any transferee thereof) of such and of every Note issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Trustee, the Issuer in reliance thereon, whether or not notation of such action is made upon such Note.

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14.3 Notices, etc., to Trustee, the Revolving Credit Note Agent, the Issuer, the Collateral Manager, the Collateral Administrator, the Paying Agent, the Valuation Agent

(a) Any request, demand, authorization, direction, instruction, order, notice, consent, waiver or Act of Holders or other documents provided or permitted by this Indenture to be made upon, given, delivered, e-mailed or furnished to, or filed with:

(i) the Trustee shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to and mailed, by certified mail, return receipt requested, hand delivered, sent by overnight courier service guaranteeing next day delivery, by electronic mail, or by facsimile in legible form, to the Trustee addressed to it at its applicable Corporate Trust Office, or at any other address previously furnished in writing to the other parties hereto by the Trustee, and executed by an Authorized Representative of the entity sending such request, demand, authorization, direction, instruction, order, notice, consent, waiver or other document, provided that any demand, authorization, direction, instruction, order, notice, consent, waiver or other document sent to State Street Bank and Trust Company, 1 Iron Street, Boston, MA 02210, Attention: Structured Trust & Analytics, Facsimile No. 617-937-4370, E-mail: statestreet CDO services@statestreet.com (in any capacity hereunder) will be deemed effective only upon receipt thereof;

(ii) the Revolving Credit Note Agent shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to and mailed, by certified mail, return receipt requested, hand delivered, sent by overnight courier service guaranteeing next day delivery, by electronic mail, or by facsimile in legible form, to the Revolving Credit Note Agent addressed to it at its applicable Corporate Trust Office, or at any other address previously furnished in writing to the other parties hereto by the Revolving Credit Note Agent, and executed by an Authorized Representative of the entity sending such request, demand, authorization, direction, instruction, order, notice, consent, waiver or other document, provided that any demand, authorization, direction, instruction, order, notice, consent, waiver or other document sent to State Street Bank and Trust Company, 1 Iron Street, Boston, MA 02210, Attention: Structured Trust & Analytics, Facsimile No. 617-937-4370, E-mail: statestreet CDO services@statestreet.com (in any capacity hereunder) will be deemed effective only upon receipt thereof;

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(iii) the Issuer shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by facsimile in legible form, to the Issuer addressed to it at c/o CM Finance Inc., 399 Park Avenue, 39^th Floor, New York, NY 10022, Attention: Stephon Barnes, Christopher E. Jansen and Michael C. Mauer, telephone no. (212) 380-5904, Facsmile no. (212) 380-5915, email: cjansen@cmfn-inc.com, mm@cmfn-inc.com, jagarwal@cmfn-inc.com and ops@cyruscapital.com or at any other address previously furnished in writing to the other parties hereto by the Issuer, as the case may be, with a copy to the Collateral Manager at its address below;

(iv) the Collateral Manager shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by facsimile in legible form, to the Collateral Manager addressed to it at 399 Park Avenue, 39^th Floor, New York, NY 10022, Attention: Stephon Barnes, Christopher E. Jansen and Michael C. Mauer, telephone no.: (212) 380-5904, Facsmile no. (212) 380-5915, email: cjansen@cmfn-inc.com, mm@cmfn-inc.com, jagarwal@cmfn-inc.com and ops@cyruscapital.com or at any other address previously furnished in writing to the parties hereto;

(v) the Bank shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by telecopy in legible form, addressed to State Street Bank and Trust Company, 1 Iron Street, Boston, MA 02210, Attention: Structured Trust & Analytics, Facsimile No. 617-937-4370, E-mail: statestreet CDO services@statestreet.com, or at any other address previously furnished in writing to the Issuer and the Trustee by the Bank;

(vi) the Collateral Administrator shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by facsimile in legible form, to the Collateral Administrator at State Street Bank and Trust Company, 1 Iron Street, Boston, MA 02210, Attention: Structured Trust & Analytics, Facsimile No. 617-937-4370, E-mail: statestreet CDO services@statestreet.com, or at any other address previously furnished in writing to the parties hereto; and

(vii) the Valuation Agent shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by telecopy in legible form, addressed to UBS AG, London Branch, Structured Funding, Attn: Ben Stewart, 1285 Avenue of the Americas, New York, NY 10019-6064, Tel: (203) 719-1611, E-mail: OL-Cyrus-TRS@ubs.com, or at any other address previously furnished in writing to the Issuer and the Trustee by UBS.

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(b) In the event that any provision in this Indenture calls for any notice or document to be delivered simultaneously to the Trustee and any other Person, the Trustee’s receipt of such notice or document shall entitle the Trustee to assume that such notice or document was delivered to such other Person unless otherwise expressly specified herein.

(c) Any reference herein to information being provided “in writing” shall be deemed to include each permitted method of delivery specified in sub clause (a) above.

14.4 Notices to Holders; Waiver

Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of any event,

(a) such notice shall be sufficiently given to Holders if in writing and mailed, first class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Note Registers (or, in the case of Holders of Global Notes, emailed to DTC for distribution to each Holder affected by such event), not earlier than the earliest date and not later than the latest date, prescribed for the giving of such notice; and

(b) such notice shall be in the English language.

Such notices will be deemed to have been given on the date of such mailing.

Notwithstanding clause (a) above, a Holder may give the Trustee a written notice that it is requesting that notices to it be given by electronic mail or by facsimile transmissions and stating the electronic mail address or facsimile number for such transmission. Thereafter, the Trustee shall give notices to such Holder by electronic mail or facsimile transmission, as so requested; provided that if such notice also requests that notices be given by mail, then such notice shall also be given by mail in accordance with clause (a) above.

The Trustee will deliver to the Holders any information or notice relating to this Indenture requested to be so delivered by at least 25% of the Holders (by Aggregate Outstanding Amount), at the expense of the Issuer. The Trustee may require the requesting Holders to comply with its standard verification policies in order to confirm Holder status.

Neither the failure to mail any notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. In case by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity or by reason of any other cause it shall be impracticable to give such notice by mail of any event to Holders when such notice is required to be given pursuant to any provision of this Indenture, then such notification to Holders as shall be made with the approval of the Trustee shall constitute a sufficient notification to such Holders for every purpose hereunder.

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Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

14.5 Effect of Headings and Table of Contents

The Article and Section headings herein (including those used in cross-references herein) and the Table of Contents are for convenience only and shall not affect the construction hereof.

14.6 Successors and Assigns

All covenants and agreements in this Indenture by the Issuer shall bind their respective successors and assigns, whether so expressed or not.

14.7 Severability

If any term, provision, covenant or condition of this Indenture or the Notes, or the application thereof to any party hereto or any circumstance, is held to be unenforceable, invalid or illegal (in whole or in part) for any reason (in any relevant jurisdiction), the remaining terms, provisions, covenants and conditions of this Indenture or the Notes, modified by the deletion of the unenforceable, invalid or illegal portion (in any relevant jurisdiction), will continue in full force and effect, and such unenforceability, invalidity, or illegality will not otherwise affect the enforceability, validity or legality of the remaining terms, provisions, covenants and conditions of this Indenture or the Notes, as the case may be, so long as this Indenture or the Notes, as the case may be, as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the deletion of such portion of this Indenture or the Notes, as the case may be, will not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.

14.8 Benefits of Indenture

The Valuation Agent and the Collateral Manager shall each be an express third party beneficiary of each agreement or obligation in this Indenture (including, without limitation, any right to make a determination, receive a notice, report or certificate, make a request, give consent or direct a disposition expressed as being exercisable by the Valuation Agent or Collateral Manager hereunder). Nothing in this Indenture or in the Notes, expressed or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the Holders, the Collateral Manager and the Valuation Agent, any benefit or any legal or equitable right, remedy or claim under this Indenture.

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14.9 Legal Holidays

In the event that the date of any Payment Date or Stated Maturity shall not be a Business Day, then notwithstanding any other provision of the Notes or this Indenture, payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the nominal date of any such Payment Date or Stated Maturity date, as the case may be, and except as provided in the definition of “Monthly Period”, no interest shall accrue on such payment for the period from and after any such nominal date.

14.10 Governing Law

This Indenture and the Notes shall be construed in accordance with, and this Indenture and the Notes and any matters arising out of or relating in any way whatsoever to this Indenture or the Notes (whether in contract, tort or otherwise), shall be governed by, the law of the State of New York.

14.11 Submission to Jurisdiction

With respect to any suit, action or proceedings relating to this Indenture or any matter between the parties arising under or in connection with this Indenture (Proceedings), each party irrevocably: (i) submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York sitting in the Borough of Manhattan and the United States District Court for the Southern District of New York, and any appellate court from any thereof; and (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Indenture precludes any of the parties from bringing Proceedings in any other jurisdiction, nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.

14.12 WAIVER OF JURY TRIAL

EACH OF THE ISSUER AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY. Each party hereby (i) certifies that no representative, agent or attorney of the other has represented, expressly or otherwise, that the other would not, in the event of a Proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it has been induced to enter into this Indenture by, among other things, the mutual waivers and certifications in this paragraph.

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14.13 Counterparts

This Indenture (and each amendment, modification and waiver in respect of this Indenture) may be executed and delivered in any number of counterparts (including by e-mail (PDF) or facsimile), each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument, and each of the parties hereto may execute this Indenture by signing any such counterpart. Delivery of an executed counterpart of this Indenture by e-mail (PDF) or facsimile shall be deemed to constitute due and sufficient delivery of such counterpart

14.14 Acts of Issuer

Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or performed by the Issuer shall be effective if given or performed by the Issuer or by the Collateral Manager on the Issuer’s behalf.

14.15 Confidential Information

(a) The Trustee and each Holder of Notes will maintain the confidentiality of all Confidential Information in accordance with procedures adopted by the Issuer or such Holder in good faith to protect Confidential Information of third parties delivered to such Person; provided that such Person may deliver or disclose Confidential Information to: (i) such Person’s directors, trustees, officers, employees, agents, attorneys and Affiliates who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 14.15 and to the extent such disclosure is reasonably required for the administration of this Indenture, the matters contemplated hereby or the investment represented by the Notes; (ii) such Person’s financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 14.15 and to the extent such disclosure is reasonably required for the administration of this Indenture, the matters contemplated hereby or the investment represented by the Notes; (iii) any other Holder; (iv) any Person of the type that would be, to such Person’s knowledge, permitted to acquire Notes in accordance with the requirements of Section 2.5 hereof to which such Person sells or offers to sell any such Note or any part thereof (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 14.15); (v) any other Person from which such former Person offers to purchase any security of the Issuer (if such other Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 14.15); (vi) any Federal or State or other regulatory, governmental or judicial authority having jurisdiction over such Person; (vii) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about the investment portfolio of such Person, reinsurers and liquidity and credit providers that agree to hold confidential the Confidential Information substantially in

Page 128

accordance with this Section 14.15; (viii) any other Person with the consent of the Issuer and the Collateral Manager; or (ix) any other Person to which such delivery or disclosure may be necessary or appropriate (A) to effect compliance with any law, rule, regulation or order applicable to such Person, (B) in response to any subpoena or other legal process upon prior notice to the Issuer (unless prohibited by applicable law, rule, order or decree or other requirement having the force of law), (C) in connection with any litigation to which such Person is a party upon prior notice to the Issuer (unless prohibited by applicable law, rule, order or decree or other requirement having the force of law) or (D) if an Event of Default has occurred and is continuing, to the extent such Person may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under the Notes or this Indenture or (E) in the Trustee’s or Collateral Administrator’s performance of its obligations under this Indenture, the Collateral Administration Agreement or other transaction document related thereto; and provided that delivery to Holders by the Trustee or the Collateral Administrator of any report of information required by the terms of this Indenture to be provided to Holders shall not be a violation of this Section 14.15. Each Holder of Notes agrees, except as set forth in clauses (vi), (vii) and (ix) above, that it shall use the Confidential Information for the sole purpose of making an investment in the Notes or administering its investment in the Notes; and that the Trustee and the Collateral Administrator shall neither be required nor authorized to disclose to Holders any Confidential Information in violation of this Section 14.15. In the event of any required disclosure of the Confidential Information by such Holder, such Holder agrees to use reasonable efforts to protect the confidentiality of the Confidential Information. Each Holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 14.15.

(b) For the purposes of this Section 14.15, Confidential Information means information delivered to the Trustee, the Collateral Administrator or any Holder of Notes by or on behalf of the Issuer in connection with and relating to the transactions contemplated by or otherwise pursuant to this Indenture; provided that such term does not include information that: (i) was publicly known or otherwise known to the Trustee, the Collateral Administrator or such Holder prior to the time of such disclosure; (ii) subsequently becomes publicly known through no act or omission by the Trustee, the Collateral Administrator, any Holder or any person acting on behalf of the Trustee, the Collateral Administrator or any Holder; (iii) otherwise is known or becomes known to the Trustee, the Collateral Administrator or any Holder other than (x) through disclosure by the Issuer or (y) to the knowledge of the Trustee, the Collateral Administrator or a Holder, as the case may be, in each case after reasonable inquiry, as a result of the breach of a fiduciary duty to the Issuer or a contractual duty to the Issuer; or (iv) is allowed to be treated as non-confidential by consent of the Issuer.

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(c) Notwithstanding the foregoing, the Trustee and the Collateral Administrator may disclose Confidential Information to the extent disclosure thereof may be required by law or by any regulatory or governmental authority and the Trustee and the Collateral Administrator may disclose on a confidential basis any Confidential Information to its agents, attorneys and auditors in connection with the performance of its responsibilities hereunder.

15. ASSIGNMENT OF CERTAIN AGREEMENTS

15.1 Assignment of Collateral Management Agreement, Revolving Credit Note Agreement, Collateral Administration Agreement and Issuer Contribution Agreement

(a) The Issuer hereby acknowledges that its Grant pursuant to the first Granting Clause hereof includes all of the Issuer’s estate, right, title and interest in, to and under the Collateral Management Agreement, the Revolving Credit Note Agreement, the Collateral Administration Agreement and the Issuer Contribution Agreement including (i) the right to give all notices, consents and releases thereunder, (ii) the right to receive all notices, accountings, consents, releases and statements thereunder, (iii) the right to do any and all other things whatsoever that the Issuer is or may be entitled to do thereunder, (iv) with respect to the Collateral Management Agreement, the right to give all notices of termination and to take any legal action upon the breach of an obligation of the Collateral Manager thereunder, including the commencement, conduct and consummation of proceedings at law or in equity, and (v) with respect to the Issuer Contribution Agreement, the right to give equity contribution notices and to do any and all other things whatsoever that the Issuer is or may be entitled to do thereunder; provided that notwithstanding anything herein to the contrary, the Issuer shall retain, and the Trustee shall not have, the authority to exercise any of the rights set forth in (i) through (v) above or that may otherwise arise as a result of the Grant until the occurrence of an Event of Default hereunder and such authority shall terminate at such time, if any, as such Event of Default is cured or waived.

(b) The assignment made hereby is executed as collateral security, and the execution and delivery hereby shall not in any way impair or diminish the obligations of the Issuer under the provisions of the Collateral Management Agreement, the Revolving Credit Note Agreement, the Collateral Administration Agreement and the Issuer Contribution Agreement nor shall any of the obligations contained in such agreements be imposed on the Trustee.

(c) Upon the retirement of the Notes, the payment of all amounts required to be paid pursuant to the Priority of Payments and the release of the Collateral from the lien of this Indenture, this assignment and all rights herein assigned to the Trustee for the benefit of the Holders shall cease and terminate and all the estate, right, title and interest of the Trustee in, to and under the Collateral Management Agreement, the Revolving Credit Note Agreement, the Collateral Administration Agreement and the Issuer Contribution Agreement shall revert to the Issuer and no further instrument or act shall be necessary to evidence such termination and reversion.

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(d) The Issuer represents that the Issuer has not executed any other assignment of the Collateral Management Agreement, the Revolving Credit Note Agreement, the Collateral Administration Agreement or the Issuer Contribution Agreement.

(e) The Issuer agrees that this assignment is irrevocable, and that it will not take any action which is inconsistent with this assignment or make any other assignment inconsistent herewith. The Issuer will, from time to time, execute all instruments of further assurance and all such supplemental instruments with respect to this assignment as may be necessary to continue and maintain the effectiveness of such assignment.

(f) Subject to Section 15.1(a), the Issuer hereby agrees, and hereby undertakes to obtain the agreement and consent of the Collateral Manager in the Collateral Management Agreement, to the following:

(i) The Collateral Manager shall consent to the provisions of this assignment and agree to perform any provisions of this Indenture applicable to the Collateral Manager subject to the terms (including the standard of care set forth in the Collateral Management Agreement) of the Collateral Management Agreement.

(ii) The Collateral Manager shall acknowledge that the Issuer is assigning all of its right, title and interest in, to and under the Collateral Management Agreement to the Trustee as representative of the Holders and the Collateral Manager shall agree that all of the representations, covenants and agreements made by the Collateral Manager in the Collateral Management Agreement are also for the benefit of the Trustee, subject to Section 15.1(a).

(iii) The Collateral Manager shall deliver to the Trustee copies of all notices, statements, communications and instruments delivered or required to be delivered by the Collateral Manager to the Issuer pursuant to the Collateral Management Agreement.

(iv) Neither the Issuer nor the Collateral Manager will enter into any agreement amending, modifying or terminating the Collateral Management Agreement (other than an amendment to correct inconsistencies, typographical or other errors, defects or ambiguities) or selecting or consenting to a successor manager except with the consents and satisfaction of the conditions specified in the Collateral Management Agreement entered into on the Closing Date.

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(v) The Collateral Manager agrees not to cause the filing of a petition in bankruptcy against or on behalf of the Issuer until the payment in full of all Notes issued under this Indenture and the expiration of a period equal to one year and a day, or, if longer, the applicable preference period, following such payment. Nothing in this Section 15.1 shall preclude, or be deemed to stop, the Collateral Manager from taking any action prior to the expiration of the aforementioned period in (A) any case or Proceeding voluntarily filed or commenced by the Issuer (other than any such Proceeding filed or commenced on behalf of the Issuer at the direction of the Collateral Manager or Sole Shareholder) or (B) any involuntary insolvency Proceeding filed or commenced by a Person other than the Collateral Manager or Sole Shareholder.

(g) Upon a Trust Officer of the Trustee (i) receiving written notice from the Collateral Manager that an event constituting “Cause” as defined in the Collateral Management Agreement has occurred, (ii) receiving written notice that the Collateral Manager is resigning or is being removed, with or without “Cause” or (iii) written notice of a successor collateral manager, the Trustee shall, not later than one Business Day thereafter, notify the Holders (as their names appear in the Note Registers).

(h) Subject to Section 15.1(a), the Issuer hereby agrees, and hereby undertakes to obtain the agreement and consent of the Sole Shareholder in the Issuer Contribution Agreement, to the following:

(i) The Sole Shareholder shall consent to the provisions of this assignment and agree to perform any provisions of this Indenture applicable to the Sole Shareholder subject to the terms of the Issuer Contribution Agreement.

(ii) The Sole Shareholder shall acknowledge that the Issuer is assigning all of its right, title and interest in, to and under the Issuer Contribution Agreement to the Trustee as representative of the Holders and the Sole Shareholder shall agree that all of the representations, covenants and agreements made by the Sole Shareholder in the Issuer Contribution Agreement are also for the benefit of the Trustee, subject to Section 15.1(a).

(iii) The Sole Shareholder shall deliver to the Trustee copies of all notices, statements, communications and instruments delivered or required to be delivered by the Sole Shareholder to the Issuer pursuant to the Issuer Contribution Agreement.

(iv) Neither the Issuer nor the Sole Shareholder will enter into any agreement amending, modifying or terminating the Issuer Contribution Agreement (other than an amendment to correct inconsistencies, typographical or

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other manifest errors, defects or ambiguities) without prior written consent of the Trustee and the Valuation Agent (unless such amendment could not reasonably be expected to materially adversely affect any of the Issuer, the Collateral or the interests of the Trustee and Issuer therein and notice thereof has been given to the Trustee and Valuation Agent).

(v) The Sole Shareholder agrees not to cause the filing of a petition in bankruptcy against or on behalf of the Issuer until the payment in full of all Notes issued under this Indenture and the expiration of a period equal to one year and a day, or, if longer, the applicable preference period, following such payment. Nothing in this Section 15.1 shall preclude, or be deemed to preclude, the Sole Shareholder from taking any action prior to the expiration of the aforementioned period in (A) any case or Proceeding voluntarily filed or commenced by the Issuer (other than any such Proceeding filed or commenced on behalf of the Issuer at the direction of the Collateral Manager or Sole Shareholder) or (B) any involuntary insolvency Proceeding filed or commenced by a Person other than the Sole Shareholder or Collateral Manager.

- Signature Page Follows -

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IN WITNESS WHEREOF, we have set our hands as of the day and year first written above.

EXECUTED AS A DEED BY

CM FINANCE SPV LTD.,
as Issuer

By:

Name:

Title:

Witness:

Name:

Occupation:

Address:

Indenture – Signature Page

STATE STREET BANK AND TRUST COMPANY,

as Trustee and, solely as expressly specified herein, as Bank

By:

Name:

Title:

Indenture – Signature Page

Schedule 1

Portfolio Assets as of Closing Date

Committed Loans:

Status	Name	Tranche	Security Type	Price		Par Value		Market Value
Committed	Virgin America	1st Lien Note	1st Lien	$	90.0000	$	5,000,000	$	4,500,000
Committed	Virgin America	2nd Lien Note	2nd Lien	$	100.0000	$	5,000,000	$	5,000,000
Committed	MF Global	Delayed Draw TL (Exit Facility)	1st Lien	$	97.5000	$	10,000,000	$	9,750,000
Total					Total	$	20,000,000	$	19,250,000

Funded Loans:

Status	Name	Tranche	Security Type	Price		Par Value		Market Value
Funded	Crestwood	Term Loan	1st Lien	$	101.7500	$	11,954,510	$	12,163,714
Funded	Endeavour	Term Loan (Refund Guarantee Facility)	1st Lien	$	100.0000	$	17,953,305	$	17,953,305
Funded	YRC	Receivables Facility (aka 2nd Out ABL)	1st Lien	$	100.5000	$	12,074,283	$	12,134,654
Funded	Capitol Petroleum Group	Senior Secured Note	1st Lien	$	98.3600	$	10,096,891	$	9,931,302
Funded	TNS	2nd Lien	2nd Lien	$	100.5000	$	9,250,000	$	9,296,250
Funded	AM General	Term Loan	1st Lien	$	98.0000	$	10,000,000	$	9,800,000
Funded	Alcatel	Term Loan C	1st Lien	$	102.0000	$	12,712,500	$	12,966,750
Funded	New Wave Communications	2nd Lien Term Loan	2nd Lien	$	99.5000	$	8,000,000	$	7,960,000
Total					Total	$	92,041,489	$	92,205,975

Page S-1-1

Schedule 2

Moody’s Industry Classifications

Industry Number	Collateral Description
1	Aerospace & Defense
2	Automotive
3	Banking, Finance, Insurance and Real Estate
4	Beverage, Food, & Tobacco
5	Capital Equipment
6	Chemicals, Plastics, & Rubber
7	Construction & Building
8	Consumer goods: durable
9	Consumer goods: non-durable
10	Containers, Packaging, & Glass
11	Energy: Electricity
12	Energy: Oil & Gas
13	Environmental Industries
14	Forest Products & Paper
15	Healthcare & Pharmaceuticals
16	High Tech Industries
17	Hotel, Gaming, & Leisure
18	Media: Advertising, Printing & Publishing
19	Media: Broadcasting & Subscription
20	Media: Diversified & Production
21	Metals & Mining
22	Retail
23	Services: Business
24	Services: Consumer
25	Sovereign & Public Finance
26	Telecommunications
27	Transportation: Cargo
28	Transportation: Consumer
29	Utilities: Electric
30	Utilities: Oil & Gas
31	Utilities: Water
32	Wholesale

Page S-2-1

Schedule 3

S&P Industry Classifications

Collateral Code	Collateral Description
1	Aerospace & Defense
2	Air transport
3	Automotive
4	Beverage & Tobacco
5	Radio & Television
6
7	Building & Development
8	Business equipment & services
9	Cable & satellite television
10	Chemicals & plastics
11	Clothing/textiles
12	Conglomerates
13	Containers & glass products
14	Cosmetics/toiletries
15	Drugs
16	Ecological services & equipment
17	Electronics/electrical
18	Equipment leasing
19	Farming/agriculture
20	Financial intermediaries
21	Food/drug retailers
22	Food products
23	Food service
24	Forest products
25	Health care
26	Home furnishings
27	Lodging & casinos
28	Industrial equipment
29
30	Leisure goods/activities/movies
31	Nonferrous metals/minerals
32	Oil & gas
33	Publishing
34	Rail industries
35	Retailers (except food & drug)
36	Steel
37	Surface transport
38	Telecommunications
39	Utilities
43	Life Insurance
44	Health Insurance
45	Property & Casualty Insurance
46	Diversified Insurance

Page S-3-1

CONTENTS

SECTION		PAGE
1.	Definitions		2
1.1	Definitions		2
1.2	Assumptions as to Collateral		29
2.	The Notes		31
2.1	Forms Generally		31
2.2	Forms of Notes		31
2.3	Authorized Amount; Stated Maturity; Denominations		33
2.4	Execution, Authentication, Delivery and Dating		34
2.5	Registration, Registration of Transfer and Exchange		34
2.6	Mutilated, Defaced, Destroyed, Lost or Stolen Note		44
2.7	Payment of Principal and Interest and Other Amounts; Principal and Interest Rights Preserved		45
2.8	Persons Deemed Owners		48
2.9	Cancellation		48
2.10	DTC Ceases to be Depository		48
2.11	Non-Permitted Holders or Violation of ERISA Representations or Noteholder Reporting Obligations		49
2.12	Tax Certification and Noteholder Reporting Obligations		51
2.13	Additional Issuance of Notes		52
2.14	Borrowings under the Revolving Credit Note Agreement		53
3.	Conditions Precedent		53
3.1	Conditions to Issuance of Notes on Closing Date		53
3.2	Custodianship; Delivery of Portfolio Assets and Eligible Investments		56
3.3	Application of Proceeds of Issuance		57
4.	Satisfaction And Discharge		57
4.1	Satisfaction and Discharge of Indenture		57
4.2	Application of Trust Cash		58
4.3	Repayment of Cash Held by Paying Agent		59

i

5.	Remedies	59
5.1	Events of Default	59
5.2	Acceleration of Maturity; Rescission and Annulment	62
5.3	Collection of Indebtedness and Suits for Enforcement by Trustee	62
5.4	Remedies	64
5.5	Optional Preservation of Collateral	66
5.6	Trustee May Enforce Claims Without Possession of Notes	68
5.7	Application of Cash Collected	68
5.8	Limitation on Suits	68
5.9	Unconditional Rights of Holders to Receive Principal and Interest	69
5.10	Restoration of Rights and Remedies	69
5.11	Rights and Remedies Cumulative	69
5.12	Delay or Omission Not Waiver	69
5.13	Control by Majority Noteholders	69
5.14	Waiver of Past Defaults	70
5.15	Undertaking for Costs	70
5.16	Waiver of Stay or Extension Laws	71
5.17	Sale of Collateral	71
5.18	Action on the Notes	72
6.	The Trustee	72
6.1	Certain Duties and Responsibilities	72
6.2	Notice of Default	74
6.3	Certain Rights of Trustee	74
6.4	Not Responsible for Recitals or Issuance of Notes	78
6.5	May Hold Notes	78
6.6	Cash Held in Trust	78
6.7	Compensation and Reimbursement	79
6.8	Corporate Trustee Required; Eligibility	80
6.9	Resignation and Removal; Appointment of Successor	80
6.10	Acceptance of Appointment by Successor	82
6.11	Merger, Conversion, Consolidation or Succession to Business of Trustee	82
6.12	Co-Trustees	83
6.13	Certain Duties of Trustee Related to Delayed Payment of Proceeds	84
6.14	Authenticating Agents	84

ii

6.15	Withholding	85
6.16	Fiduciary for Holders Only; Agent for each other Secured Party	86
6.17	Representations and Warranties of the Bank	86
7.	Covenants	87
7.1	Payment of Principal and Interest	87
7.2	Maintenance of Office or Agency	87
7.3	Cash for Note Payments to be Held in Trust	88
7.4	Existence of Issuer	89
7.5	Protection of Collateral	90
7.6	Opinions as to Collateral	92
7.7	Performance of Obligations	92
7.8	Negative Covenants	92
7.9	Statement as to Compliance	94
7.10	Issuer May Not Consolidate Except on Certain Terms	95
7.11	Successor Substituted	95
7.12	No Other Business	95
7.13	Acquisition of Portfolio Assets	96
7.14	Reporting	96
7.15	Certain Tax Matters	96
7.16	Side Letter Security Agreement	97
8.	Supplemental Indentures	97
8.1	Supplemental Indentures Without Consent of Holders of Notes	97
8.2	Supplemental Indentures With Consent of Holders of Notes	99
8.3	Execution of Supplemental Indentures	99
8.4	Determination of Effect on Holders	101
8.5	Effect of Supplemental Indentures	102
8.6	Reference in Notes to Supplemental Indentures	102
9.	[Reserved]	102
10.	Accounts, Accountings And Releases	102
10.1	Collection of Cash	102
10.2	Collection Account	103
10.3	Transaction Accounts	104
10.4	Reinvestment of Funds in Accounts; Reports by Trustee	108

iii

10.5	Accountings	110
10.6	Release of Collateral	115
10.7	Procedures Relating to the Establishment of Accounts Controlled by the Trustee	116
10.8	Section 3(c)(7) Procedures	116
11.	Application Of Cash	117
11.1	Disbursements of Cash from Payment Account	117
12.	Sale of Portfolio Assets; purchase of additional Portfolio Assets	118
12.1	Sales of Portfolio Assets	118
12.2	Acquisition of Portfolio Assets; Eligible Investments	119
12.3	Conditions Applicable to All Sale and Purchase Transactions	120
13.	Relations among Holders	120
13.1	Relations among Holders	120
13.2	Standard of Conduct	121
14.	Miscellaneous	121
14.1	Form of Documents Delivered to Trustee	121
14.2	Acts of Holders	122
14.3	Notices, etc., to Trustee, the Revolving Credit Note Agent, the Issuer, the Collateral Manager, the Collateral Administrator, the Paying Agent, the Valuation Agent	123
14.4	Notices to Holders; Waiver	125
14.5	Effect of Headings and Table of Contents	126
14.6	Successors and Assigns	126
14.7	Severability	126
14.8	Benefits of Indenture	126
14.9	Legal Holidays	127
14.10	Governing Law	127
14.11	Submission to Jurisdiction	127
14.12	WAIVER OF JURY TRIAL	127
14.13	Counterparts	128
14.14	Acts of Issuer	128
14.15	Confidential Information	128
15.	Assignment Of Certain Agreements	130
15.1	Assignment of Collateral Management Agreement, Revolving Credit Note Agreement, Collateral Administration Agreement and Issuer Contribution Agreement	130

iv

Schedules and Exhibits

Schedule 1	List of Portfolio Assets as of Closing Date
Schedule 2	Moody’s Industry Classifications
Schedule 3	S&P Industry Classifications
Exhibit A	Forms of Notes
A1	Form of Global Class A Note
A2	Form of Certificated Class A Note
A3	Form of Class A-R Note
Exhibit B	Forms of Transfer and Exchange Certificates
B1	Form of Transferor Certificate for Transfer of Rule 144A Global Note or Certificated Note to Regulation S Global Note
B2	Form of Purchaser Representation Letter for Certificated Notes
B3	Form of Transferor Certificate for Transfer of Certificated Note to Rule 144A Global Note
B4	Form of Transferee Certificate of Rule 144A Global Note
B5	Form of Transferee Certificate of Regulation S Global Note
Exhibit C	Form of Opinion of Nixon Peabody LLP
Exhibit D	Form of Opinion of Bingham McCutchen LLP
Exhibit E	Form of Opinion of Applyby (Cayman) Ltd.
Exhibit F	Form of Beneficial Owner Certificate

v

Exhibit 10.33

Dated as of September 26, 2014

CM FINANCE SPV LTD.,

as Issuer

STATE STREET BANK AND TRUST COMPANY,

as Trustee

INDENTURE

EX-10.34

Exhibit 10.34

Execution version

THIRD AMENDMENT AGREEMENT TO 2002 ISDA MASTER AGREEMENT

This THIRD AMENDMENT AGREEMENT, dated as of July 20, 2015 (this Amendment Agreement), between UBS AG, a banking corporation organized under the law of Switzerland (Party A), and CM FINANCE INC., as successor by merger to CM Finance LLC, a corporation incorporated under the laws of the State of Maryland (Party B), acting by and through CM Investment Partners LLC (as successor to CM Investment Partners, L.P.), except as otherwise indicated, not in its individual capacity but as agent of Party B (in such capacity, Investment Adviser).

WHEREAS, Party A and Party B have previously entered into that certain 2002 ISDA Master Agreement, dated as of May 20, 2013 (together with the Schedule thereto, the Credit Support Annex to the Schedule and each Confirmation exchanged thereunder, as amended on December 4, 2014, as further amended on September 26, 2014 and as further amended, supplemented or otherwise modified from time to time, the Agreement).

WHEREAS, Party A and Party B wish to amend the Agreement in accordance with the terms of this Amendment Agreement.

ACCORDINGLY, in consideration of the promises and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions

Capitalized terms used but not defined herein have the respective meanings given to such terms in the Agreement.

2. Amendments

With effect from and including the Effective Date (as defined in Section 3), the Agreement shall be amended as follows:

(a) Amendment of the Schedule to the Agreement

The following shall be included as a new Part 1(i)(x):

“(x) Pledged Bonds. (A) Party B sells, disposes or otherwise transfers any of the Pledged Bonds (as such term is defined in the Specified Confirmations) or any interest therein (whether by way of security or otherwise), (B) Party B otherwise permits any lien, charge, adverse claim, security interest, mortgage or other encumbrance (other than the lien in favor of Party A) to be created on or extend to or otherwise arise upon or burden the Pledged Bonds or any part thereof, any interest therein or the proceeds thereof or (C) Party A

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otherwise ceases to have a first priority perfected security interest in all or any part of the Pledged Bonds, provided that if such cessation is a result of Party A’s gross negligence, willful misconduct or fraud, then Party A shall be the Affected Party for an event under this sub-clause (C). ”

(b) Amendments to the Credit Support Annex – Paragraph 13

(i) Paragraph 13(b)(i)(B) is hereby deleted in its entirety and replaced with the following:

“(B) “Return Amount” has the meaning specified in Paragraph 3(b); provided that, if a Termination Trade Date or a Repayment Date (each as defined in the Specified Confirmations) has occurred in respect of a Subject Transaction, Party A shall not be obligated to Transfer any Posted Credit Support as a Return Amount until such time as Party B has discharged in full all of its payment and delivery obligations (if any) on the related Total Return Payment Date (as defined in the Specified Confirmations).

(ii) Paragraph 13(b)(iv)(D) is hereby amended by adding the words “or Pledged Bonds” immediately after the words “Transfer of Pledged Notes” in the last line thereof.

(iii) Paragraph 13(e)(ii) is hereby amended by adding the words “and the Pledged Bonds” immediately after the words “the Pledged Notes” in the second line thereof.

(iv) Paragraph 13(i) is hereby amended by adding the words “and Pledged Bonds” immediately after the words “all Pledged Notes” in the second line thereof.

(v) Paragraph 13(j)(i) is hereby deleted in its entirety and replaced with the following:

“(i) “Value” with respect to any Pledged Note or any Pledge Bond, as specified in the Specified Confirmations.”

(vi) Paragraph 13(j)(ii) is hereby deleted in its entirety and replaced with the following:

“(ii) “Transfer” shall mean, with respect to any Pledged Note or any Pledge Bond, (A) if the Pledged Notes or the Pledged Bonds, as applicable, are in the form of certificated securities that cannot be paid or delivered by book-entry, delivery in appropriate physical form to Party A or its account accompanied by any duly executed instruments of transfer, assignments in blank, transfer tax stamps and any other documents (including, without

Page 2

limitation, transferor certificates, transferee certificates and representation letters) necessary to constitute a legally valid transfer to the recipient (and, in the case of any duly executed instrument of transfer or assignment in blank in which the signature is guaranteed by an eligible guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (a “Medallion-Stamped Signature”), such instrument or assignment is dated not earlier than the third month immediately preceding the date on which such Pledged Note or such Pledged Bond, as applicable, is Transferred to Party A) or (B) if the Pledged Notes or the Pledged Bonds, as applicable, are in the form of securities that can be paid or delivered by book-entry, the delivery of the Pledged Notes or the Pledged Bonds, as applicable, by Party B to the account of Party A specified in clause (l) below.”

(vii) Paragraph 13(l)(i) shall be amended by including the following as a new sub-paragraph (C):

“(C) Pledged Bonds:

(1) Physical:

To be specified by Party A to Party B.

(2) Book Entry:

DTC #0642

OTC Swaps Collateral

Account #452-90109”

(viii) Paragraph 13(l)(ii) shall be amended by including the following as a new sub-paragraph (C):

“(C) Pledged Bonds:

(1) Physical:

To be specified by Party B to Party A.

(2) Book Entry:

DTC #0997

FFC: CYOC

Agent ID – 26022

Institutional # - 58873”

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(ix) Paragraph 13(m)(v) is hereby deleted in its entirety and replaced with the following:

“(v) “Specified Confirmations” has the meaning set forth in the ISDA Schedule.”

(x) Paragraph 13(m) is hereby amended by including the following as a new sub-paragraph (vi):

“(vi) “Pledged Bonds” has the meaning assigned thereto in the Specified Confirmation.”

(xi) Paragraph 13(n)(viii) is hereby deleted in its entirety and replaced with the following:

“(viii) Transfer of Pledged Notes and Pledged Bonds. Party B’s Transfer obligations in respect of (i) Party B’s Independent Amount in respect of the A-R Note Transaction (as such term is defined in the Specified Confirmations) may only be satisfied by the Transfer to Party A of the Pledged Notes immediately upon the issuance thereof to Party B, and (ii) Party B’s Independent Amount in respect of any Bond Transaction (as such term is defined in the Specified Confirmations) may only be satisfied by the Transfer to Party A of the relevant Pledged Bond in accordance with the terms of the Specified Confirmations. With respect to any instrument of transfer or assignment in blank related to a Pledged Note or a Pledged Bond, as applicable, for which a Medallion-Stamped Signature is required, Party B shall deliver to Party A, no later than the date which is four months after the date of the most recently previously provided such instrument of transfer or assignment in blank, a replacement duly executed instrument of transfer or assignment in blank with a Medallion-Stamped Signature dated no earlier than the date which is three months after the date of the most recently previously provided such instrument of transfer or assignment in blank. Provided Party B successfully Transfers the Pledged Notes or the Pledged Bonds, as applicable, to Party A, Party B shall not have any obligation to pay any further Independent Amount in respect of such Transaction at any time.

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(xii) Paragraph 13(n)(ix) is hereby deleted in its entirety and replaced with the following:

“(ix) Failure to Transfer Pledged Notes or Pledged Bonds. The failure by Party B to Transfer any Pledged Note or any Pledged Bond to Party A when due in accordance with sub-clause (viii) above shall automatically (without any further action on the part of Party A) constitute an Additional Termination Event with respect to which Party B is the sole Affected Party, the related Transaction entered into under the Specified Confirmations is an Affected Transaction and the date of such failure is the Early Termination Date with respect to such Affected Transaction.”

(xiii) Paragraph 13(n) is amended by including the following as a new sub-paragraph (xii):

“(xii) Pledged Bonds. Party B hereby agrees to Transfer each Pledged Bond to Party A in accordance with the terms hereof and of the Specified Confirmations and grants to Party A, as the Secured Party, as security for its Obligations, a first priority continuing security interest in, lien on and right of Set-off against the Pledged Bonds.”

3. Conditions Precedent to Effective Date

This Amendment Agreement shall become effective on and as of the date (the Effective Date) on which this Amendment Agreement shall have been duly executed and delivered by each party hereto.

4. Representations and Warranties; Covenants; Other Agreements

(a) Representations and Warranties.

(i) Each party represents to the other party that each of the representations and warranties contained in the Agreement (including all representations set forth in the Credit Support Annex) is true and correct on and as of the Effective Date with the same force and effect as if made on and as of the Effective Date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

(ii) Each party represents and warrants to the other party that this Amendment Agreement has been duly and validly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

(b) Further Assurance. From time to time, each of the parties hereto will promptly execute and deliver all such further instruments, certificates and documents, and

Page 5

take all such further actions as any one of them may deem to be necessary, advisable, convenient or proper to carry out the intent of this Amendment Agreement.

(c) Agreement Continuation. The Agreement, as modified by this Amendment Agreement, shall continue in full force and effect, and nothing herein contained shall be construed as a waiver or modification of existing rights under the Agreement, except as such rights are expressly modified hereby.

5. Miscellaneous

(a) Successors and Assigns. This Amendment Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No person or entity other than the parties hereto and their respective successors and permitted assigns shall have any rights under this Amendment Agreement.

(b) Entire Agreement. This Amendment Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings (except as otherwise provided herein) with respect thereto.

(c) Headings. The headings used in this Amendment Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Amendment Agreement.

(d) Governing Law. This Amendment Agreement shall be construed in accordance with, and this Amendment Agreement and any matters arising out of or relating in any way whatsoever to this Amendment Agreement (whether in contract, tort or otherwise), shall be governed by, the law of the State of New York.

(e) Jurisdiction. With respect to any suit, action or proceedings relating to this Amendment Agreement or any matter between the parties arising under or in connection with this Amendment Agreement (Proceedings), each party irrevocably: (i) submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York sitting in the Borough of Manhattan and the United States District Court for the Southern District of New York, and any appellate court from any thereof; and (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Amendment Agreement precludes any party from bringing Proceedings in any other jurisdiction, nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.

Page 6

(f) Waiver of Jury Trial Right. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS. Each party hereby (a) certifies that no representative, agent or attorney of any other has represented, expressly or otherwise, that such other would not, in the event of a Proceeding, seek to enforce the foregoing waiver; and (b) acknowledges that it has been induced to enter into this Amendment Agreement by, among other things, the mutual waivers and certifications in this paragraph.

(g) Counterparts. This Amendment Agreement (and each amendment, modification and waiver in respect of this Amendment Agreement) may be executed and delivered in any number of counterparts (including by e-mail (PDF) or facsimile), each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument, and each of the parties hereto may execute this Amendment Agreement by signing any such counterpart. Delivery of an executed counterpart of this Amendment Agreement by e-mail (PDF) or facsimile shall be deemed to constitute due and sufficient delivery of such counterpart.

(h) Severability. If any term, provision, covenant or condition of this Amendment Agreement, or the application thereof to any party hereto or any circumstance, is held to be unenforceable, invalid or illegal (in whole or in part) for any reason (in any relevant jurisdiction), the remaining terms, provisions, covenants and conditions of this Amendment Agreement, modified by the deletion of the unenforceable, invalid or illegal portion (in any relevant jurisdiction), will continue in full force and effect, and such unenforceability, invalidity, or illegality will not otherwise affect the enforceability, validity or legality of the remaining terms, provisions, covenants and conditions of this Amendment Agreement, so long as this Amendment Agreement, as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the deletion of such portion of this Amendment Agreement, will not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.

Page 7

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed and delivered by their respective authorized officers or representatives as of the date first above written.

UBS AG	CM FINANCE INC.
By:	By:
Name:	Name:
Title:	Title:
By:
Name:
Title:

Signature Page to Third Amendment Agreement (ISDA)

EX-10.35

Exhibit 10.35

Execution Copy

THIRD AMENDMENT AGREEMENT, dated as of July 20, 2015 (this Third Amendment Agreement), between CM FINANCE SPV LTD., an exempted company incorporated with limited liability under the laws of the Cayman Islands, as issuer (the Issuer); and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as trustee (in such capacity, together with its permitted successors and assigns in the trusts under the Indenture, the Trustee) and, solely as expressly specified in the Indenture, in its individual capacity (the Bank).

WHEREAS, the Issuer, the Trustee and the Bank have previously entered into that certain Indenture, dated as of May 23, 2013 (as supplemented by the First Supplemental Indenture, dated as of June 6, 2013, between the Issuer and the Trustee and amended and restated by the Amendment Agreement dated as of December 4, 2013 between the Issuer, the Trustee and the Bank and further amended and restated by the Second Amendment Agreement dated as of September 26, 2014 between the Issuer, the Trustee and the Bank, the Original Indenture), between the Issuer, the Trustee and the Bank.

WHEREAS, the parties agree that this Third Amendment Agreement shall constitute a supplemental indenture for purposes of Article VIII of the Indenture and wish to amend and restate the Original Indenture by entering into this Third Amendment Agreement.

WHEREAS, Section 8.2 of the Original Indenture provides that the Original Indenture may be amended for a purpose not permitted under Section 8.1 of the Original Indenture, with the written consent of each Holder and the Collateral Manager.

WHEREAS, the Issuer has requested that, pursuant to and in accordance with the terms and conditions of this Third Amendment Agreement, the Trustee enter into, and that each Holder and the Collateral Manager consent to, the Third Amended and Restated Indenture, dated as of July 20, 2015 (as attached hereto as Exhibit A, the Indenture), between the Issuer, the Trustee and the Bank, pursuant to which the Issuer proposes to (a) make certain amendments to the Original Indenture (i) so that any Class of Notes are not considered to be an “ownership interest” as defined for purposes of the Volcker Rule (as defined in the Indenture) or (ii) for the Issuer to not be considered a “covered fund” as defined for purposes of the Volcker Rule and (b) amend the terms of the Class A-R Notes (the Class A-R Notes) to limit the aggregate principal amount thereof to up to the Maximum RCN Facility Funding Commitment (as defined in the Revolving Credit Note Agreement as defined below) in effect from time to time (the Class A-R Notes Amendments) in accordance with the Revolving Credit Note Agreement, dated as of December 4, 2013, as amended and restated pursuant to the Amended and Restated Revolving Credit Note Agreement as of September 26, 2014 and as further amended and restated pursuant to the Amended and Restated Revolving Credit Note Agreement as of July 20, 2015 (the Revolving Credit Note Agreement), between the Issuer, each entity party thereto as a Class A-R Noteholder, State Street Bank and Trust Company, as revolving credit note agent, and the Trustee.

Page 1

ACCORDINGLY, in consideration of the promises and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions

Capitalized terms used but not defined herein have the respective meanings given to such terms in the Original Indenture.

2. Amendments

With effect from and including the Effective Date (as defined in Section 3), the Original Indenture shall be amended and restated so that it shall be read and construed as set out in the Indenture attached hereto as Exhibit A.

3. Conditions Precedent to Effective Date

This Third Amendment Agreement shall become effective on and as of the date (the Effective Date) on which each of the following conditions precedent shall have been satisfied:

(a) Third Amendment Agreement. This Third Amendment Agreement shall have been duly executed and delivered by each party hereto.

(b) Revolving Credit Note Agreement. The Revolving Credit Note Agreement shall have been duly executed and delivered by each party thereto.

(c) Amendments to Transaction Documents. Amendments to the Collateral Management Agreement shall have been duly executed and delivered by each party thereto (the Collateral Management Agreement, together with the Revolving Credit Note Agreement, the Amendment Documents).

(d) Representations and Warranties. Each of the representations and warranties contained in the Indenture, this Third Amendment Agreement and each Amendment Document described in sub-section (c) is true and correct on and as of the Effective Date with the same force and effect as if made on and as of the Effective Date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

(e) No Event of Default. No Event of Default shall have occurred and be continuing.

Page 2

(f) Corporate Documents. The Trustee shall have received in form and substance reasonably satisfactory to the Trustee the following corporate documents:

(i) Officers’ Certificates of the Issuer.

(A) An Officer’s certificate of the Issuer, dated as of the date hereof, (A) evidencing the authorization of the execution and delivery on behalf of the Issuer of (1) the Amendment Documents to which the Issuer is a party; and (2) such related documents as may be required for the purpose of the Class A-R Notes Amendments and the transactions contemplated in the Indenture, this Third Amendment Agreement and the Amendment Documents; and (B) certifying that (1) the copies of the Authorizing Resolution and Constitutive Documents attached thereto are, in each case, a true and complete copy thereof; (2) such authorizations have not been amended or rescinded and are in full force and effect on and as of the date hereof; and (3) the Officers of the Issuer authorized to execute and deliver such documents hold the offices and have the signatures indicated thereon.

(B) An Officer’s certificate of the Issuer, dated as of the date hereof, stating that, to the Officer’s knowledge, (i) the Issuer is not in default under the Indenture; (ii) the Class A-R Notes Amendments will not result in a default or a breach of any of the terms, conditions or provisions of, or constitute a default under, its organizational documents, any indenture or other agreement or instrument to which it is a party or by which it is bound, or any order of any court or administrative agency entered in any Proceeding to which it is a party or by which it may be bound or to which it may be subject; (iii) if applicable, all conditions precedent provided in the Indenture relating to the Class A-R Notes Amendments have been complied with; (iv) if applicable, all expenses due or accrued with respect to the Class A-R Notes Amendments or relating to actions taken on or in connection with the date hereof have been paid or reserves therefor have been made; and (v) all of its representations and warranties contained in the Indenture, this Third Amendment Agreement and each Amendment Document are true and correct as of the date hereof.

(ii) Officers’ Certificate of the Sole Shareholder. An Officer’s certificate of the Sole Shareholder, dated as of the date hereof, (A) evidencing the authorization by Authorizing Resolution of the execution and delivery of (1) the Amendment Documents to which the Sole Shareholder is a party; and (2) such related documents as may be required for the purpose of the Class A-R Notes Amendments and the transactions contemplated in the Indenture, this Third Amendment Agreement and the Amendment Documents; and (B) certifying that (1) the copies of the Authorizing Resolution and Constitutive Documents attached thereto are, in each case, a true and complete copy thereof; (2) such resolutions have not been amended or rescinded and are in full force and effect on and as of the date hereof; and

Page 3

(3) the Officers of the Sole Shareholder or its manager authorized to execute and deliver such documents hold the offices and have the signatures indicated thereon.

(g) Legal Opinions. The Trustee shall have received the following legal opinions:

(i) U.S. Counsel Opinion. An opinion of Nixon Peabody LLP, counsel to the Trustee and the Collateral Administrator, dated the date hereof, in form and substance satisfactory to the Trustee and UBS AG.

(ii) Cayman Counsel Opinion. An opinion of Appleby (Cayman) Ltd., Cayman Islands counsel to the Issuer, dated the date hereof, in form and substance satisfactory to the Trustee and UBS AG.

4. Representations and Warranties; Covenants; other Agreements

(a) Each party hereto represents and warrants that this Third Amendment Agreement has been duly and validly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

(b) From time to time, each of the parties hereto will promptly execute and deliver all such further instruments, certificates and documents, and take all such further actions as any one of them may deem to be necessary, advisable, convenient or proper to carry out the intent of this Third Amendment Agreement.

(c) For the purposes of this Third Amendment Agreement: (i) each of the Trustee, the Collateral Administrator, the Collateral Manager and each Holder, by executing and delivering a counterpart of this Third Amendment Agreement, hereby waives any right under the Transaction Documents to prior notice of this Third Amendment Agreement; (ii) each Holder and the Collateral Manager, by executing and delivering a counterpart of this Third Amendment Agreement, hereby provides their written consent to the execution of this Third Amendment Agreement, the Indenture and the Amendment Documents, dated on or about the date hereof, between the Issuer, the Collateral Manager, the Trustee and the Collateral Administrator, by the Trustee and the Issuer pursuant to Section 8.2 of the Original Indenture; (iii) each of the Issuer, the Collateral Manager and each Holder, by executing and delivering a counterpart of this Third Amendment Agreement, hereby agrees that the execution of this Third Amendment Agreement is authorized and permitted by the Original Indenture and that all conditions precedent thereto have been satisfied and that, for all purposes under the Original Indenture, including Section 8.3(b) thereof, the Trustee shall be permitted to rely on this Section 4(c), and shall be as fully protected in so relying on this Section 4(c), in lieu of an Opinion of Counsel; and (iv) each of UBS AG, London Branch and CM Finance Inc., as successor to CM Finance LLC, by executing and delivering a counterpart of this Third Amendment Agreement, hereby represents that it is the beneficial owner of Notes having an aggregate principal amount as indicated above its signature hereto.

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5. Waiver of Opinion Counsel.

For the purposes of this Third Amendment Agreement, the Trustee, the Collateral Manager and each Holder, by executing and delivering a counterpart of this Third Amendment Agreement, hereby waive any requirement under Section 2.13(e) of the Indenture to obtain an opinion of tax counsel.

6. Miscellaneous

(a) Successors and Assigns. This Third Amendment Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No person or entity other than the parties hereto and their respective successors and permitted assigns shall have any rights under this Third Amendment Agreement.

(b) Entire Agreement. This Third Amendment Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings (except as otherwise provided herein) with respect thereto.

(c) Headings. The headings used in this Third Amendment Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Third Amendment Agreement.

(d) Governing Law. This Third Amendment Agreement shall be construed in accordance with, and this Third Amendment Agreement and any matters arising out of or relating in any way whatsoever to this Third Amendment Agreement (whether in contract, tort or otherwise), shall be governed by, the law of the State of New York.

(e) Jurisdiction. With respect to any suit, action or proceedings relating to this Third Amendment Agreement or any matter between the parties arising under or in connection with this Third Amendment Agreement (Proceedings), each party irrevocably: (i) submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York sitting in the Borough of Manhattan and the United States District Court for the Southern District of New York, and any appellate court from any thereof; and (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Third Amendment Agreement precludes any party from bringing Proceedings in any other jurisdiction, nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.

Page 5

(f) Waiver of Jury Trial Right. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS. Each party hereby (a) certifies that no representative, agent or attorney of any other has represented, expressly or otherwise, that such other would not, in the event of a Proceeding, seek to enforce the foregoing waiver; and (b) acknowledges that it has been induced to enter into this Third Amendment Agreement by, among other things, the mutual waivers and certifications in this paragraph.

(g) Counterparts. This Third Amendment Agreement (and each amendment, modification and waiver in respect of this Third Amendment Agreement) may be executed and delivered in any number of counterparts (including by e-mail (PDF) or facsimile), each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument, and each of the parties hereto may execute this Third Amendment Agreement by signing any such counterpart. Delivery of an executed counterpart of this Third Amendment Agreement by e-mail (PDF) or facsimile shall be deemed to constitute due and sufficient delivery of such counterpart.

(h) Severability. If any term, provision, covenant or condition of this Third Amendment Agreement, or the application thereof to any party hereto or any circumstance, is held to be unenforceable, invalid or illegal (in whole or in part) for any reason (in any relevant jurisdiction), the remaining terms, provisions, covenants and conditions of this Third Amendment Agreement, modified by the deletion of the unenforceable, invalid or illegal portion (in any relevant jurisdiction), will continue in full force and effect, and such unenforceability, invalidity, or illegality will not otherwise affect the enforceability, validity or legality of the remaining terms, provisions, covenants and conditions of this Third Amendment Agreement, so long as this Third Amendment Agreement, as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the deletion of such portion of this Third Amendment Agreement, will not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.

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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment Agreement to be duly executed and delivered by their respective signatories thereunto duly authorized as of the date first written above.

CM FINANCE SPV LTD.,
as Issuer
By:
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as Trustee and as Bank
By:
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as Collateral Administrator
By:
Name:
Title:
CM INVESTMENT PARTNERS LLC (as successor to CM Investment Partners, L.P.), as Collateral Manager
By: MMCMIP LLC, as Managing Member
By:
Name:
Title:	MMCMIP Designee

Third Amendment Agreement

UBS AG, LONDON BRANCH,

as Holder of Notes

By:

Name:

Title:

By:

Name:

Title:

CM FINANCE INC. (as successor by merger to CM FINANCE LLC),

as Holder and as Sole Shareholder

By:

Name:

Title:

Third Amendment Agreement

EXHIBIT A

THIRD AMENDED AND RESTATED INDENTURE

Exhibit A

EX-10.36

Exhibit 10.36

UBS AG

100 Liverpool Street

London EC2M 2RH

Tel. +44-20-7567

8000

Date:	May 23, 2013 (as amended and restated as of June 6, 2013, as further amended and restated as of December 4, 2013 and as of September 26, 2014, and as further amended and restated as of July 20, 2015)
To	CM Finance Inc., as successor to CM Finance LLC (“Counterparty”)
Attention:	Stephon Barnes, Christopher E. Jansen and Michael C. Mauer
Fax No:	(212) 380-5915
From:	UBS AG, London Branch (“UBS”)
Re:	Total Return Swap Transaction
UBS Reference Number:	85138421

Ladies and Gentlemen:

The purpose of this letter agreement is to set forth the terms and conditions of the Transaction entered into between UBS AG, London Branch (“UBS”) and CM Finance Inc., as successor to CM Finance LLC (“Counterparty”), a corporation incorporated under the law of the State of Maryland, on the Trade Date specified below (the “Transaction”). This letter constitutes a “Confirmation” as referred to in the Master Agreement specified below.

The definitions and provisions contained in the 2006 ISDA Definitions (the “Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Definitions and this Confirmation, this Confirmation shall govern. Capitalized terms used but not defined in this Confirmation have the meanings assigned to them in Annex A. Capitalized terms used but not defined in this Confirmation or in Annex A have the meanings assigned to them in the Definitions or, if not defined in the Definitions, in the Reference Obligation Indenture referred to below.

With effect from the Amendment Effective Date specified below, this Confirmation amends and restates the prior Confirmation, dated as of May 23, 2013 (as amended and restated as of June 6, 2013 and as further amended and restated as of December 4, 2013 and as of September 26, 2014, and without regard to any subsequent amendments thereto, the “Original Confirmation”) relating to the Transactions described herein, which Original Confirmation (with respect to the period from and after the Amendment Effective Date) is hereby superseded and shall be of no further force or effect.

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1. AGREEMENT

This Confirmation supplements, forms a part of and is subject to, the ISDA Master Agreement (Multicurrency–Cross Border) dated as of May 20, 2013 (as amended, supplemented and otherwise modified and in effect from time to time, the “Master Agreement”), between UBS and Counterparty. All provisions contained in the Master Agreement govern this Confirmation except as expressly modified below.

2. TERMS OF TRANSACTION

The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:
Amendment Effective Date	July 20, 2015
Effective Date:	May 23, 2013
Scheduled Termination Date:	December 5, 2017
Termination Date:	The earlier of (i) the Scheduled Termination Date with respect to the Transaction and (ii) the Obligation Termination Date. The obligations of the parties to make payments required to be made hereunder shall survive the Termination Date.
Obligation Termination Date:	In relation to any Terminated Obligation, the related Termination Settlement Date.
Reference Entity:	CM Finance SPV Ltd., an exempted company incorporated with limited liability under the law of the Cayman Islands.
Reference Obligation:	All of the Class A Notes issued from time to time by the Reference Entity under the Reference Obligation Indenture that are not Pledged Notes.
Pledged Notes:	All of the Class A Notes issued by the Reference Entity under the Reference Obligation Indenture that are held by the Counterparty on the Effective Date or issued to Counterparty on the Amendment Effective Date.
Reference Obligation Indenture:	The Indenture, dated as of May 23, 2013 between the Reference Entity and State Street Bank and Trust Company, as trustee (the “Trustee”), as (i) supplemented by the First Supplemental Indenture, dated as of June 6, 2013, (ii) amended and restated as of December 4, 2013, (iii) further amended and restated as of the Amendment Effective Date and (iv) further amended, restated, supplemented or otherwise modified and in effect from time to time.

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Notional Amount:	The outstanding principal amount of the Reference Obligation (determined after giving effect to any reduction in the principal amount thereof pursuant to the terms of the Reference Obligation Indenture). In relation to a Terminated Obligation, the principal amount of the related Reference Obligation that is the subject of such termination.
Portfolio Asset:	Each “Portfolio Asset” under and as defined in the Reference Obligation Indenture.
Portfolio:	At any time, all Portfolio Assets held by the Reference Entity at such time.
Purchase Price:	As defined in the Reference Obligation Indenture.
Purchase Amount:	In relation to any Portfolio Asset that is not a Delayed Draw Loan and any date of determination, the product of the Purchase Price and the Par Amount. In relation to any Portfolio Asset that is a Delayed Draw Loan and any date of determination, the product of the Purchase Price and the Commitment Amount.
Par Amount:	In relation to any Portfolio Asset, the outstanding principal amount of such Portfolio Asset (as the same may be increased in the case of a Delayed Draw Loan pursuant to any amount drawn in respect of such Delayed Draw Loan). The Par Amount of any Delayed Draw Loan on any date shall include the aggregate stated face amount of all letters of credit, bankers’ acceptances and other similar instruments issued in respect of such Delayed Draw Loan to the extent that the holder of such Delayed Draw Loan is obligated to extend credit in respect of any drawing or other similar payment thereunder.
Commitment Amount:	In relation to any Portfolio Asset that is a Delayed Draw Loan as of any date of determination, the maximum outstanding principal amount of such Portfolio Asset that a registered holder of the amount of such Portfolio Asset held by the Reference Entity would on such date be obligated to fund (including all amounts previously funded and outstanding, whether or not such amounts, if repaid, may be reborrowed).
Portfolio Asset Obligor:	In relation to any Portfolio Asset, the borrower or issuer of the Portfolio Asset set forth in, and

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	identified as the “Obligor” in, the Relevant Source. In addition, “Portfolio Asset Obligor”, unless the context otherwise requires, shall also refer to any guarantor of or other obligor on the Portfolio Asset.
Business Day:	New York, Boston, London and TARGET.
Business Day Convention:	Following (which shall, other than with respect to the definition of “Monthly Period”, apply to any date specified herein for the making of any payment or determination or the taking of any action which falls on a day that is not a Business Day).
Payment Date:	Nine Business Days after the end of each Monthly Period.
Monthly Period:	Each period from, and including, the 15th calendar day of each calendar month (each, a Monthly Date) to, but excluding, the next following Monthly Date, except that (a) the initial Monthly Period will commence on, and include, the Effective Date and will end on, but exclude, the 15th day of June, 2013 and (b) the final Monthly Period will end on, but exclude, the date on which all of the Reference Obligations are paid in full.
Calculation Agent:	UBS. Except as otherwise expressly provided herein, the Calculation Agent shall make all determinations, calculations and adjustments required pursuant to this Confirmation in good faith and in any commercially reasonable manner.
Calculation Agent City:	New York
Payments by Counterparty
Counterparty First Floating Amounts:
First Floating Amount Payer:	Counterparty
First Floating Amount:	In relation to any First Floating Rate Payer Payment Date, the sum of the product of (a) the First Floating Rate Payer Calculation Amount for such First Floating Rate Payer Payment Date multiplied by (b) the Floating Rate Option during the related First Floating Rate Payer Calculation Period plus the Spread multiplied by (c) the Floating Rate Day Count Fraction.

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First Floating Rate Payer Calculation Amount:	In relation to any First Floating Rate Payer Payment Date, the daily average of the Notional Amount during the related First Floating Rate Payer Calculation Period.
First Floating Rate Payer Calculation Period:	Each First Floating Monthly Period, except that (a) the initial First Floating Rate Payer Calculation Period will commence on, and include, the Effective Date and (b) the final First Floating Rate Payer Calculation Period will end on, but exclude, the final Obligation Termination Date.
First Floating Rate Payer Payment Dates:	Each UBS Fixed Amount Payment Date.
First Floating Monthly Period:	Each period from, and including, a First Floating Rate Payer Payment Date to, but excluding, the next following First Floating Rate Payer Payment Date, except that (a) the initial First Floating Monthly Period will commence on, and include, the Effective Date will end on, but exclude the First Floating Rate Payer Payment Date that occurs in June, 2013 and (b) the final First Floating Monthly Period will end on, but exclude, the date on which all of the Reference Obligation is paid in full.
Floating Rate Option:	USD-LIBOR-BBA, provided that the Floating Rate Option for initial First Floating Rate Payer Calculation Period shall be 0.19528%.
Designated Maturity:	One month
Spread:	(a) For the period from and including the Effective Date to but excluding the Amendment Effective Date: 2.85%. (b) From and including the Amendment Effective Date: 2.75%.
Floating Rate Day Count Fraction:	Actual/360
Reset Dates:	As set forth in “Designated Maturity” above
Compounding:	Inapplicable

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Counterparty Second Floating Amounts:
Second Floating Amount Payer:	Counterparty
Second Floating Amount:	In relation to any Terminated Obligation, Capital Depreciation, if any.
Second Floating Rate Payer Payment Dates:	Each Total Return Payment Date.
Counterparty Third Floating Amounts:
Third Floating Amount Payer:	Counterparty
Third Floating Amount:	$48,875.00
Third Floating Rate Payer Payment Dates:	The earlier of (a) September 26, 2014 and (b) the Termination Date.
Counterparty Fourth Floating Amounts:
Fourth Floating Amount Payer:	Counterparty
Fourth Floating Amount:	$258,541.67
Fourth Floating Rate Payer Payment Dates:	The earlier of (a) December 4, 2014 and (b) the Termination Date.
Counterparty Fifth Floating Amounts:
Fifth Floating Amount Payer:	Counterparty
Fifth Floating Amount:	$259,958.33
Fifth Floating Rate Payer Payment Dates:	The earlier of (a) December 4, 2015 and (b) the Termination Date.
Counterparty Sixth Floating Amounts:
Sixth Floating Amount Payer:	Counterparty
Sixth Floating Amount:	$258,541.67

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Sixth Floating Rate Payer Payment Dates:	The earlier of (a) December 5, 2016 and (b) the Termination Date.
Payments by UBS:
UBS Fixed Amounts:
Fixed Amount Payer:	UBS
Fixed Amount:	The Interest and Fee Amount for the related Fixed Amount Payer Calculation Period.
Fixed Amount Payer Calculation Periods:	Each Monthly Period; provided that (a) the initial Fixed Amount Payer Calculation Period shall commence on and include the Effective Date and (b) the final Fixed Amount Payer Calculation Period shall end on, but exclude, the final Obligation Termination Date.
UBS Fixed Amount Payment Dates:	The Payment Date following the last day of any Fixed Amount Payer Calculation Period.
UBS Floating Amounts:
Floating Amount Payer:	UBS
Floating Amount:	In relation to any Terminated Obligation, Capital Appreciation, if any.
Floating Rate Payer Payment Dates:	Each Total Return Payment Date.

3. ACCELERATED TERMINATION.

Collateral Default

(a) If (i) Counterparty defaults in the performance of any of its obligations under Clause 9 in respect of the Transfer by Counterparty as Pledgor of any Eligible Credit Support or (ii) the Reference Entity increases the outstanding principal amount of the Reference Obligations at any time after the Effective Date pursuant to Section 2.13 of the Reference Obligation Indenture, then UBS will have the right but not the obligation to terminate the Transaction in whole (but not in part); provided that (A) in the case of sub-clause (i), UBS may deliver the relevant Accelerated Termination Notice (as defined below) at any time on or prior to the final Termination Trade Date and (B) in the case of sub-clause (ii), UBS must deliver the relevant Accelerated Termination Notice (as defined below) within five Business Days of UBS receiving notice of the relevant

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increase in order to exercise such termination right. UBS can exercise this termination right by delivering a termination notice to Counterparty (an “Accelerated Termination Notice” for purposes of this Clause 3(a)). Such Accelerated Termination Notice shall specify the final Termination Trade Date and the proposed Termination Settlement Date. Upon the termination of the Transaction pursuant to this Clause 3(a), Counterparty shall pay an additional amount to UBS equal to the applicable Breakage Costs on the Obligation Termination Date (which payment obligation of Counterparty shall survive the termination of the Transaction).

Effect of Designation of Early Termination Date

(b) If there occurs or is effectively designated an Early Termination Date under the Master Agreement, then (i) notwithstanding any contrary or otherwise inconsistent provision of the Master Agreement, the provisions set forth in Section 6(e) of the Master Agreement shall not apply to the Transaction and the amount of all payments in respect of each Terminated Obligation shall not be an amount determined in accordance with Section 6(e) of the Master Agreement but shall instead be the Counterparty Second Floating Amount or UBS Floating Amount (as the case may be) determined in accordance with Clause 4 (subject, in the case of Clause 4(a), to the limitations set forth therein with respect to Counterparty relying on such provision), together with any Counterparty First Floating Amount, the Counterparty Third Floating Amount, the Counterparty Fourth Floating Amount, the Counterparty Fifth Floating Amount, the Counterparty Sixth Floating Amount, any UBS Fixed Amount and Breakage Costs (if any) determined in accordance with this Confirmation and subject to netting under the Master Agreement, (ii) the party that designated such Early Termination Date (or the Non-Defaulting Party in the case of an automatic designation) will promptly deliver a notice (an “Accelerated Termination Notice” for purposes of this Clause 3(b)) to the other party (which Accelerated Termination Notice shall specify the final Termination Trade Date and the proposed Termination Settlement Date and may form part of any notice designating such Early Termination Date) and (iii) the amount, if any, payable in respect of such Early Termination Date will be determined in accordance with this Confirmation based upon the delivery of such Accelerated Termination Notice. Notwithstanding the foregoing, upon the termination of the Transaction pursuant to this Clause 3(b) other than as a result of an Event of Default or Termination Event with respect to which UBS is the Defaulting Party or an Affected Party, Counterparty shall pay an additional amount to UBS equal to the applicable Breakage Costs on the Obligation Termination Date (which payment obligation of Counterparty shall survive the termination of the Transaction); provided that Counterparty shall not be required to pay any Breakage Costs in the event of termination of the Transaction as a result of (i) an Additional Termination Event pursuant to Clause 3(c)(i) if the related “Event of Default” (as defined in the Reference Obligation Indenture) is a direct result of any action or omission by Party A or any of its Affiliates or (ii) an Additional Termination Event pursuant to Clause 3(c)(ii).

Additional Termination Events

(c) Each of the following shall constitute an Additional Termination Event under the Master Agreement with respect to which Counterparty will be the sole Affected Party and each of the Transactions entered into hereunder and under the Related Confirmation will constitute an Affected Transaction:

(i) the delivery of an “Accelerated Termination Notice” by UBS to Counterparty in respect of all Transactions currently outstanding under (and as defined in) the Related Confirmation in accordance with Clause 3(a)(ii) of the Related Confirmation;

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(ii) the occurrence of an “Event of Default” under (and as defined in) the Reference Obligation Indenture (provided that, for purposes of this Confirmation and the Master Agreement, the determination of whether an “Event of Default” (as so defined) has occurred with respect to any amount due and payable on the Reference Obligation on the stated maturity thereof shall be made (x) without giving effect to the first sentence of Section 2.7(g) of the Reference Obligation Indenture and (y) without giving effect to any grace period in Section 5.1(a) or Section 5.1(b)(i) of the Reference Obligation Indenture); and

(iii) if and for so long as any UBS Holder holds any part of the Reference Obligation as a hedge for the Transaction, either (A) the ownership by such UBS Holder of the Reference Obligation (or any portion thereof) or (B) the compliance by such UBS Holder with its obligations under the Reference Obligation Indenture or under the Reference Obligation would violate any law, rule or regulation of any governmental, regulatory or judicial authority applicable to such UBS Holder.

4. FINAL PRICE DETERMINATION.

Following the termination of the Transaction (i) pursuant to (or, in the case of Clause 3(b), as described in) Clause 3 or (ii) by reason of the occurrence of the Scheduled Termination Date (other than in connection with a Repayment), the Final Price for each Terminated Obligation will be determined in accordance with this Clause 4.

(a) If any UBS Holder holds the Reference Obligation as a hedge for such Terminated Obligation, subject to sub-clauses (i), (ii) and (iii) below, Counterparty may identify an Approved Dealer that has submitted a Firm Bid to acquire the Reference Obligation from UBS or any such Affiliate, in each case by giving notice of such Firm Bid to UBS. Such notice must be given no later than 10 a.m. (New York time) on the applicable Termination Trade Date. So long as (i) any sale by UBS or such Affiliate of the Reference Obligation or applicable portion thereof to such Approved Dealer (as applicable) is (A) not prohibited under applicable law or regulation and (B) substantially in accordance with the then-current market practice in the principal market for, and transfer restrictions with respect to, the Reference Obligation (as determined by the Calculation Agent) and at prevailing market price, (ii) all payment and collateral delivery obligations of Counterparty have otherwise been satisfied when due under this Confirmation and the Master Agreement and (iii) no Event of Default or Additional Termination Event has occurred or is continuing with respect to Counterparty, in each case on the date Counterparty delivers such notice, (x) if a retransfer is necessary in order for UBS to be able to unwind its hedge position (or the applicable portion thereof) and UBS accepts such Firm Bid, UBS or such Affiliate shall take, on or promptly following the Termination Trade Date all actions within its reasonable control necessary to cause such retransfer of the Reference Obligation to UBS or such Affiliate, (y) subject (only where such retransfer is necessary for UBS to unwind its hedge position (or the applicable portion thereof) and UBS accepts such Firm Bid) to such retransfer of the Reference Obligation having occurred in accordance with UBS’ instructions, UBS or such Affiliate shall accept such Firm Bid and transfer the Reference Obligation or portion thereof to such Approved Dealer and (z) the net cash proceeds received by UBS or such Affiliate from the sale of the Reference Obligation or portion thereof (exclusive of accrued interest and capitalized interest), net of the related Costs of Assignment, shall be the “Final Price” for the relevant Reference Obligation or portion thereof. In the event that such transfer of the Reference Obligation or portion thereof to such Approved Dealer does not occur (I) as a result of a breach by UBS of its obligations under this Section 4(a), the Final Price for the Terminated Obligation shall be determined based on the Firm Bid provided by such Approved Dealer or (II) other than as a result of a breach by UBS of its obligations under this Section 4(a), the Final Price for the Terminated Obligation shall be determined pursuant to Section 4(b) below.

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(b) If the Final Price for the Terminated Obligation is not determined in accordance with clause (a) above, then the Calculation Agent shall attempt to obtain Firm Bids for the Terminated Obligation with respect to the applicable Termination Trade Date from three or more Dealers. The Calculation Agent will give Counterparty notice of its intention to obtain Firm Bids pursuant to this Clause 4 (such notice to be given telephonically and via electronic mail) not later than 5:00 p.m. New York time on the date three Business Days prior to the bid submission deadline as shall be specified by the Calculation Agent in each of its requests for Firm Bids for the Terminated Obligation with respect to the applicable Termination Trade Date. By notice to UBS not later than such bid submission deadline, Counterparty may, but shall not be obligated to, designate any Dealer to provide a Firm Bid (and the Calculation Agent will seek a Firm Bid from such Dealer if so designated by Counterparty on a timely basis).

In seeking to obtain a Firm Bid from any Dealer, the Calculation Agent will deliver to such Dealer the following information: (1) a copy of the Reference Obligation Indenture (and each Transaction Document referred to (and as defined) therein); and (2) a copy of each Monthly Report delivered under (and as defined in) the Reference Obligation Indenture within the last 12 months. Such Dealers must provide the Calculation Agent with a Firm Bid within one Business Day of the Calculation Agent’s request for such Firm Bid in order for the Calculation Agent to consider such Firm Bid in its determinations of the Final Price under this Clause 4(b). In seeking to obtain a Firm Bid from any Dealer, the Calculation Agent will, to the extent practicable, afford such Dealer with an opportunity, to the extent requested by such Dealer, to ask questions of, and receive information from, the persons or entities responsible for the management of the Reference Entity.

UBS may, but is not obligated to, sell or cause the sale of any portion of a Terminated Obligation to any Dealer that provides a Firm Bid for purposes of this Clause 4(b).

If the Calculation Agent is able to obtain at least one Firm Bid or combination of Firm Bids for all of the Notional Amount allocable to a Terminated Obligation, the Final Price for such Terminated Obligation shall be determined by reference to the highest such Firm Bid or combination of Firm Bids received by the Calculation Agent within one Business Day of its request therefor. If no Firm Bids are obtained as provided above in this Clause 4 for all or a portion of a Terminated Obligation, the Final Price shall be deemed to be zero with respect to each portion of such Terminated Obligation for which no Firm Bid was obtained. The Calculation Agent will conduct the bid process in accordance with the procedures set forth in this Clause 4 and otherwise in a commercially reasonable manner.

Notwithstanding anything to the contrary herein,

(i) the Calculation Agent shall be entitled to disregard any Firm Bid submitted by a Dealer if, in the Calculation Agent’s commercially reasonable judgment, (x) such Dealer is ineligible to accept assignment or transfer of the relevant Terminated Obligation or portion thereof, as applicable, substantially in accordance with the then-current market practice in the principal market for such Terminated Obligation, as determined by the Calculation Agent, or (y) such Dealer would not, through the exercise of its commercially reasonable efforts, be able to obtain any consent required under any agreement or instrument governing or otherwise relating to such Terminated Obligation to the assignment or transfer of such Terminated Obligation or portion thereof, as applicable, to it; and

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(ii) if the Calculation Agent determines that the highest Firm Bid obtained in connection with the applicable Termination Trade Date is not bona fide due to (x) the bankruptcy or insolvency of the bidder or (y) the inability, failure or refusal (or reasonably expected inability, failure or refusal) of the bidder to settle the purchase of such Terminated Obligation or portion thereof, as applicable, or otherwise settle transactions in the relevant market or perform its obligations generally, that Firm Bid shall be disregarded.

If the highest Firm Bid for any portion of such Terminated Obligation is disregarded pursuant to this paragraph, then (i) if there is at least one other available Firm Bid for such portion, the “Final Price” shall be the next highest Firm Bid and (ii) if there are no other available Firm Bids for such portion, the Calculation Agent shall have no obligation to obtain further bids, and the applicable “Final Price” for the portion which was so disregarded shall be deemed to be zero.

If UBS transfers, or causes the transfer of, a Terminated Obligation to the Dealer or Dealers providing the highest Firm Bid or combination of Firm Bids, the net cash proceeds received from the sale of such Terminated Obligation (which sale shall be scheduled to settle no later than the Relevant Settlement Date), exclusive of accrued interest and capitalized interest and net of any Costs of Assignment, shall be the “Final Price” for such Terminated Obligation (or the portion thereof that is sold).

If UBS determines, in its sole discretion, not to sell or cause the sale of any portion of such Terminated Obligation to the entity or entities providing the highest Firm Bid or combination of Firm Bids, the “Final Price” for such unsold portion shall be equal to such highest Firm Bid (or combination of Firm Bids) multiplied by the portion of the Notional Amount allocable to such Terminated Obligation (or the respective portions of the Notional Amount to which such Firm Bids relate). The Calculation Agent may perform any of its duties under this Clause 4(b) through any Affiliate designated by it, but no such designation shall relieve the Calculation Agent of its duties under this Clause 4(b).

(c) In the event that (i) the Final Price for all or any part of the Terminated Obligation is deemed to be zero pursuant to the foregoing and (ii) any UBS Holders holds the Reference Obligation as a hedge for such Terminated Obligation, UBS and Counterparty will make commercially reasonable efforts to accomplish the assignment or other transfer to Counterparty (free of payment by Counterparty other than Costs of Assignment incurred by UBS or any of its Affiliates in effecting the transfer; provided that all other payment and collateral delivery obligations of Counterparty are otherwise fulfilled under the Master Agreement at the time of such transfer) of the relevant Terminated Obligation (or the relevant portion thereof) for which the Final Price is deemed to be zero; and UBS shall not be liable for any losses related to any delay in or failure of such assignment beyond its control. Counterparty shall reimburse UBS for all Costs of Assignment incurred by UBS in effecting the transfer promptly following UBS’ demand therefor.

5. [RESERVED]

6. ADJUSTMENTS.

If the Reference Obligation or any portion thereof is irreversibly converted or exchanged into or for any securities, obligations or other assets or property (“Exchange Consideration”), or any payment on the Reference Obligation is paid in the form of any Exchange Consideration that is not cash, thereafter such Exchange Consideration will constitute the Reference Obligation or portion thereof and the Calculation Agent shall, after consultation with the parties, adjust the terms of the Transaction as the Calculation Agent determines appropriate to preserve the theoretical value of the Transaction to the parties immediately prior to such exchange or, if such exchange results in a change in value, the proportionate post-exchange value, and determine the effective date of such adjustments.

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7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

(a) Each party hereby agrees as follows, so long as either party has or may have any obligation under the Transaction.

(i) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into the Transaction; it being understood that information and explanations related to the terms and conditions of the Transaction shall not be considered investment advice or a recommendation to enter into the Transaction. It has not received from the other party any assurance or guarantee as to the expected results of the Transaction;

(ii) Evaluation and Understanding. It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of the Transaction. It is also capable of assuming, and assumes, the financial and other risks of the Transaction;

(iii) Status of Parties. The other party is not acting as a fiduciary or an advisor for it in respect of the Transaction;

(iv) Reliance on its Own Advisors. Without limiting the generality of the foregoing, in making its decision to enter into, and thereafter to maintain, administer or terminate, the Transaction, it will not rely on any communication from the other party as, and it has not received any representation or other communication from the other party constituting, legal, accounting, business or tax advice, and it will consult its own legal, accounting, business and tax advisors concerning the consequences of the Transaction; and

(v) U.S. Tax Treatment. In connection with the Transaction, it will, for U.S. Federal income tax purposes (and to the extent permitted by law, state and local income tax purposes): (w) treat the Counterparty as having retained beneficial ownership of all of the economic benefits and burdens of ownership of the Reference Obligation, the Pledged Notes and each Portfolio Asset at all times during the pendency of the Transaction (except after a default by either party) and all payments made in respect of the Reference Obligation and the Pledged Notes as having been made directly to the Counterparty; (x) treat the Transaction (including the Credit Support Annex to the Transaction), taken together with the issuance of the Reference Obligation to the UBS Holder, as a single loan of USD 102,000,000 from UBS to the Counterparty secured by the Reference Obligation and the Pledged Notes, maturing on the Scheduled Termination Date and which is not a contingent debt instrument described in Treas. Regs. Section 1.1275-4; (y) treat the Counterparty First Floating Amounts as interest paid on an obligation issued in registered form to a U.S. person (within the meaning of Section 7701(a)(30) of the Code) in respect of the loan described in clause (x); and (z) not treat the issuance of the Reference Obligation to the UBS Holder as creating a partnership or otherwise as an equity interest in the Reference Entity. The parties agree to file all tax forms, returns and withholding certificates (including, without limiting the foregoing, U.S. Internal Revenue Service Form 1099 and any withholding certificates required to be provided pursuant to the Schedule to the Master Agreement) consistent with this treatment, and the Counterparty agrees to provide copies of all withholding tax certificates relating to the Reference Obligation and the Portfolio Assets reasonably requested by the trustee under the Reference Obligation Indenture.

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References in this Clause 7(a) to “the other party” shall, in the case of UBS and where the context so allows, include references to any Affiliate of UBS.

(b) Each party acknowledges and agrees that, so long as either party has or may have any obligation under the Transaction:

(i) the Transaction does not create any direct or indirect obligation of the Reference Entity or any Portfolio Asset Obligor or any direct or indirect participation in the Reference Obligation, any Portfolio Asset or any other obligation of the Reference Entity or any Portfolio Asset Obligor;

(ii) each party and its Affiliates may deal in the Reference Obligation and any Portfolio Asset and may accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of commercial or investment banking or other business with the Reference Entity, any Portfolio Asset Obligor or any Affiliate of the Reference Entity or any Portfolio Asset Obligor, any other person or entity having obligations relating to the Reference Entity or any Portfolio Asset Obligor and may act with respect to such business in the same manner as if the Transaction did not exist and may originate, purchase, sell, hold or trade, and may exercise consensual or remedial rights in respect of, obligations, securities or other financial instruments of, issued by or linked to the Reference Entity or any Portfolio Asset Obligor, regardless of whether any such action might have an adverse effect on the Reference Entity or any Portfolio Asset Obligor, the value of the Reference Obligation or any Portfolio Asset or the position of the other party to the Transaction or otherwise;

(iii) with respect to information regarding the Reference Entity, any Portfolio Asset Obligor or any Affiliate of the Reference Entity or any Portfolio Asset Obligor that is or may be material in the context of the Transaction:

(A) each party and its Affiliates and the Calculation Agent may, whether by virtue of the types of relationships described herein or otherwise, at the date hereof or at any time hereafter, be in possession of information regarding the Reference Entity, any Portfolio Asset Obligor or any Affiliate of the Reference Entity or any Portfolio Asset Obligor that is or may be material in the context of the Transaction and that may or may not be publicly available or known to the other party. In addition, this Confirmation does not create any obligation on the part of such party and its Affiliates to disclose to the other party any such relationship or information (whether or not confidential);

(B) Counterparty understands that UBS and its Affiliates are engaged in a wide range of financial services and businesses, including investment management, financing, securities trading, corporate and investment banking and research (such services and businesses are collectively referred to in this Clause 7(b)(iii) as “Activities”) and may engage in the Activities with or on behalf of one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates. Furthermore, UBS or its Affiliates may, in undertaking the Activities, engage in trading in financial products or undertake other investment businesses for its own account or on behalf of others (including one or more of the

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Reference Entity, the Portfolio Asset Obligors and their respective Affiliates and including holding, for its own account or on behalf of others, equity, debt and similar positions in one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates), including trading in or holding long, short or derivative positions in securities, loans or other financial products of one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates. Counterparty understands and agrees that in engaging in the Activities, (x) UBS or its Affiliates may now or in the future have interests or take actions that may conflict with the interests of Counterparty and (y) officers and employees of UBS or its Affiliates (including those responsible for negotiating the Transaction) may currently have and later may receive or otherwise obtain information concerning one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates (including information concerning mergers, acquisitions, divestitures, restructurings, defaults under material agreements, creditors’ rights proceedings or other matters that may affect the value of the Reference Obligation or any Portfolio Asset or the ability of the Reference Entity or any Portfolio Asset Obligor to perform its obligations thereunder), which information may not be available to Counterparty and may be material to a decision to enter into the Transaction (the “Excluded Information”). Counterparty acknowledges that it has determined to enter into the Transaction notwithstanding its lack of knowledge of the Excluded Information. Counterparty agrees that neither UBS nor any of its Affiliates shall have any liability to Counterparty, and Counterparty waives and releases any claims that it might have against UBS or its Affiliates, whether under applicable securities laws or otherwise, with respect to the nondisclosure of the Excluded Information in connection with this Confirmation or the Transaction; provided that the Excluded Information shall not and does not affect the truth or accuracy of UBS’s representations or warranties in the Master Agreement or this Confirmation;

(C) Counterparty confirms that it (i) is a sophisticated entity with respect to the obligations of the type of the Reference Obligation and the Portfolio Assets, (ii) has adequate information concerning the business and financial condition of the Reference Entity and each Portfolio Asset Obligor to make an informed decision regarding its entry into this Confirmation and the Transaction, (iii) possesses (individually or through its Affiliates) such knowledge and experience in financial and business matters that it is capable, without reliance on UBS or its Affiliates, of evaluating the merits and risks (including tax, legal, regulatory, credit, accounting and other financial matters) of entering into this Confirmation and the Transaction and is financially able to bear such risks, (iv) has such knowledge and experience, and has entered into other transactions of a similar economic nature, so as to be aware of the risks and uncertainties inherent in the assumption of rights and obligations of the type contemplated in this Confirmation and the Transaction, and (v) has determined that entering into this Confirmation and the Transaction hereunder is suitable and appropriate for it;

(D) Counterparty acknowledges that (i) it is solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with this Confirmation and the Transaction, (ii) that it has, independently and without reliance upon UBS or its Affiliates, made its own appraisal and

Page 14

investigation of all risks associated with, and its own credit analysis and decision to enter into, this Confirmation and the Transaction based on such documents and information, as it has deemed appropriate and (iii) it will, independently and without reliance upon UBS or its Affiliates, continue to be solely responsible for making its own appraisal and investigation of all risks arising under or in connection with, and its own credit analysis and decision to take or not take action under, this Confirmation and the Transaction, based on such documents and information as it shall from time to time deem appropriate which may include, in each case, any or all of the following (it being understood that neither UBS nor any of its Affiliates is responsible for or has made any representation or warranty with respect to any such matters or information): (x) the financial condition, status and capitalization of the Reference Entity or any Portfolio Asset Obligor; (y) the legality, validity, effectiveness, adequacy or enforceability of any agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with the Reference Obligation or any Portfolio Asset; or (z) the adequacy, accuracy and/or completeness of (A) any document in the form approved by the Reference Entity or any Portfolio Asset Obligor concerning the Reference Entity or such Portfolio Asset Obligor (or any of their respective subsidiaries) which, at the request of the Reference Entity or such Portfolio Asset Obligor and on its behalf, was prepared in relation to the syndication of the Reference Obligation or any Portfolio Asset or other obligations of the Reference Entity or any Portfolio Asset Obligor and which may or may not have been distributed by the arranger(s) of such obligations to selected financial institutions (an “Information Memorandum”) and (B) any other information concerning the Reference Entity or any Portfolio Asset Obligor delivered by UBS or its Affiliates under or in connection with this Confirmation, the Transaction or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with the Reference Obligation or any Portfolio Asset; and

(E) Counterparty agrees that none of (i) the Master Agreement, (ii) the receipt by UBS or its Affiliates of any information (including Excluded Information) concerning one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates (including information concerning the value of the Reference Obligation or any Portfolio Asset or the ability of the Reference Entity or any Portfolio Asset Obligor to perform their respective obligations thereunder) nor (iii) any other matter, shall give rise to any fiduciary or other similar duties (including without limitation any duty of trust or confidence) owing by UBS or its Affiliates to Counterparty including any such duty that would prevent or restrict UBS or its Affiliates from acting on behalf of customers (including the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates) or for its own account;

(iv) neither UBS nor any of its Affiliates shall be under any obligation to hedge the Transaction or to own or hold the Reference Obligation or any Portfolio Asset as a result of the Transaction, and UBS and its Affiliates may establish, maintain, modify, terminate or re-establish any hedge position or any methodology for hedging at any time without regard to Counterparty. Any such purchases, sales or other transactions will be at the sole discretion of UBS and its Affiliates, and Counterparty acknowledges that such transactions may affect the market price of the Reference Obligation and/or the Portfolio Assets. Counterparty acknowledges and agrees that it is not relying on any representation,

Page 15

warranty or statement by UBS or any of its Affiliates as to whether, at what times, in what manner or by what method UBS or any of its Affiliates may engage in any hedging activities;

(v) notwithstanding any other provision in this Confirmation or any other document, UBS and Counterparty (and each employee, representative, or other agent of UBS or Counterparty) may each disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to them relating to such U.S. tax treatment and U.S. tax structure (as those terms are used in Treasury Regulations under Sections 6011, 6111 and 6112 of the Code), other than any information for which nondisclosure is reasonably necessary in order to comply with applicable securities laws. To the extent not inconsistent with the previous sentence, UBS and Counterparty will each keep confidential (except as required by law) all information unless the other party has consented in writing to the disclosure of such information. In the event of a disclosure with respect to the U.S. tax treatment and U.S. tax structure of this Transaction, the person making the disclosure may disclose all information relevant to an understanding of the U.S. tax treatment and U.S. tax structure of this Transaction, but such person may not disclose the identity of the Counterparty, any Reference Entity or any Portfolio Asset; and

(vi) if UBS chooses to hold (either directly or indirectly) the Reference Obligation as a result of the Transaction, UBS may deal with the Reference Obligation as if the Transaction did not exist (and, without limiting the generality of the foregoing, UBS shall have no duty to Counterparty with respect to any such direct or indirect ownership of the Reference Obligation).

(c) Each of the parties hereby represents that, on the date on which the Transaction is entered into hereunder:

(i) it is entering into the Transaction for investment, financial intermediation, hedging or other commercial purposes;

(ii) (x) it is an “eligible contract participant” as defined in the U.S. Commodity Exchange Act, as amended (the “CEA”), (y) the Master Agreement and each Transaction are subject to individual negotiation by each party, and (z) neither the Master Agreement nor the Transaction will be executed or traded on a “trading facility” within the meaning of Section 1a(33) of the CEA; and

(iii) (A) the Master Agreement (including the Credit Support Annex) and each Transaction entered into under this Confirmation is a “swap agreement” within the meaning given to such term under Section 101(53B) of the United States Bankruptcy Code of 1978, as amended (the “Bankruptcy Code”) and (B) it is a “swap participant” within the meaning given to such term under Section 101(53C) of the Bankruptcy Code.

(d) Counterparty hereby represents to UBS that:

(i) its investments in and liabilities in respect of the Transaction, which it understands is not readily marketable, is not disproportionate to its net worth, and it is able to bear any loss in connection with the Transaction, including the loss of its entire investment in the Transaction;

Page 16

(ii) it understands no obligations of UBS to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of UBS or any governmental agency;

(iii) it has elected to treat the Reference Entity as an entity disregarded from its owner for United States Federal income tax purposes;

(iv) it can receive all payments on each Portfolio Asset included in the Portfolio without U.S. Federal withholding tax and the relevant Reference Entity or any subsidiary thereof holding a Portfolio Asset, as applicable, can (except to the extent otherwise disclosed with respect to the Portfolio Asset prior to the related Trade Date (as defined in the Reference Obligation Indenture)) receive all such payments without foreign withholding tax (which representation, subject to any such exception, shall also be made for purposes of Section 3(f) of the Master Agreement);

(v) it has delivered an applicable United States Internal Revenue Service form W-9 (or successor form) with respect to withholding tax required to be delivered by it pursuant to Part 3 of the Schedule to the Master Agreement (and this representation will also be deemed made pursuant to Section 3(f) of the Master Agreement);

(vi) it is not, for U.S. Federal income tax purposes, a tax exempt organization for purposes of Section 514 of the U.S. Internal Revenue Code of 1986, as amended, and, unless any such organization that invests in Counterparty does so only indirectly through an entity that is not transparent for U.S. Federal income tax purposes, there is disclosure to such organization that such organizations may recognize unrelated business taxable income;

(vii) it has obtained tax advice from its auditors or external legal counsel, in either case of recognized standing in relation to U.S. Federal income tax matters, that considered the U.S. tax treatment of the Transaction to which this Confirmation relates; and

(viii) it has obtained its own advice as to the proper tax characterization of the transaction in all jurisdictions, including for the avoidance of doubt the United States, and is not relying on UBS or its advisors in respect of such matters in any respect.

(e) UBS hereby represents to Counterparty that

(i) UBS will provide to the Counterparty and the Reference Entity a valid Form W-9 provided by UBS Securities LLC and attached to a valid Form W-8IMY (or successor thereto), that the Counterparty and the Reference Entity may reliably associate all payments to be made by either of them pursuant to the Transaction with such forms, and therefore may treat all such payments under the Transaction as made to a U.S. person within the meaning of Treas. Regs. Section 1.1441-1(d)(4);

(ii) the Transaction to which this Confirmation relates is entered into by UBS through an office located within the United States, or U.S. personnel of UBS materially participated in this Transaction for U.S. Federal income tax purposes and UBS is acting solely as an agent of UBS Securities LLC, a person that is a “U.S. person” as that term is defined under IRC Section 7701(a)(30);

(iii) except to the extent necessary to enable UBS to exercise any of its rights under Paragraph 6(c) of the Credit Support Annex, that UBS is under no legal or contractual obligation to

Page 17

treat the Reference Obligation issued to it, any Pledged Notes pledged under the Credit Support Annex or any Portfolio Asset as legally or beneficially owned by any person other than the Counterparty; and

(iv) that UBS has obtained its own advice as to the proper tax characterization of the transaction in all jurisdictions, including for the avoidance of doubt the United States, and is not relying on the Counterparty or its advisors in respect of such matters in any respect.

(f) Except for disclosure authorized pursuant to Clause 7(b)(v), Counterparty agrees to be bound by the confidentiality provisions of the Reference Obligation Indenture (and of each credit or loan agreement governing each Portfolio Asset) with respect to all information and documentation in relation to the Reference Entity or any Portfolio Asset Obligor or the Reference Obligation or any Portfolio Asset delivered to Counterparty hereunder. Counterparty acknowledges that such information may include material non-public information concerning one or more of the Reference Entity, the Portfolio Asset Obligors and their respective securities and agrees to use such information in accordance with applicable law, including Federal and State securities laws. In addition, Counterparty agrees to keep confidential any internal rating supplied by UBS to Counterparty with respect to any Portfolio Asset.

(g) Notwithstanding anything in the Master Agreement to the contrary, UBS will not be required to pay any additional amount under Section 2(d)(i) of the Master Agreement in respect of any deduction or withholding for or on account of any Tax in relation to any payment under the Transaction. If UBS is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding for or on account of any Tax in relation to any payment under the Transaction and UBS does not so deduct or withhold, then Section 2(d)(ii) of the Master Agreement shall be applicable.

(h) If an “Event of Default” under (and as defined in) the Reference Obligation Indenture occurs, then UBS may give notice to Counterparty (so long as such event is continuing on the date of such notice) that UBS, in its capacity as Valuation Agent under (and as defined in) the Reference Obligation Indenture, has elected to exercise exclusively on behalf of the Reference Entity and each subsidiary thereof all rights of the Reference Entity to purchase and dispose of, and to exercise all voting and other consensual rights with respect to, and to make all other determinations and decisions with respect to the ownership of, the Portfolio Assets held or to be acquired by the Reference Entity, pursuant to Section 12.1(c) of the Reference Obligation Indenture.

8. ADJUSTMENTS RELATING TO CERTAIN UNPAID OR RESCINDED PAYMENTS.

(a) If (i) UBS makes any payment to Counterparty as provided under Clause 2 and the corresponding Interest and Fee Amount is not paid (in whole or in part) when due or (ii) any Interest and Fee Amount in respect of the Reference Obligation is required to be returned (in whole or in part) by a holder of the Reference Obligation (including, without limitation, the UBS Holder) to the applicable Reference Entity or paid to any other person or entity or is otherwise rescinded pursuant to any bankruptcy or insolvency law or any other applicable law, then (i) each payment obligation under the Transaction related to such payment shall be recomputed by the Calculation Agent as if such unpaid or returned amount had not been paid and (ii) Counterparty will pay to UBS, within five Business Days following receipt of notice from UBS, such amount (or portion thereof) so not paid or so required to be returned, paid or otherwise rescinded. If such returned,

Page 18

paid or otherwise rescinded amount is subsequently paid, UBS shall pay such amount (subject to Clause 8(c)) to Counterparty within five Business Days after the date of such subsequent payment.

(b) [reserved]

(c) Amounts payable pursuant to this Clause 8 shall be subject to adjustment by the Calculation Agent in good faith and on a commercially reasonable basis, as agreed by UBS and Counterparty, in order to preserve for the parties the intended economic risks and benefits of the relevant Transaction; provided that (i) no amounts in respect of interest shall be payable by either party on any adjusted amount and (ii) the Calculation Agent in performing the calculations pursuant to this Clause 8 will assume that no interest has accrued on any adjusted amount.

(d) The payment obligations of UBS and Counterparty pursuant to this Clause 8 shall survive the termination of the Transaction.

9. CREDIT SUPPORT.

Notwithstanding anything in the Credit Support Annex (the “Credit Support Annex”) to the Schedule to the Master Agreement to the contrary, the following collateral terms shall apply to the Transaction to which this Confirmation relates. Capitalized terms used in this Clause 9 but not otherwise defined in this Confirmation have the respective meanings given to such terms in the Credit Support Annex. In the event of any conflict between the Credit Support Annex and these “Collateral Provisions”, these “Collateral Provisions” shall prevail.

(a) Counterparty shall Transfer Eligible Collateral to UBS pursuant to the terms of the Credit Support Annex between UBS and Counterparty, as amended hereby. For purposes of said Credit Support Annex, the Independent Amount applicable to Counterparty in respect of the Transaction to which this Confirmation relates shall, on any Valuation Date, be equal to the aggregate Value of the Pledged Notes, and Counterparty’s obligations to transfer collateral to UBS in respect of such Independent Amount shall at all times be satisfied by the Pledged Notes being Transferred to UBS in accordance with the terms of the Credit Support Annex.

(b) The definition of Exposure in Paragraph 12 of the Credit Support Annex is hereby amended and restated in its entirety to read:

UBS’s “Exposure” as Secured Party for the Transactions entered into hereunder and under the Related Confirmation and any Valuation Date or other date for which Exposure is calculated shall mean the sum of (a) the excess, if any, of the Class A-R Net Collateral Value Deficit over the Class A-R Variation Margin Threshold on such date plus (b) the excess, if any, of the Class A Net Collateral Value Deficit over the Class A Variation Margin Threshold on such date, plus (c) the excess, if any, of the Bond Net Collateral Value Deficit over the Bond Variation Margin Threshold.

(c) The “Minimum Transfer Amount” with respect to Counterparty as of any Valuation Date shall be U.S.$100,000; provided that (i) a single Delivery Amount or Return Amount (as applicable) shall be calculated on each Valuation Date for the Transactions entered into hereunder and under the Related Confirmation for purposes of determining whether or not the Minimum Transfer Amount has been exceeded and (ii) the Minimum Transfer Amount for Counterparty shall be zero (1) for purposes of determining any Delivery Amount required to be Transferred by Counterparty in respect of any Independent Amount and (2) at any time when an Event of Default, Potential

Page 19

Event of Default, Termination Event or event which with the giving of notice or lapse of time would (absent the cure thereof during any applicable grace period) constitute a Termination Event has occurred and is continuing with respect to which Counterparty is (or would be) the Defaulting Party or Affected Party.

(d) Solely for purposes of the first demand (and not any subsequent demand) made by UBS as Secured Party for any Transfer of Eligible Credit Support by Counterparty in respect of a Delivery Amount (or the applicable portion thereof) that is due to an increase in the Exposure of UBS as Secured Party (and not, for the avoidance of doubt, the Transfer of the Pledged Notes in satisfaction of Counterparty’s obligations in respect of the Independent Amount) made or deemed made by UBS pursuant to Clause 9(a) above), Paragraph 4(b) of the Credit Support Annex shall be amended by (i) replacing the words “next Local Business Day” with “tenth Local Business Day thereafter” and (ii) replacing the words “second Local Business Day thereafter” with “eleventh Local Business Day thereafter”. UBS shall make no further demand for the Transfer of Eligible Credit Support by Counterparty in respect of a Delivery Amount (or the applicable portion thereof) that is due to an increase in UBS’ Exposure until such tenth or eleventh (as applicable) Local Business Day period has expired, whereupon the Transfer timing provisions of Paragraph 4(b) shall apply as set forth in the Credit Support Annex without regard to the provisions of this Clause 9(d).

(e) Notwithstanding anything to the contrary herein or in the Credit Support Annex, (i) the Threshold with respect to UBS shall be infinity, (ii) in no event shall Counterparty have any positive Exposure as a Secured Party to UBS with respect to the Transaction to which this Confirmation relates and (iii) accordingly, (A) Counterparty shall be the only “Pledgor” and UBS shall be the only “Secured Party” for all purposes of the Credit Support Annex and (B) only the Counterparty makes the pledge and grant in Paragraph 2 of the Credit Support Annex, the acknowledgment in the final sentence of Paragraph 8(a) of the Credit Support Annex and the representations in Paragraph 9 of the Credit Support Annex.

(f) In no event shall Counterparty’s Credit Support Amount as Pledgor be less than the sum of (i) the Independent Amount for the Transaction to which this Confirmation relates and (ii) the sum of the Independent Amounts for all of the Transactions evidenced by the Related Confirmation. Accordingly, in no event shall the Pledged Notes be Transferred to Counterparty until the Termination Date.

(g) UBS shall be the sole Valuation Agent for purposes of the Transaction to which this Confirmation relates and each Business Day shall be a Valuation Date.

(h) Notwithstanding anything in this Confirmation to the contrary, for purposes of determining the portion of the Exposure that is attributable to a Portfolio Asset (or portion thereof) that is being sold or has been repaid, the Par Amount of such Portfolio Asset shall not be reduced to reflect such sale or repayment until the Business Day next succeeding the settlement date of such sale or the date on which such repayment occurs, as the case may be. In addition, if the Reference Entity sells any Portfolio Asset and the settlement date for such sale occurs after the date customary for settlement substantially in accordance with the then-current market practice in the principal market for such Portfolio Asset (as determined by the Calculation Agent), then Unrealized Capital Appreciation and Unrealized Capital Depreciation will continue to vary until the actual settlement date (and, for this purpose, each of Unrealized Capital Appreciation and Unrealized Capital Depreciation with respect to such Portfolio Asset shall be determined until such date of actual settlement as if no sale price had been established until the date of settlement of the relevant sale).

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(i) The provisions of Paragraph 5 of the Credit Support Annex shall be superseded and replaced in their entirety by Counterparty’s dispute rights with respect to the Current Price of any Portfolio Asset as set forth in the definition of “Current Price”.

10. NOTICE AND ACCOUNT DETAILS.

Notices to UBS:

UBS AG, London Branch

Structured Funding

Attn: Ben Stewart

1285 Avenue of the Americas

New York, NY 10019-6064

Tel: (203) 719-1611

E-mail: OL-Cyrus-TRS@ubs.com

With copies to:

E-mail: DL-IR-STM-TEAM@ubs.com

E-mail: SH-OTC-Credit-Setts@ubs.com

E-mail: OL-CTM@ubs.com

Notices to Counterparty:

CM Finance Inc.

399 Park Avenue, 39^th Floor

New York, NY 10022

Attention: Stephon Barnes, Christopher E. Jansen and Michael C. Mauer

Tel: (212) 380-5904

Email: cjansen@cmfn-inc.com, mm@cmfn-inc.com, jagarwal@cmfn-inc.com and ops@cyruscapital.com

Payments to UBS:

Favour: UBS AG, Stamford Branch Swift Address: UBSWUS33XXX

Further Credit To: UBS AG, London Branch

Swift Address: UBSWGB2LXXX

Account No: 101-WA-140007-000

Payments to Counterparty:

Receiving Bank Name: State Street Bank and Trust Co. Boston

Receiving Bank BIC Code: SBOSUS33XXX

Receiving Bank ABA: 011000028

Beneficiary Account Number: 10434322

Beneficiary Account Name: CM Finance Inc

Page 21

11. OFFICES.

(a) The Office of UBS for the Transaction:

London

(b) The Office of Counterparty for the Transaction:

None

12. SETTLEMENT

The Transaction hereunder is being entered into by a member of the UBS group (“UBS Party”). For the avoidance of doubt, any payment or delivery obligations of the UBS Party in respect of the Transaction may be effected by any of UBS Limited or UBS AG, London Branch or UBS Securities LLC (the “Settlement Agent”). UBS Party has authorized the Settlement Agent to act on its behalf in the same manner and with the same force and effect as UBS Party might or could do in connection with any such payment or delivery obligation.

- signature page follows -

Page 22

Please confirm that the foregoing correctly sets forth the terms of our agreement by having a duly authorized officer of Counterparty execute this Confirmation and return the same by facsimile to the attention of the individual at UBS indicated on the first page hereof.

Yours faithfully

For and on Behalf of

UBS AG, London Branch

By:	By:
Name:	Name:
Title:	Title:

Confirmation – Signature Page

Acknowledged and agreed by CM Finance Inc., as successor to CM Finance LLC, as of the date specified above.

CM FINANCE INC.,

as TRS Counterparty

By:

Name:

Title:

Confirmation – Signature Page

ANNEX A

ADDITIONAL DEFINITIONS

“Affiliate”, for purposes of this Confirmation only, has the meaning given to such term in Rule 405 under the Securities Act of 1933, as amended.

“Approved Dealer” means (a) any entity listed in Annex B hereto and (b) if an entity listed in Annex B hereto is not the principal banking or securities Affiliate within a financial holding company group, the principal banking or securities Affiliate of such listed entity within such financial holding company group; provided that (i) UBS may at any time, upon written notice to Counterparty, delete any name listed in such Annex so long as such deletion is consistent with the general application of its internal credit and risk policies with respect to such Approved Dealer (and not designed to circumvent the rights of Counterparty hereunder) and (ii) the parties may, at any time, agree in writing to add or remove an Approved Dealer to or from Annex B.

“Bond Net Collateral Value Deficit” has the meaning given to such term in the Related Confirmation.

“Bond Variation Margin Threshold” has the meaning given to such term in the Related Confirmation.

“Breakage Cost Calculation Period” means, with respect to any termination of the Transaction following the delivery of an Accelerated Termination Notice pursuant to Clause 3(a) or 3(b), each period from, and including, one Breakage Cost Hypothetical Payment Date to, but excluding, the next following Breakage Cost Hypothetical Payment Date, except that (a) the initial Breakage Cost Calculation Period will commence on, and include, the Obligation Termination Date, and (b) the final Breakage Cost Calculation Period will end on, but exclude, December 5, 2017.

“Breakage Cost Hypothetical Payment Date” means, with respect to any termination of the Transaction following the delivery of an Accelerated Termination Notice pursuant to Clause 3(a) or 3(b), (a) each Payment Date, commencing on the first Payment Date following the date on which such Accelerated Termination Notice is delivered, and (b) the Scheduled Termination Date.

“Breakage Costs” means, with respect to any termination of the Transaction following the delivery of an Accelerated Termination Notice pursuant to Clause 3(a) or 3(b), an amount equal to the sum, determined with respect to each Breakage Cost Calculation Period occurring after the date on which such Accelerated Termination Notice is delivered, of the product of the following:

(a) USD 102,000,000,

(b) the Floating Rate Day Count Fraction (determined based on the actual number of days in such Breakage Cost Calculation Period), and

(c) the Spread,

discounted from the Breakage Cost Hypothetical Payment Date occurring immediately following the end of such Breakage Cost Calculation Period to the Obligation Termination Date; provided that such present value shall be determined using the discount factor implied by the mid-point between the forward bid and offered side LIBOR curves for fixed-for-floating LIBOR swaps of the relevant tenors.

Page A-1

“Capital Appreciation” and “Capital Depreciation” mean, for any Total Return Payment Date, the amount determined according to the following formula for the applicable Terminated Obligation:

Final Price – Applicable Notional Amount

where

“Final Price” means, with respect to any Terminated Obligation, the amount determined pursuant to Clause 4, and

“Applicable Notional Amount” means the Notional Amount (determined immediately prior to the applicable Termination Trade Date) allocable to such Terminated Obligation.

If such amount is positive, such amount is “Capital Appreciation” and if such amount is negative, the absolute value of such amount is “Capital Depreciation”.

“Class A Net Collateral Value” means, on any date of determination, the excess, if any, of (a) the sum of (i) the Class A Total Asset Amount on such date plus (ii) the Class A Net Unrealized Capital Appreciation on such date over (b) the sum of (i) the Aggregate Principal Amount of the Reference Obligation outstanding on such date plus (ii) the Class A Net Unrealized Capital Depreciation on such date.

“Class A Net Collateral Value Deficit” means, on any date of determination, the excess, if any, of (a) the Aggregate Principal Amount of the Reference Obligation outstanding on such date over (b) the Class A Net Collateral Value on such date.

“Class A Net Unrealized Capital Appreciation” means, on any date of determination, the product of (a) the Net Unrealized Capital Appreciation on such date and (b) an amount equal to the quotient of (i) the Aggregate Principal Amount of Class A Notes that are outstanding on such date divided by (ii) the sum of (A) the Outstanding Class A-R Funded Amount and (B) the Aggregate Principal Amount of Class A Notes that are outstanding on such date.

“Class A Net Unrealized Capital Depreciation” means, on any date of determination, the product of (a) the Net Unrealized Capital Depreciation on such date and (b) an amount equal to the quotient of (i) the Aggregate Principal Amount of Class A Notes that are outstanding on such date divided by (ii) the sum of (A) the Outstanding Class A-R Funded Amount and (B) the Aggregate Principal Amount of Class A Notes that are outstanding on such date.

“Class A Notes” means the Class A Notes issued from time to time by the Reference Entity under the Reference Obligation Indenture.

“Class A Total Asset Amount” means, on any date of determination, the product of (a) the Total Asset Amount on such date and (b) an amount equal to the quotient of (i) the Aggregate Principal Amount of Class A Notes that are outstanding on such date divided by (ii) the sum of (A) the Outstanding Class A-R Funded Amount and (B) the Aggregate Principal Amount of Class A Notes that are outstanding on such date.

“Class A Variation Margin Threshold” means, on any date of determination, an amount equal to 9% of the Aggregate Principal Amount of the Class A Notes then outstanding (after giving effect to any repayment on such date); provided that, the Class A Variation Margin Threshold shall be zero while any “Event of Default” under (and as defined in) the Reference Obligation Indenture shall have occurred and be continuing.

Page A-2

“Class A-R Net Collateral Value Deficit” has the meaning given to such term in the Related Confirmation.

“Class A-R Notes” means the Class A-R Notes issued from time to time by the Reference Entity under the Reference Obligation Indenture.

“Class A-R Variation Margin Threshold” has the meaning given to such term in the Related Confirmation.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Costs of Assignment” means, in the case of any Terminated Obligation or Portfolio Asset, the sum of (a) any costs of any purchase, exchange, sale, transfer or assignment transaction with respect to such Terminated Obligation or Portfolio Asset paid by a person or entity effecting such transaction (including any UBS Holder) under the terms of such Terminated Obligation or Portfolio Asset or otherwise actually imposed on such person or entity by any applicable trustee, administrative agent, registrar, borrower or obligor incurred in connection with any such transaction with respect to such Terminated Obligation or Portfolio Asset (including, without limitation, any amounts reimbursable by such person or entity in respect of any tax or other governmental charge incurred with respect thereto), (b) any reasonable expenses that are incurred by such person or entity in connection with any such transaction and (c) any reasonable administrative, legal or accounting fees, costs and expenses (including, without limitation, any fees and expenses of the trustee of or outside counsel to the Reference Entity) that are incurred by such person or entity in connection with any such transaction.

“Current Price” means, with respect to each Portfolio Asset on any date of determination, the determination by the Valuation Agent’s loan trading desk of the net cash proceeds that would be received from the sale on such date of determination of such Portfolio Asset, exclusive of accrued interest and capitalized interest and net of the related expected Costs of Assignment. If, with respect to any date of determination, Counterparty, acting in a commercially reasonable manner and in good faith, disputes any such original determination of the Current Price of any Portfolio Asset by the Valuation Agent, then Counterparty may, no later than two New York Business Hours after the notice of such determination is given to Counterparty, designate at least one Dealer to provide to the Valuation Agent, within such two New York Business Hour period, a Firm Bid to purchase each such Portfolio Asset (with a quotation amount equal to the Par Amount or (in the case of a Delayed Draw Loan) Commitment Amount). Such Firm Bid (or the highest Firm Bid, if more than one) timely received in accordance with the foregoing will be the Current Price of the relevant Portfolio Asset with respect to the relevant date of determination. If no such Firm Bid is timely received in accordance with the foregoing, the Current Price of the relevant Portfolio Asset will be the original determination thereof by the Valuation Agent. For the avoidance of doubt, any determination of any amount herein (other than any portion of such amount that represents an undisputed amount) consequent upon the determination of a Current Price subject to dispute as provided above shall be delayed until the deadline for the provision of Firm Bid(s) (or, if applicable, any such valuation) to the Valuation Agent as aforesaid. The “Current Price” shall be (i) expressed as a percentage of (A) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount or (B) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount and (ii) determined exclusive of accrued interest and capitalized interest.

“Dealer” means (a) any entity (other than the Calculation Agent or any of its Affiliates) designated by the Calculation Agent or its designated Affiliate in its sole discretion as a “Dealer” for the purposes of this Confirmation and (b) to the extent designated by Counterparty as provided in Clause 4(b) or pursuant to the definition of “Current Price”, either (i) any Approved Dealer or (ii) any other entity approved in advance by UBS, such approval not to be unreasonably withheld or delayed (it being agreed that UBS

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may reasonably withhold its approval based on the credit standing and its risk assessment of such entity); provided that the Calculation Agent or any Affiliate thereof may be a Dealer if more than one Dealer is designated pursuant to Clause 4.

“Defaulted Portfolio Asset” means any Portfolio Asset as to which (a) there has occurred a default as to the payment of principal and/or interest (without regard to any notice requirement or grace period; provided that any capitalization of interest that is permitted under the terms of the relevant Underlying Instrument shall not constitute a default for purposes of the foregoing), (b) such Portfolio Asset is a Participation Interest with respect to which the relevant Selling Institution has defaulted in any respect in the performance of any of its payment obligations under such Participation Interest or (c) such Portfolio Asset is a Participation Interest in a loan that would, if such loan were a Portfolio Asset, constitute a “Defaulted Portfolio Asset”; provided that, in each of the cases set forth in clauses (a) through (c) above, such Portfolio Asset will only constitute a “Defaulted Portfolio Asset” for so long as such default has not been cured or waived.

“Delayed-Draw Loan” has the meaning given to such term in the Reference Obligation Indenture.

“Firm Bid” means, (a) with respect to a Terminated Obligation, a good and irrevocable bid for value to purchase all of such Terminated Obligation, expressed as a percentage of the portion of the Notional Amount allocable to such Terminated Obligation and determined exclusive of accrued interest and capitalized interest, for scheduled settlement no later than the Relevant Settlement Date, submitted by (i) in the case of a Firm Bid obtained for purposes of Clause 4(a), an Approved Dealer specified by Counterparty in its sole discretion or (ii) in the case of a Firm Bid obtained for purposes of Clause 4(b), a Dealer specified by the Calculation Agent in its sole discretion (or, to the extent permitted by Clause 4(b), Counterparty), in each case as of a time during regular business hours in New York City and (b) with respect to a Portfolio Asset and any dispute with respect to the determination of the Current Price thereof, a good and irrevocable bid for value to purchase the Par Amount or (in the case of a Delayed Draw Loan) Commitment Amount of such Portfolio Asset, expressed as a percentage and determined exclusive of accrued interest and capitalized interest, for scheduled settlement within the standard settlement cycle for such Portfolio Asset (with such cycle commencing on the applicable date of submission), submitted by a Dealer specified by the Calculation Agent in its sole discretion (or, to the extent permitted by Clause 4(b), Counterparty), in each case as of a time during regular business hours in New York City.

“Insolvency Event” has the meaning given to such term in the Reference Obligation Indenture.

“Interest and Fee Amount” means, for any Fixed Amount Payer Calculation Period, the aggregate amount of interest (including, without limitation, interest breakage costs, deferred or capitalized interest and interest thereon), fees (including, without limitation, amendment, consent, tender, facility and other similar fees) and other amounts (other than in respect of principal repayments) actually paid with respect to the Reference Obligation (after deduction of any withholding taxes for which the relevant Reference Entity is not obligated to reimburse holders of the Reference Obligation, if applicable) during such Fixed Amount Payer Calculation Period; provided that Interest and Fee Amounts shall not include any amounts that accrue prior to the Effective Date or that accrue on or after the Obligation Termination Date.

“Net Unrealized Capital Appreciation” means, with respect to all Portfolio Assets in the Portfolio (other than Non-Approved Portfolio Assets, Zero Value Participation Interests and Defaulted Portfolio Assets) and any date of determination, the greater of (a) zero and (b) an amount equal to:

(i) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price is greater than the Purchase Price of such Portfolio Asset, of (A) such Current Price minus such Purchase Price multiplied by (B) (1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset, minus

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(ii) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price of such Portfolio Asset is less than the Purchase Price of such Portfolio Asset, of (A) such Purchase Price minus such Current Price multiplied by (B) (1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset;

provided that, for the purposes of computing the Net Unrealized Capital Appreciation, any such Portfolio Asset that is sold or repaid will be deemed to continue to be outstanding in an amount equal to its Par Amount (or in the case of a Delayed Draw Loan, Commitment Amount) until (but excluding) the date of settlement of such sale or the date of such repayment.

“Net Unrealized Capital Depreciation” means, with respect to all Portfolio Assets in the Portfolio (other than Non-Approved Portfolio Assets, Zero Value Participation Interests and Defaulted Portfolio Assets) and any date of determination, the greater of (a) zero and (b) an amount equal to:

(i) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price of such Portfolio Asset is less than the Purchase Price of such Portfolio Asset, of (A) such Purchase Price minus such Current Price multiplied by (B)(1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset, minus

(ii) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price is greater than the Purchase Price of such Portfolio Asset, of (A) such Current Price minus such Purchase Price multiplied by (B) (1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset;

provided that, for the purposes of computing the Net Unrealized Capital Depreciation, any such Portfolio Asset that is sold or repaid will be deemed to continue to be outstanding in an amount equal to its Par Amount (or in the case of a Delayed Draw Loan, Commitment Amount) until (but excluding) the date of settlement of such sale or the date of such repayment.

“New York Business Hour” means any one-hour period that occurs during the period from 9:00 a.m. (New York time) to 6:00 p.m. (New York time) on any day on which commercial banks are open for business in New York City; provided that if a period is expressed as an amount of New York Business Hours and insufficient New York Business Hours exist prior to 6:00 p.m. (New York time) on the relevant day following the commencement of such period, such period shall be deemed to continue on the next succeeding day on which commercial banks are open for business in New York City until the relevant period of New York Business Hours has expired.

“Non-Approved Portfolio Asset” means any Portfolio Asset which UBS has not approved in writing by notice to Counterparty on or prior to the settlement date of the acquisition thereof by the Reference Entity.

“Outstanding Class A-R Funded Amount” has the meaning given to such term in the Reference Obligation Revolving Credit Note Agreement.

“Reference Obligation Revolving Credit Note Agreement” means the Revolving Credit Note Agreement, dated as of December 4, 2013, between the Reference Entity, State Street Bank and Trust Company and the noteholders from time to time party thereto, as amended as of the Amendment Effective Date, as the same may be further amended, modified or otherwise supplemented from time to time.

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“Participation Interest” has the meaning given to such term in the Reference Obligation Indenture.

“Related Confirmation” means the Confirmation relating to certain total return swap transactions referencing the Class A-R Notes and certain bonds, dated as of December 4, 2013, with UBS Reference Number: 85242362 between Party A and Party B, amended and restated as of September 26, 2014 and as further amended as of the Amendment Effective Date, as the same may be further amended, modified or otherwise supplemented from time to time.

“Relevant Settlement Date” means the date customary for settlement substantially in accordance with the then-current market practice in the principal market for the relevant Reference Obligation (as determined by the Calculation Agent with reference to the relevant Termination Trade Date).

“Relevant Source” means (a) in the case of an initial Portfolio Asset, the agreement specified as such in Schedule 1 to the Reference Obligation Indenture, and (b) otherwise, the indenture, credit agreement, loan agreement or other agreement governing such Portfolio Asset.

“Selling Institution” has the meaning given to such term in the Reference Obligation Indenture.

“Terminated Obligation” means the Reference Obligation terminated pursuant to Clause 3.

“Termination Settlement Date” means, for any Terminated Obligation, (a) if the Final Price is determined by reference to the actual sale of a Terminated Obligation pursuant to Clause 4, the date of settlement of such sale and (b) otherwise, the Relevant Settlement Date.

“Termination Trade Date” means, with respect to any Terminated Obligation, (a) where an Approved Dealer identified by Counterparty is acquiring the Reference Obligation or applicable portion thereof from UBS or its Affiliate pursuant to Section 4(a), the Termination Trade Date specified in the applicable Accelerated Termination Notice, or (b) otherwise the bid submission deadline as shall be set forth in each of UBS’ requests issued pursuant to Section 4(b) for Firm Bids for the portion of the Notional Amount allocable to such Terminated Obligation (expressed as a percentage and determined exclusive of accrued interest and capitalized interest) that are the basis for determining the Final Price of such Terminated Obligation.

“Total Asset Amount” means, on any date of determination by the Valuation Agent, an amount equal to the sum of: (a) the aggregate Purchase Amount of all Portfolio Assets in the Portfolio (other than Non-Approved Portfolio Assets, Zero Value Participation Interests and Defaulted Portfolio Assets) on such date; plus (b) the aggregate amount of all cash standing to the credit of the Accounts (excluding any and all Class A-R Prepayment Accounts) on such date; plus (c) the aggregate cost of purchase of all “Eligible Investments” (as defined in the Reference Obligation Indenture) held by the Reference Entity on such date

“Total Return Payment Date” means, with respect to any Terminated Obligation, the Obligation Termination Date in respect of such Terminated Obligation.

“UBS Holder” means, if UBS or an Affiliate of UBS holds the Reference Obligation or any portion thereof as a result of the Transaction, UBS or such Affiliate, as appropriate.

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“Underlying Instrument” means the indenture, credit agreement or other agreement pursuant to which a Portfolio Asset has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such Portfolio Asset or of which the holders of such Portfolio Asset are the beneficiaries.

“Zero Value Participation Interest” means any Participation Interest included in the Portfolio Assets that (a) has not been elevated to a loan directly held and registered in the name of the Reference Entity within 90 days of the Effective Date or (b) is acquired by the Reference Entity at any time after the Effective Date.

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ANNEX B

APPROVED DEALERS

Bank of America Securities LLC

Barclays Bank plc

BNP Paribas

Cantor Fitzgerald

Castle Oak

CIBC World Markets, Inc.

Citibank, N.A.

Credit Agricole Cheuveux North America, Inc.

Credit Suisse First Boston LLC

Deutsche Bank Securities Inc.

Goldman Sachs & Co.

Guggenheim

Global Hunter

Jefferies & Company Inc.

JPMorgan Chase Bank, N.A.

Macquarie

Miller Tabak Roberts Securities, LLC

Morgan Stanley & Co.

Nomura

RBC Capital Markets Corp.

SG Americas Securities LLC

Sterne, Age & Leach, Inc.

The Royal Bank of Scotland plc.

UBS AG

Wachovia Capital Markets LLC

Page B-1

EX-10.37

Exhibit 10.37

UBS AG

100 Liverpool Street

London EC2M 2RH

Tel. +44-20-7567 8000

Date:	December 4, 2013 (amended and restated as of September 26, 2014, and as further amended and restated as of July 17, 2015)
To	CM Finance Inc., as successor to CM Finance LLC (“Counterparty”)
Attention:	Stephon Barnes, Christopher E. Jansen and Michael C. Mauer
Fax No:	(212) 380-5915
From:	UBS AG, London Branch (“UBS”)
Re:	Total Return Swap Transactions
UBS Reference Number:	85242362

Ladies and Gentlemen:

The purpose of this letter agreement (the “Master Confirmation”) is to set forth the terms and conditions of each of the Transactions entered into from time to time between UBS AG, London Branch (“UBS”) and CM Finance Inc., as successor to CM Finance LLC (“Counterparty”), a corporation incorporated under the law of the State of Maryland, on the Trade Date specified below (each, a “Transaction”, and collectively the “Transactions”), and, with respect to each Bond Transaction (as defined below), pursuant to a Bond Transaction Supplement substantially in the form set forth in Annex C hereto (a “Bond Transaction Supplement”, which together with this Master Confirmation shall constitute a “Bond Transaction Confirmation”). Each Transaction, or in the case of the Bond Transactions (as defined below), each Bond Transaction Confirmation, constitutes a “Confirmation” as referred to in the Master Agreement specified below.

The definitions and provisions contained in the 2006 ISDA Definitions (the “Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Master Confirmation and each Bond Transaction Confirmation. Capitalized terms used but not defined in this Master Confirmation or any Bond Transaction Confirmation have the meanings assigned to them in Annex A. Capitalized terms used but not defined in this Master Agreement, any Bond Transaction Confirmation or in Annex A have the meanings assigned to them in the Definitions.

With effect from the Second Amendment Effective Date specified below, this Master Confirmation amends and restates the prior Confirmation, dated as of December 4, 2013 (as amended and restated as of September 26, 2014, and without regard to any subsequent amendments thereto, the “Original Confirmation”) relating to the Transactions described herein, which Original Confirmation (with respect

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to the period from and after the Second Amendment Effective Date) is hereby superseded and shall be of no further force or effect. The sole Transaction evidenced by the Original Confirmation relating to the Class A-R Notes is referred to herein as the “A-R Note Transaction”. The A-R Note Transaction shall continue after the Second Amendment Effective Date and be governed by the terms of this Master Confirmation only (without regard to any Bond Transaction Supplement).

1. AGREEMENT

This Master Confirmation and each Bond Transaction Confirmation, together with the Master Agreement (defined below), evidences a complete binding agreement between you and us as to the terms of the Transactions entered into hereunder. This Master Confirmation and each Bond Transaction Confirmation supplements, forms a part of and is subject to, the ISDA Master Agreement (Multicurrency–Cross Border), including the Schedule thereto (the “Schedule”) and the Credit Support Annex to the Schedule (the “Credit Support Annex”, and together with such ISDA Master Agreement and the Schedule, the “Master Agreement”), each between UBS and Counterparty, dated as of May 20, 2013 (as amended, supplemented and otherwise modified and in effect from time to time). All provisions contained or incorporated in the Master Agreement govern, this Master Confirmation and each Bond Transaction Confirmation except as expressly modified below or in the relevant Bond Transaction Supplement (where applicable).

With respect to any Transaction, in the event of any inconsistency between a Bond Transaction Supplement, this Master Confirmation, the Master Agreement and the Definitions, the following will govern with respect to such Transaction in the order of precedence indicated: (1) the Bond Transaction Supplement (if appropriate), (2) this Master Confirmation (without giving effect to any Bond Transaction Supplement), (3) the Master Agreement (without giving effect to this Master Confirmation or any Bond Transaction Supplement), and (4) the Definitions.

2. TERMS OF TRANSACTION

The terms of the particular Transaction to which this Master Confirmation relates are as follows:

General Terms:

Amendment Effective Date	September 26, 2014
Second Amendment Effective Date	July 17, 2015
Trade Date:	December 4, 2013
Effective Date:	December 4, 2013
Scheduled Termination Date:	December 5, 2016
Termination Date:	With respect to each Transaction, the earlier of (i) the Scheduled Termination Date and (ii) the Obligation Termination Date with respect to such Transaction. The obligations of the parties to make payments required to be made hereunder shall survive the Termination Date.

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Obligation Termination Date:	(a) In relation to any Terminated Obligation, the related Termination Settlement Date. (b) In relation to any Repaid Obligation, the related Repayment Date.
Reference Entity:	(a) With respect to the A-R Note Transaction, CM Finance SPV Ltd., an exempted company incorporated with limited liability under the law of the Cayman Islands (the “A-R Note Reference Entity”). (b) With respect to each Bond Transaction, the issuer of the Reference Obligation identified as such in the relevant Bond Transaction Supplement (and any successor issuer in relation to such Reference Obligation). In addition, with respect to each Bond Transaction, “Reference Entity”, unless the context otherwise requires, shall also refer to any guarantor on the relevant Reference Obligation.
Reference Obligation:	(a) With respect to the A-R Note Transaction, all of the Class A-R Notes issued from time to time by the A-R Note Reference Entity under the Reference Obligation Indenture that are not Pledged Notes, and (b) with respect to any other Transaction, the security listed in the relevant Bond Transaction Supplement having a Bond Reference Amount equal to the “Bond Reference Amount” indicated in such Bond Transaction Supplement, subject to adjustment by the Calculation Agent in accordance with the terms of this Master Confirmation (each such Transaction, a “Bond Transaction”). With respect to any Bond Transaction, the Reference Obligation can be either an Initial Bond Reference Obligation, or a Subsequent Bond Reference Obligation.
Initial Bond Reference Obligation:	A Reference Obligation listed in a Bond Transaction Supplement delivered on the Second Amendment Effective Date. The Second Amendment Effective Date shall be the “Obligation Trade Date” in relation to each Initial Bond Reference Obligation. Promptly following the entry into any Bond Transaction subject to this Master Confirmation on the Second Amendment Effective Date, UBS shall deliver to Counterparty a Bond Transaction Supplement in relation to such Bond Transaction and a list of all the outstanding Bond Transactions subject to this Master Confirmation as of such date in the form set forth in Annex D hereto (such list, the “Bond Transaction List”).

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Any failure by UBS to effect such delivery shall not constitute an Event of Default under the Master Agreement, and shall not affect the validity of the related Bond Transaction.

Subsequent Bond Reference Obligation:

Counterparty may, by notice to UBS on any Business Day after the Second Amendment Effective Date (such notice, a “Subsequent Trade Notice”, and each such day, an “Obligation Trade Date” in relation to the security specified in such Subsequent Trade Notice), designate that any security (each, a “Subsequent Bond Reference Obligation”) shall become the subject of a Bond Transaction under this Master Confirmation. Any such Subsequent Trade Notice shall specify: (i) the proposed Subsequent Bond Reference Obligation; (ii) the proposed Reference Entity; (iii) the proposed Bond Reference Amount; and (iv) the CUSIP, if any, of the proposed Subsequent Bond Reference Obligation. Notwithstanding the foregoing, no such designation by Counterparty with respect to any Subsequent Bond Reference Obligation will be effective unless: (a) UBS, in its sole discretion, consents on or prior to the Obligation Trade Date with respect to such Subsequent Bond Reference Obligation to such Subsequent Bond Reference Obligation becoming the subject of a Bond Transaction hereunder; (b) with respect to any Bond Transaction, if UBS elects to establish a hedge for such Bond Transaction, UBS effects the settlement of such hedge on or before the Obligation Settlement Date with respect to such Bond Transaction (and the related Subsequent Bond Reference Obligation); and (c) on the Obligation Trade Date with respect to such Subsequent Bond Reference Obligation, the Aggregate Bond Notional Amount will not exceed the Maximum Bond Notional Amount immediately after the relevant proposed Subsequent Bond Reference Obligation becomes the subject of a Bond Transaction hereunder. If UBS, in its sole discretion, determines that any Subsequent Bond Reference Obligation which is the subject of a Subsequent Trade Notice does not satisfy any of the foregoing conditions, UBS shall give prompt notice to Counterparty and no Bond Transaction will be entered into with respect thereto.

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	If UBS, in its sole discretion, determines that the Subsequent Bond Reference Obligation which is the subject of a Subsequent Trade Notice does satisfy the foregoing conditions, UBS shall: (a) promptly notify the Counterparty of its determination of the Initial Bond Market Price in relation to such Subsequent Bond Reference Obligation; and (b) promptly following the Obligation Trade Date for such Subsequent Bond Reference Obligation, deliver to Counterparty (i) a Bond Transaction Supplement in relation to such Bond Transaction, and (ii) an updated Bond Transaction List as at such Obligation Trade Date. Any failure by UBS to effect such delivery shall not constitute an Event of Default under the Master Agreement, and shall not affect the validity of the related Bond Transaction.
Obligation Trade Date; Obligation Settlement Date:	With respect to each Bond Transaction, on the Obligation Trade Date for such Bond Transaction, the Bond Reference Amount of such Bond Transaction shall be, for all purposes hereof other than calculating Rate Payments, increased by the “Bond Reference Amount” specified in the relevant Bond Transaction Supplement. With respect to each Bond Transaction, the “Obligation Settlement Date” shall be the date following the Obligation Trade Date for such Bond Transaction that is customary for settlement of the related Reference Obligation, settling substantially in accordance with then-current market practice in the principal market for the related Reference Obligation (as determined by the Calculation Agent). On the Obligation Settlement Date for each Bond Transaction, the Bond Reference Amount of such Transaction shall be, solely for the purposes of calculating Rate Payments, increased by the “Bond Reference Amount” specified in the relevant Bond Transaction Supplement.
Pledged Notes:	All of the Class A-R Notes issued by the A-R Note Reference Entity under the Reference Obligation Indenture that are held by the Counterparty on the Effective Date or issued to Counterparty on the Amendment Effective Date.

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Reference Obligation Indenture:	The Indenture, dated as of May 23, 2013 between the A-R Note Reference Entity and State Street Bank and Trust Company, as trustee (the “Trustee”), as (i) supplemented by the First Supplemental Indenture, dated as of June 6, 2013, (ii) amended and restated as of December 4, 2013, (iii) further amended and restated as of the Amendment Effective Date, (iv) further amended and restated as of the Second Amendment Effective Date and (v) further amended, restated, supplemented or otherwise modified and in effect from time to time.
Portfolio Asset:	Each “Portfolio Asset” under and as defined in the Reference Obligation Indenture.
Portfolio:	At any time, all Portfolio Assets held by the A-R Note Reference Entity at such time.
Purchase Price:	As defined in the Reference Obligation Indenture.
Purchase Amount:	In relation to any Portfolio Asset that is not a Delayed Draw Loan and any date of determination, the product of the Purchase Price and the Par Amount. In relation to any Portfolio Asset that is a Delayed Draw Loan and any date of determination, the product of the Purchase Price and the Commitment Amount.
Par Amount:	In relation to any Portfolio Asset, the outstanding principal amount of such Portfolio Asset (as the same may be increased in the case of a Delayed Draw Loan pursuant to any amount drawn in respect of such Delayed Draw Loan). The Par Amount of any Delayed Draw Loan on any date shall include the aggregate stated face amount of all letters of credit, bankers’ acceptances and other similar instruments issued in respect of such Delayed Draw Loan to the extent that the holder of such Delayed Draw Loan is obligated to extend credit in respect of any drawing or other similar payment thereunder.
Commitment Amount:	In relation to the Reference Obligation that is the subject of the A-R Note Transaction or any Portfolio Asset that is a Delayed Draw Loan as of any date of determination, the maximum outstanding principal amount of such Reference Obligation or such Portfolio Asset that a registered holder of such Reference Obligation or the amount of such Portfolio

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	Asset held by the A-R Note Reference Entity would on such date be obligated to fund (including all amounts previously funded and outstanding, whether or not such amounts, if repaid, may be reborrowed).
Portfolio Asset Obligor:	In relation to any Portfolio Asset, the borrower or issuer of the Portfolio Asset set forth in, and identified as the “Obligor” in, the Relevant Source. In addition, “Portfolio Asset Obligor”, unless the context otherwise requires, shall also refer to any guarantor of or other obligor on the Portfolio Asset.
Bond Reference Amount:	In relation to any Bond Transaction (and the related Reference Obligation) as of any date of determination, the outstanding principal amount of such security as shown in the relevant Bond Transaction Supplement opposite “Bond Reference Amount”, as reduced pursuant to Clauses 3 and 5 and otherwise adjusted pursuant to Clauses 6 and 8.
Initial Bond Market Price:	In relation to: (a) any Initial Bond Reference Obligation (and the related Bond Transaction), the Initial Bond Market Price specified in the relevant Bond Transaction Supplement; and (b) any Subsequent Bond Reference Obligation (and the related Transaction), the Initial Bond Market Price specified in the relevant Bond Transaction Supplement, as determined as contemplated above opposite the caption “Subsequent Bond Reference Obligation”. The Initial Bond Market Price will be determined as of the related Obligation Trade Date inclusive of accrued interest and will be expressed as a percentage of the Bond Reference Amount. The Initial Bond Market Price will be determined exclusive of expenses that would be incurred by a buyer in connection with any purchase of the related Reference Obligation.
Bond Notional Amount:	(a) In relation to any Bond Transaction (other than in relation to any Terminated Obligation or Repaid Obligation), as of any date of determination, the Bond Reference Amount of the related Reference Obligation as of such date multiplied by the Initial Bond Market Price in relation to such Reference Obligation; and

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	(b) In relation to any Terminated Obligation or Repaid Obligation that relates to a Bond Transaction, as of any date of determination, the amount of the reduction in the Bond Reference Amount of the related Reference Obligation on such date of determination determined under this Master Confirmation multiplied by the Initial Bond Market Price in relation to the related Reference Obligation.
Aggregate Bond Notional Amount:	As of any date of determination, the sum of the Bond Notional Amounts with respect to all Bond Transactions outstanding on such date.
Business Day:	New York, Boston, London and TARGET.
Business Day Convention:	Following (which shall, other than with respect to the definition of “Monthly Period”, apply to any date specified herein for the making of any payment or determination or the taking of any action which falls on a day that is not a Business Day).
Payment Date:	Nine Business Days after the end of each Monthly Period.
Monthly Period:	Each period from, and including, the 15th calendar day of each calendar month (each, a Monthly Date) to, but excluding, the next following Monthly Date, except that (a) the initial Monthly Period will commence on, and include, the Effective Date and will end on, but exclude, the 15th day of December, 2013 and (b) the final Monthly Period will end on, but exclude, the date on which all of the Reference Obligations are paid in full.
Calculation Agent:	UBS. Except as otherwise expressly provided herein, the Calculation Agent shall make all determinations, calculations and adjustments required pursuant to this Master Confirmation in good faith and in any commercially reasonable manner.
Calculation Agent City:	New York

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Payments by Counterparty
Counterparty First Fixed Amounts:
Counterparty First Fixed Amounts:
First Fixed Amount Payer:	Counterparty
First Fixed Amount:	In relation to any First Fixed Rate Payer Payment Date, the product of (a) the First Fixed Rate Payer Calculation Amount for such First Fixed Rate Payer Payment Date multiplied by (b) the First Fixed Spread multiplied by (c) the Fixed Rate Day Count Fraction.
First Fixed Rate Payer Calculation Amount:	In relation to any First Fixed Rate Payer Payment Date, an amount equal to the sum of (a) the daily average, during the related First Fixed Rate Payer Calculation Period, of (i) USD50,000,000 minus (ii) the Unfunded A-R Note Reference Obligation Amount, and (b) the daily average, during the related First Fixed Rate Payer Calculation Period, of the Aggregate Bond Notional Amount.
First Fixed Rate Payer Calculation Period:	Each First Fixed Monthly Period, except that (a) the initial First Fixed Rate Payer Calculation Period will commence on, and include, the Effective Date and (b) the final First Fixed Rate Payer Calculation Period will end on, but exclude, the final Obligation Termination Date.
First Fixed Rate	Each UBS Fixed Amount Payment Date
Payer Payment Dates:
First Fixed Monthly Period:	Each period from, and including, a First Fixed Rate Payer Payment Date to, but excluding, the next following First Fixed Rate Payer Payment Date.
First Fixed Spread:	(a) From and including the Effective Date to but excluding the Amendment Effective Date, 2.10% and (b) thereafter, 2.00%.
Fixed Rate Day Count Fraction	30/360
Counterparty Second Fixed Amounts:
Second Fixed Amount Payer:	Counterparty

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Second Fixed Amount:	In relation to any Second Fixed Rate Payer Payment Date, the product of (a) the daily average of the Unfunded A-R Note Reference Obligation Amount for the related Second Fixed Monthly Period multiplied by (b) the Second Fixed Spread multiplied by (c) the Fixed Rate Day Count Fraction.
Second Fixed Rate Payer Calculation Period:	Each Second Fixed Monthly Period, except that (a) the initial Second Fixed Rate Payer Calculation Period will commence on, and include, the Effective Date and (b) the final Second Fixed Rate Payer Calculation Period will end on, but exclude, the Obligation Termination Date with respect to the A-R Note Transaction.
Second Fixed Monthly Period	Each period from, and including, a Second Fixed Rate Payer Payment Date to, but excluding, the next following Second Fixed Rate Payer Payment Date.
Second Fixed Spread:	0.50%
Second Fixed Rate Payer Payment Dates:	Each UBS Fixed Amount Payment Date.
Fixed Rate Day Count Fraction	30/360
Counterparty First Floating Amounts:
First Floating Amount Payer:	Counterparty
First Floating Amount:	In relation to any Terminated Obligation or Repaid Obligation, Capital Depreciation, if any
First Floating Rate Payer Payment Dates:	Each Total Return Payment Date
Counterparty Second Floating Amount:
Second Floating Amount Payer:	Counterparty
Second Floating Amount:	USD625,000
Second Floating Rate Payer Payment Date:	The Effective Date

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Counterparty Third Floating Amount:
Third Floating Amount Payer:	Counterparty
Third Floating Amount:	USD157,721.51
Third Floating Rate Payer Payment Date:	The earlier of (a) September 26, 2014 and (b) the Termination Date
Counterparty Fourth Floating Amount:
Fourth Floating Amount Payer:	Counterparty
Fourth Floating Amount:	USD1,003,750.00
Fourth Floating Rate Payer Payment Date:	The earlier of (a) December 4, 2014 and (b) the Termination Date
Counterparty Fifth Floating Amount:
Fifth Floating Amount Payer:	Counterparty
Fifth Floating Amount:	USD1,006,500.00
Fifth Floating Rate Payer Payment Date:	The earlier of (a) December 4, 2015 and (b) the Termination Date
Payments by UBS:
UBS Fixed Amounts:
Fixed Amount Payer:	UBS
Fixed Amount:	The Interest and Fee Amount received (i) in the case of the A-R Note Transaction, during the related Fixed Amount Payer Calculation Period, and (ii) in the case of each Bond Transaction, on any Business Day.
Fixed Amount Payer Calculation Periods:	Each Monthly Period; provided that (a) the initial Fixed Amount Payer Calculation Period shall commence on and include the Effective Date and (b) the final Fixed Amount Payer Calculation Period shall end on, but exclude, the final Obligation Termination Date.
UBS Fixed Amount Payment Dates:	In relation to: (a) the A-R Note Transaction, the Payment Date following the last day of any Fixed Amount Payer Calculation Period; and

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	(b) each Bond Transaction, each Business Day following (i) the date on which such Interest and Fee Amount is received by a holder of such Reference Obligation, or, if the related Reference Obligation is held as a hedge by or on behalf of UBS as a hedge for such Bond Transaction, is received by the UBS Holder of the related hedge in respect of such Transaction.
UBS Floating Amounts:
Floating Amount Payer:	UBS
Floating Amount:	In relation to any Terminated Obligation or Repaid Obligation, Capital Appreciation, if any.
Floating Rate Payer Payment Dates:	Each Total Return Payment Date.

3. ACCELERATED TERMINATION.

Collateral Default

(a) A Transaction may be terminated in whole by either party (or in part by Counterparty) in accordance with this Clause 3(a) by the giving of notice (an “Accelerated Termination Notice”) to the other party (each such termination, an “Accelerated Termination”).

(i) Counterparty shall be entitled to terminate any Bond Transaction or any portion thereof for any reason by delivering an Accelerated Termination Notice to UBS that is given (A) on or prior to the proposed Termination Trade Date and (B) no fewer than five Business Days prior to the proposed Termination Settlement Date. The Accelerated Termination Notice shall specify the Reference Obligation that is the subject of such Accelerated Termination, the Bond Reference Amount of the Terminated Obligation, the proposed Termination Trade Date and the proposed Termination Settlement Date. With respect to any termination pursuant to this clause (i), the Final Price with respect to any such Terminated Obligation shall be determined in accordance with Clause 4(a) or Clause 4(b), as applicable.

(ii) If (x) Counterparty fails to make, when due, any Transfer required under Paragraph 3 of the Credit Support Annex (as modified pursuant to Clause 9 of this Master Confirmation) to be made by Counterparty in relation to any Transaction to which this Master Confirmation relates, or (y) the A-R Note Reference Entity increases the Maximum RCN Facility Funding Commitment at any time after the Effective Date pursuant to Section 2.13 of the Reference Obligation Indenture, then UBS shall be entitled to terminate all (but not some only) of the Transactions to which this Master Confirmation relates by delivering an Accelerated Termination Notice to Counterparty; provided that (A) in the case of sub-clause (x), UBS may deliver the relevant Accelerated

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Termination Notice at any time on or prior to the final Termination Trade Date and (B) in the case of sub-clause (y), UBS must deliver the relevant Accelerated Termination Notice within five Business Days of UBS receiving notice of the relevant increase in order to exercise such termination right. The Accelerated Termination Notice shall specify, as to each Terminated Obligation, the Reference Obligation that is the subject of such Accelerated Termination, the Bond Reference Amount of the Terminated Obligation (where applicable), the proposed Terminated Trade Date and the proposed Termination Settlement Date. With respect to any termination pursuant to this Clause 3(a)(ii), the Final Price with respect to any such Terminated Obligation shall be determined in accordance with Clause 4(b). Upon the termination of all (but not some only) of the Transactions pursuant to this Clause 3(a)(ii), Counterparty shall pay an additional amount to UBS equal to the applicable Breakage Costs on the final Obligation Termination Date (which payment obligation of Counterparty shall survive the termination of the Transactions).

Effect of Designation of Early Termination Date

(b) If there occurs or is effectively designated an Early Termination Date under the Master Agreement, then (i) each Transaction to which this Master Confirmation relates will be terminated (and each related Reference Obligation shall be deemed to constitute a “Terminated Obligation”), (ii) notwithstanding any contrary or otherwise inconsistent provision of the Master Agreement, the provisions set forth in Section 6(e) of the Master Agreement shall not apply to the Transactions to which this Master Confirmation relates and the amount of all payments in respect of each Terminated Obligation shall not be an amount determined in accordance with Section 6(e) of the Master Agreement but shall instead be the Counterparty First Floating Amount or UBS Floating Amount (as the case may be) in respect of such Transaction determined in accordance with Clause 4 (subject, in the case of Clause 4(a), to the limitations set forth therein with respect to Counterparty relying on such provision), together with any Counterparty First Fixed Amount, the Counterparty Third Floating Amount, the Counterparty Fourth Floating Amount, the Counterparty Fifth Floating Amount and any UBS Fixed Amount and Breakage Costs (if any) determined in accordance with this Master Confirmation and subject to netting under the Master Agreement, (iii) the party that designated such Early Termination Date (or the Non-Defaulting Party in the case of an automatic designation) will promptly deliver a notice (an “Accelerated Termination Notice” for purposes of this Clause 3(b)) to the other party (which Accelerated Termination Notice shall specify the proposed Termination Trade Date and the proposed Termination Settlement Date and may form part of any notice designating such Early Termination Date) and (iv) the amount, if any, payable in respect of such Early Termination Date with respect to the Transactions to which this Master Confirmation relates will be determined in accordance with this Master Confirmation based upon the delivery of such Accelerated Termination Notice and shall be an “Unpaid Amount” with respect to Section 6(e) of the Master Agreement that is payable on the final Total Return Payment Date with respect to all Transactions (and not when otherwise provided in Section 6(e)). Notwithstanding the foregoing, upon the termination of all (but not some only) of the Transactions pursuant to this Clause 3(b) other than as a result of an Event of Default or Termination Event with respect to which UBS is the Defaulting Party or an Affected Party, Counterparty shall pay an additional amount to UBS equal to the applicable Breakage Costs on the final Obligation Termination Date (which payment obligation of Counterparty shall survive the termination of the Transactions); provided that, Counterparty shall not be required to pay any Breakage Costs in the event of a termination of the Transactions as a result of (i) an Additional Termination Event pursuant to Clause 3(c)(i) if the related “Event of Default” (as defined in the Reference Obligation Indenture) is a direct result of any action or omission by Party A or any of its Affiliates or (ii) an Additional Termination Event pursuant to Clause 3(c)(ii) or 3(c)(iii).

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Additional Termination Events

(c) Each of the following shall constitute an Additional Termination Event under the Master Agreement with respect to which Counterparty will be the sole Affected Party and (x) in the case of sub-clause (i), each of the Transactions entered into hereunder and under the Related Confirmation will constitute an Affected Transaction, and (y) in the case of sub-clauses (ii) and (iii) below, (A) if the relevant Transaction is the A-R Note Transaction, each of the Transactions entered into hereunder and (other than in the case of sub-clause (iii) below) under the Related Confirmation will constitute an Affected Transaction, and (B) if the relevant Transaction is a Bond Transaction, such Transaction only shall constitute an Affected Transaction:

(i) the occurrence of an “Event of Default” under (and as defined in) the Reference Obligation Indenture (provided that, for purposes of this Master Confirmation and the Master Agreement, the determination of whether an “Event of Default” (as so defined) has occurred with respect to any amount due and payable in respect of the Reference Obligation related to the A-R Note Transaction on the stated maturity thereof shall be made (x) without giving effect to the first sentence of Section 2.7(g) of the Reference Obligation Indenture and (y) without giving effect to any grace period in Section 5.1(a) or Section 5.1(b)(i) of the Reference Obligation Indenture);

(ii) if and for so long as any UBS Holder holds any part of any Reference Obligation as a hedge for any Transaction, either (A) the ownership by such UBS Holder of such Reference Obligation (or any portion thereof) or (B) the compliance by such UBS Holder with its obligations under the Reference Obligation Indenture (to the extent such Reference Obligation is related to the A-R Note Transaction) or under such Reference Obligation would violate any law, rule or regulation of any governmental, regulatory or judicial authority applicable to such UBS Holder; and

(iii) if and for so long as any UBS Holder holds any part of any Reference Obligation as a hedge for any Transaction, UBS reasonably determines that either (A) the ownership by such UBS Holder of such Reference Obligation (or any portion thereof) or (B) the compliance by such UBS Holder with its obligations under the Reference Obligation Indenture (to the extent such Reference Obligation is related to the A-R Note Transaction) or under such Reference Obligation should violate any law, rule or regulation of any governmental, regulatory or judicial authority applicable to such UBS Holder (as shall be evidenced by either (x) evidence of a governmental, regulatory or judicial authority having informed UBS that such authority believes the foregoing to be the case or (y) a copy of a “should” level opinion of external counsel confirming the foregoing); provided that UBS shall not be entitled to designate an Early Termination Date under this clause (iii) unless (A) UBS is simultaneously exercising any similar rights it may have to effect a termination of all other swap transactions that are similarly affected (directly or indirectly as a result of any hedge position held in connection with such swap transactions) by the law, rule or regulation underlying such event and (B) such designated Early Termination Date occurs no earlier than the later of (1) the date that is 90 days following the effective date of the notice designating such Early Termination Date and (2) the date occurring five Local Business Days prior to the date on which the law, rule or regulation underlying such event becomes effective (and the 20 day period in Section 6(b)(iv) of the Master Agreement shall be deemed to have been amended accordingly solely for purposes of the Additional Termination Event described in this clause (iii)).

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Effect of Termination

(d) With respect to any Bond Transaction terminated in whole pursuant to this Clause 3, (i) as of the relevant Termination Trade Date, the Bond Reference Amount of such Bond Transaction shall, for all purposes hereof other than calculating Rate Payments, be reduced to zero and (ii) as of the relevant Transaction Settlement Date, the Bond Reference Amount for such Bond Transaction shall, solely for the purposes of calculating Rate Payments, be reduced to zero. With respect to any Bond Transaction terminated in part pursuant to this Clause 3, (i) as of the relevant Termination Trade Date, the Bond Reference Amount for such Bond Transaction shall be, for all purposes hereof other than calculating Rate Payments, reduced by the amount of the reduction of the Bond Reference Amount specified in the relevant Accelerated Termination Notice, and (ii) as of the relevant Termination Settlement Date, the Bond Reference Amount of such Bond Transaction shall be, solely for the purposes of calculating Rate Payments, reduced by the amount of the reduction of the Bond Reference Amount specified in the relevant Accelerated Termination Notice. Following any Termination Trade Date (other than the Termination Trade Date in respect of the final Bond Transaction), UBS shall prepare and deliver to Counterparty an updated Bond Transaction List. Any failure by UBS to effect such delivery shall not constitute an Event of Default under the Master Agreement and shall not affect the validity of the consequences prescribed in this Clause 3(d).

4. FINAL PRICE DETERMINATION.

Following the termination of any Transaction in whole or in part (i) pursuant to (or, in the case of Clause 3(b), as described in) Clause 3 or (ii) by reason of the occurrence of the Scheduled Termination Date (other than in connection with a Repayment), the Final Price for the relevant Terminated Obligation will be determined in accordance with this Clause 4.

(a) If any UBS Holder holds the related Reference Obligation as a hedge for such Terminated Obligation, subject to sub-clauses (i), (ii) and (iii) below, Counterparty may identify an Approved Dealer that has submitted a Firm Bid to acquire such Reference Obligation from UBS or any such Affiliate, in each case by giving notice of such Firm Bid to UBS. Such notice must be given no later than 10 a.m. (New York time) on the applicable Termination Trade Date. So long as (i) any sale by UBS or such Affiliate of such Reference Obligation or applicable portion thereof to such Approved Dealer (as applicable) is (A) not prohibited under applicable law or regulation and (B) substantially in accordance with the then-current market practice in the principal market for, and transfer restrictions with respect to, such Reference Obligation (as determined by the Calculation Agent) and at prevailing market price, (ii) all payment and collateral delivery obligations of Counterparty have otherwise been satisfied when due under this Master Confirmation, the Bond Transaction Confirmation and the Master Agreement and (iii) no Event of Default or Additional Termination Event has occurred or is continuing with respect to Counterparty, in each case on the date Counterparty delivers such notice, (x) if a retransfer is necessary in order for UBS to be able to unwind its hedge position (or the applicable portion thereof) and UBS accepts such Firm Bid, UBS or such Affiliate shall take, on or promptly following the Termination Trade Date all actions within its reasonable control necessary to cause such retransfer of the related Reference Obligation to UBS or such Affiliate, (y) subject (only where such retransfer is necessary for UBS to unwind its hedge position (or the applicable portion thereof) and UBS accepts such Firm Bid) to such retransfer of such Reference Obligation having occurred in accordance with UBS’ instructions, UBS or such Affiliate shall accept such Firm Bid and transfer such Reference Obligation or portion thereof to such Approved Dealer and (z) the net cash proceeds received by UBS or such Affiliate from the sale of such Reference Obligation or portion thereof (exclusive of accrued interest and capitalized interest in the case of a Reference Obligation related to the A-R Note Transaction, and inclusive of accrued interest in the case of a Reference Obligation related

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to a Bond Transaction), and net of the related Costs of Assignment, shall be the “Final Price” for the relevant Reference Obligation or portion thereof. In the event that such transfer of the Reference Obligation or portion thereof to such Approved Dealer does not occur (I) as a result of a breach by UBS of its obligations under this Section 4(a), the Final Price for the Terminated Obligation shall be determined based on the Firm Bid provided by such Approved Dealer or (II) other than as a result of a breach by UBS of its obligations under this Section 4(a), the Final Price for the Terminated Obligation shall be determined pursuant to Section 4(b) below.

(b) If the Final Price for any Terminated Obligation is not determined in accordance with clause (a) above, then the Calculation Agent shall attempt to obtain Firm Bids for such Terminated Obligation with respect to the applicable Termination Trade Date from three or more Dealers. The Calculation Agent will give Counterparty notice of its intention to obtain Firm Bids pursuant to this Clause 4(b) (such notice to be given telephonically and via electronic mail) not later than 5:00 p.m. New York time on the date three Business Days prior to the bid submission deadline as shall be specified by the Calculation Agent in each of its requests for Firm Bids for such Terminated Obligation with respect to the applicable Termination Trade Date. By notice to UBS not later than such bid submission deadline, Counterparty may, but shall not be obligated to, designate any Dealer to provide a Firm Bid (and the Calculation Agent will seek a Firm Bid from such Dealer if so designated by Counterparty on a timely basis).

Such Dealers must provide the Calculation Agent with a Firm Bid within one Business Day of the Calculation Agent’s request for such Firm Bid in order for the Calculation Agent to consider such Firm Bid in its determinations of the Final Price under this Clause 4(b).

In seeking to obtain a Firm Bid from any Dealer for a Reference Obligation related to the A-R Note Transaction, the Calculation Agent will (i) deliver to such Dealer the following information: (1) a copy of the Reference Obligation Indenture (and each Transaction Document referred to (and as defined) therein); and (2) a copy of each Monthly Report delivered under (and as defined in) the Reference Obligation Indenture within the last 12 months, and (ii) to the extent practicable, afford such Dealer with an opportunity, to the extent requested by such Dealer, to ask questions of, and receive information from, the persons or entities responsible for the management of the Reference Entity with respect to the A-R Note Transaction.

UBS may, but is not obligated to, sell or cause the sale of any portion of a Terminated Obligation to any Dealer that provides a Firm Bid for purposes of this Clause 4(b).

If the Calculation Agent is able to obtain at least one Firm Bid or combination of Firm Bids for all of the portion of the Committed Amount (in the case of the A-R Note Transaction) or the Bond Reference Amount (in the case of a Bond Transaction) allocable to a Terminated Obligation, the Final Price for such Terminated Obligation shall be determined based on the highest Firm Bid or highest weighted average of any combination of Firm Bids received by the Calculation Agent within one Business Day of its request therefor. If no Firm Bids are obtained as provided above in this Clause 4(b) for all or a portion of a Terminated Obligation, the Final Price shall be deemed to be zero with respect to each portion of such Terminated Obligation for which no Firm Bid was obtained. The Calculation Agent will conduct the bid process in accordance with the procedures set forth in this Clause 4(b) and otherwise in a commercially reasonable manner.

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Notwithstanding anything to the contrary herein,

(i) the Calculation Agent shall be entitled to disregard any Firm Bid submitted by a Dealer if, in the Calculation Agent’s commercially reasonable judgment, (x) such Dealer is ineligible to accept assignment or transfer of the relevant Terminated Obligation or portion thereof, as applicable, substantially in accordance with the then-current market practice in the principal market for such Terminated Obligation, as determined by the Calculation Agent, or (y) such Dealer would not, through the exercise of its commercially reasonable efforts, be able to obtain any consent required under any agreement or instrument governing or otherwise relating to such Terminated Obligation to the assignment or transfer of such Terminated Obligation or portion thereof, as applicable, to it; and

(ii) if the Calculation Agent determines that the highest Firm Bid obtained in connection with the applicable Termination Trade Date is not bona fide due to (x) the bankruptcy or insolvency of the bidder or (y) the inability, failure or refusal (or reasonably expected inability, failure or refusal) of the bidder to settle the purchase of such Terminated Obligation or portion thereof, as applicable, or otherwise settle transactions in the relevant market or perform its obligations generally, that Firm Bid shall be disregarded.

If the highest Firm Bid for any portion of such Terminated Obligation is disregarded pursuant to this paragraph, then (i) if there is at least one other available Firm Bid for such portion, the “Final Price” shall be determined based on the next highest Firm Bid and (ii) if there are no other available Firm Bids for such portion, the Calculation Agent shall have no obligation to obtain further bids, and the applicable “Final Price” for the portion which was so disregarded shall be deemed to be zero.

If UBS transfers, or causes the transfer of, a Terminated Obligation to the Dealer or Dealers providing the highest Firm Bid or highest weighted average of any combination of Firm Bids, the net cash proceeds received from the sale of such Terminated Obligation (which sale shall be scheduled to settle no later than the Relevant Settlement Date), exclusive of accrued interest and capitalized interest in the case of a Terminated Obligation related to the A-R Note Transaction, or inclusive of accrued interest in the case of a Termination Obligated related to a Bond Transaction and, in each case, net of any Costs of Assignment, shall be the “Final Price” for such Terminated Obligation (or the portion thereof that is sold).

If UBS determines, in its sole discretion, not to sell or cause the sale of any portion of such Terminated Obligation to the entity or entities providing the highest Firm Bid or highest weighted average of any combination of Firm Bids, the “Final Price” for such unsold portion shall be determined based on the highest Firm Bid or highest weighted average of any combination of Firm Bids, as the case may be.

The Calculation Agent may perform any of its duties under this Clause 4(b) through any Affiliate designated by it, but no such designation shall relieve the Calculation Agent of its duties under this Clause 4(b).

(c) In the event that (i) the Final Price for all or any part of the Terminated Obligation is deemed to be zero pursuant to the foregoing and (ii) any UBS Holders holds the related Reference Obligation as a hedge for such Terminated Obligation, UBS and Counterparty will make commercially reasonable efforts to accomplish the assignment or other transfer to Counterparty (free of payment by Counterparty other than Costs of Assignment incurred by UBS or any of its

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Affiliates in effecting the transfer; provided that (A) all other payment and collateral delivery obligations of Counterparty are otherwise fulfilled under the Master Agreement at the time of such transfer) of the relevant Terminated Obligation (or the relevant portion thereof) for which the Final Price is deemed to be zero; and (B) UBS shall not be liable for any losses related to any delay in or failure of such assignment beyond its control. Counterparty shall reimburse UBS for all Costs of Assignment incurred by UBS in effecting the transfer promptly following UBS’ demand therefor.

5. REPAYMENT

If all or a portion of the Bond Reference Amount of any Reference Obligation related to a Bond Transaction is repaid or otherwise reduced on or prior to the Scheduled Termination Date (the amount of such repayment or other reduction, a “Repayment”; the portion of the related Reference Obligation so repaid or otherwise reduced, a “Repaid Obligation”; and the date of such Repayment, the “Repayment Date”):

(a) the Total Return Payment Date with respect to the Repaid Obligation will be the Business Day following the Repayment Date;

(b) as of the related Repayment Date, the Bond Reference Amount of such Reference Obligation shall be decreased by an amount equal to the principal amount of the Repaid Obligation; and

(c) the related Final Price of the Repaid Obligation shall be the amount of principal and premium in respect of principal paid on the Repaid Obligation to holders thereof on such Repayment Date.

Promptly following any Repayment Date, UBS shall prepare and deliver to Counterparty a revised Bond Transaction List showing the revised Bond Reference Amount for the related Reference Obligation. Any failure by UBS to effect such delivery shall not constitute an Event of Default under the Master Agreement and shall not affect the validity of the consequences prescribed by this Clause 5.

6. ADJUSTMENTS.

If any Reference Obligation or any portion thereof is irreversibly converted or exchanged into or for any securities, obligations or other assets or property (“Exchange Consideration”), or any payment on any Reference Obligation is paid in the form of any Exchange Consideration that is not cash, thereafter such Exchange Consideration will constitute such Reference Obligation or portion thereof and the Calculation Agent shall, after consultation with the parties, adjust the terms of the relevant Transaction as the Calculation Agent determines appropriate to preserve the theoretical value of such Transaction to the parties immediately prior to such exchange or, if such exchange results in a change in value, the proportionate post-exchange value, and determine the effective date of such adjustments.

7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

(a) Each party hereby agrees as follows, so long as either party has or may have any obligation under any Transaction to which this Master Confirmation relates, with respect to each such Transaction.

(i) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into such Transaction and as to whether such Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into such Transaction; it

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being understood that information and explanations related to the terms and conditions of such Transaction shall not be considered investment advice or a recommendation to enter into such Transaction. It has not received from the other party any assurance or guarantee as to the expected results of such Transaction;

(ii) Evaluation and Understanding. It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of such Transaction. It is also capable of assuming, and assumes, the financial and other risks of such Transaction;

(iii) Status of Parties. The other party is not acting as a fiduciary or an advisor for it in respect of such Transaction;

(iv) Reliance on its Own Advisors. Without limiting the generality of the foregoing, in making its decision to enter into, and thereafter to maintain, administer or terminate, such Transaction, it will not rely on any communication from the other party as, and it has not received any representation or other communication from the other party constituting, legal, accounting, business or tax advice, and it will consult its own legal, accounting, business and tax advisors concerning the consequences of such Transaction; and

(v) U.S. Tax Treatment. With respect to the A-R Note Transaction, it will, for U.S. Federal income tax purposes (and to the extent permitted by law, state and local income tax purposes): (w) treat the Counterparty as having retained beneficial ownership of all of the economic benefits and burdens of ownership of the Reference Obligation, the Pledged Notes and each Portfolio Asset in respect of the A-R Note Transaction at all times during the pendency of the A-R Note Transaction (except after a default by either party) and all payments made in respect of such Reference Obligation and the Pledged Notes as having been made directly to the Counterparty; (x) treat the A-R Note Transaction (including the Credit Support Annex), taken together with the issuance of the Reference Obligation to the UBS Holder, as a single commitment of USD 50,000,000 from UBS to the Counterparty for a loan of an amount up to USD 50,000,000 secured by the Reference Obligation and the Pledged Notes in respect of the A-R Note Transaction, maturing on the Scheduled Termination Date and which is not a contingent debt instrument described in Treas. Regs. Section 1.1275-4; (y) treat the Counterparty First Floating Amounts as interest paid on an obligation issued in registered form to a U.S. person (within the meaning of Section 7701(a)(30) of the Code) in respect of the loan described in clause (x); and (z) not treat the issuance of the Reference Obligation to the UBS Holder as creating a partnership or otherwise as an equity interest in the A-R Note Reference Entity. The parties agree to file all tax forms, returns and withholding certificates (including, without limiting the foregoing, U.S. Internal Revenue Service Form 1099 and any withholding certificates required to be provided pursuant to the Schedule to the Master Agreement) consistent with this treatment, and the Counterparty agrees to provide copies of all withholding tax certificates relating to the Reference Obligation and the Portfolio Assets reasonably requested by the trustee under the Reference Obligation Indenture. For the avoidance of doubt, this Clause 7(a)(v) shall not apply to any Bond Transaction unless otherwise agreed by the parties.

References in this Clause 7(a) to “the other party” shall, in the case of UBS and where the context so allows, include references to any Affiliate of UBS.

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(b) Each party acknowledges and agrees that, so long as either party has or may have any obligation under any Transaction to which this Master Confirmation relates, with respect to each such Transaction:

(i) such Transaction does not create any direct or indirect obligation of any Reference Entity (or any Portfolio Asset Obligor, any related guarantor or other related credit support provided (as applicable)) or any direct or indirect participation in the relevant Reference Obligation, any Portfolio Asset (where applicable) or any other obligation of any Reference Entity (or any Portfolio Asset Obligor, any related guarantor or other related credit support provided (as applicable));

(ii) each party and its Affiliates may deal in any Reference Obligation and any Portfolio Asset and may accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of commercial or investment banking or other business with any Reference Entity, any Portfolio Asset Obligor or any Affiliate of any Reference Entity or any Portfolio Asset Obligor, any other person or entity having obligations relating to any Reference Entity, any Portfolio Asset Obligor or any Affiliate of any Reference Entity or any Portfolio Asset Obligor, and may act with respect to such business in the same manner as if such Transaction did not exist and may originate, purchase, sell, hold or trade, and may exercise consensual or remedial rights in respect of, obligations, securities or other financial instruments of, issued by or linked to any Reference Entity, any Portfolio Asset Obligor or any Affiliate of any Reference Entity or any Portfolio Asset Obligor, regardless of whether any such action might have an adverse effect on such Reference Entity or any Portfolio Asset Obligor, the value of the related Reference Obligation or any Portfolio Asset (in the case of the A-R Note Transaction) or the position of the other party to such Transaction or otherwise;

(iii) with respect to information regarding any Reference Entity, any Portfolio Asset Obligor or any Affiliate of any Reference Entity or any Portfolio Asset Obligor that is or may be material in the context of such Transaction:

(A) each party and its Affiliates and the Calculation Agent may, whether by virtue of the types of relationships described herein or otherwise, at the date hereof or at any time hereafter, be in possession of information regarding any Reference Entity, any Portfolio Asset Obligor or any Affiliate of any Reference Entity or any Portfolio Asset Obligor that is or may be material in the context of such Transaction and that may or may not be publicly available or known to the other party. In addition, this Master Confirmation does not create, and no Bond Transaction Confirmation creates, any obligation on the part of such party and its Affiliates to disclose to the other party any such relationship or information (whether or not confidential);

(B) Counterparty understands that UBS and its Affiliates are engaged in a wide range of financial services and businesses, including investment management, financing, securities trading, corporate and investment banking and research (such services and businesses are collectively referred to in this Clause 7(b)(iii) as “Activities”) and may engage in the Activities with or on behalf of one or more of the Reference Entities, the Portfolio Asset Obligors and their respective Affiliates. Furthermore, UBS or its Affiliates may, in undertaking the Activities, engage in trading in financial products or undertake other investment businesses for its own account or on behalf of others (including one or more of the

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Reference Entities, the Portfolio Asset Obligors and their respective Affiliates and including holding, for its own account or on behalf of others, equity, debt and similar positions in one or more of the Reference Entities, the Portfolio Asset Obligors and their respective Affiliates), including trading in or holding long, short or derivative positions in securities, loans or other financial products of one or more of the Reference Entities, the Portfolio Asset Obligors and their respective Affiliates. Counterparty understands and agrees that in engaging in the Activities, (x) UBS or its Affiliates may now or in the future have interests or take actions that may conflict with the interests of Counterparty and (y) officers and employees of UBS or its Affiliates (including those responsible for negotiating such Transaction) may currently have and later may receive or otherwise obtain information concerning one or more of the Reference Entities, the Portfolio Asset Obligors and their respective Affiliates (including information concerning mergers, acquisitions, divestitures, restructurings, defaults under material agreements, creditors’ rights proceedings or other matters that may affect the value of any Reference Obligation or any Portfolio Asset or the ability of any Reference Entity or any Portfolio Asset Obligor to perform its obligations thereunder), which information may not be available to Counterparty and may be material to a decision to enter into such Transaction (the “Excluded Information”). Counterparty acknowledges that it has determined to enter into such Transaction notwithstanding its lack of knowledge of the Excluded Information. Counterparty agrees that neither UBS nor any of its Affiliates shall have any liability to Counterparty, and Counterparty waives and releases any claims that it might have against UBS or its Affiliates, whether under applicable securities laws or otherwise, with respect to the nondisclosure of the Excluded Information in connection with this Master Confirmation, the related Bond Transaction Confirmation (where applicable) or such Transaction; provided that, the Excluded Information shall not and does not affect the truth or accuracy of UBS’s representations or warranties in the Master Agreement, this Master Confirmation or the related Bond Transaction Confirmation (where applicable);

(C) Counterparty confirms that it (i) is a sophisticated entity with respect to the obligations of the type of the Reference Obligations and the Portfolio Assets, (ii) has adequate information concerning the business and financial condition of each Reference Entity and each Portfolio Asset Obligor to make an informed decision regarding its entry into this Master Confirmation, the related Bond Transaction Confirmation (where applicable) and such Transaction, (iii) possesses (individually or through its Affiliates) such knowledge and experience in financial and business matters that it is capable, without reliance on UBS or its Affiliates, of evaluating the merits and risks (including tax, legal, regulatory, credit, accounting and other financial matters) of entering into this Master Confirmation, the related Bond Transaction Confirmation (where applicable) and such Transaction and is financially able to bear such risks, (iv) has such knowledge and experience, and has entered into other transactions of a similar economic nature, so as to be aware of the risks and uncertainties inherent in the assumption of rights and obligations of the type contemplated in this Master Confirmation, the related Bond Transaction Confirmation (where applicable) and such Transaction, and (v) has determined that entering into this Master Confirmation, the related Bond Transaction Confirmation (where applicable) and such Transaction is suitable and appropriate for it;

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(D) Counterparty acknowledges that (i) it is solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with this Master Confirmation, the related Bond Transaction Confirmation (where applicable) and such Transaction, (ii) that it has, independently and without reliance upon UBS or its Affiliates, made its own appraisal and investigation of all risks associated with, and its own credit analysis and decision to enter into, this Master Confirmation, the related Bond Transaction Confirmation (where applicable) and such Transaction based on such documents and information, as it has deemed appropriate and (iii) it will, independently and without reliance upon UBS or its Affiliates, continue to be solely responsible for making its own appraisal and investigation of all risks arising under or in connection with, and its own credit analysis and decision to take or not take action under, this Master Confirmation, the related Bond Transaction Confirmation (where applicable) and such Transaction, based on such documents and information as it shall from time to time deem appropriate which may include, in each case, any or all of the following (it being understood that neither UBS nor any of its Affiliates is responsible for or has made any representation or warranty with respect to any such matters or information): (x) the financial condition, status and capitalization of any Reference Entity or any Portfolio Asset Obligor; (y) the legality, validity, effectiveness, adequacy or enforceability of any agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Reference Obligation or any Portfolio Asset; or (z) the adequacy, accuracy and/or completeness of (A) any document in the form approved by any Reference Entity or any Portfolio Asset Obligor concerning such Reference Entity or such Portfolio Asset Obligor (or any of their respective Affiliates) which, at the request of such Reference Entity or such Portfolio Asset Obligor and on its behalf, was prepared in relation to the syndication of any Reference Obligation or any Portfolio Asset or other obligations of any Reference Entity or any Portfolio Asset Obligor and which may or may not have been distributed by the arranger(s) of such obligations to selected financial institutions (an “Information Memorandum”) and (B) any other information concerning any Reference Entity or any Portfolio Asset Obligor delivered by UBS or its Affiliates under or in connection with this Master Confirmation, the related Bond Transaction Confirmation (where applicable), such Transaction or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Reference Obligation or any Portfolio Asset; and

(E) Counterparty agrees that none of (i) the Master Agreement, (ii) the receipt by UBS or its Affiliates of any information (including Excluded Information) concerning one or more of the Reference Entities, the Portfolio Asset Obligors and their respective Affiliates (including information concerning the value of any Reference Obligation or any Portfolio Asset or the ability of any Reference Entity or any Portfolio Asset Obligor to perform its respective obligations thereunder) nor (iii) any other matter, shall give rise to any fiduciary or other similar duties (including without limitation any duty of trust or confidence) owing by UBS or its Affiliates to Counterparty including any such duty that would prevent or restrict UBS or its Affiliates from acting on behalf of customers (including the Reference Entities, the Portfolio Asset Obligors and their respective Affiliates) or for its own account;

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(iv) neither UBS nor any of its Affiliates shall be under any obligation to hedge such Transaction or to own or hold any Reference Obligation or any Portfolio Asset as a result of such Transaction, and UBS and its Affiliates may establish, maintain, modify, terminate or re-establish any hedge position or any methodology for hedging at any time without regard to Counterparty. Any such purchases, sales or other transactions will be at the sole discretion of UBS and its Affiliates, and Counterparty acknowledges that such transactions may affect the market price of the Reference Obligations and/or the Portfolio Assets. Counterparty acknowledges and agrees that it is not relying on any representation, warranty or statement by UBS or any of its Affiliates as to whether, at what times, in what manner or by what method UBS or any of its Affiliates may engage in any hedging activities;

(v) notwithstanding any other provision in this Master Confirmation or any other document, UBS and Counterparty (and each employee, representative, or other agent of UBS or Counterparty) may each disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of such Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to them relating to such U.S. tax treatment and U.S. tax structure (as those terms are used in Treasury Regulations under Sections 6011, 6111 and 6112 of the Code), other than any information for which nondisclosure is reasonably necessary in order to comply with applicable securities laws. To the extent not inconsistent with the previous sentence, UBS and Counterparty will each keep confidential (except as required by law) all information unless the other party has consented in writing to the disclosure of such information. In the event of a disclosure with respect to the U.S. tax treatment and U.S. tax structure of this Transaction, the person making the disclosure may disclose all information relevant to an understanding of the U.S. tax treatment and U.S. tax structure of this Transaction, but such person may not disclose the identity of the Counterparty, any Reference Entity or any Portfolio Asset; and

(vi) if UBS chooses to hold (either directly or indirectly) a Reference Obligation as a result of any Transaction, UBS may deal with such Reference Obligation as if the related Transaction did not exist (and, without limiting the generality of the foregoing, UBS shall have no duty to Counterparty with respect to any such direct or indirect ownership of such Reference Obligation).

(c) Each of the parties hereby represents that, on each date on which a Transaction is entered into hereunder:

(i) it is entering into such Transaction for investment, financial intermediation, hedging or other commercial purposes;

(ii) (x) it is an “eligible contract participant” as defined in the U.S. Commodity Exchange Act, as amended (the “CEA”), (y) the Master Agreement and each Transaction are subject to individual negotiation by each party, and (z) neither the Master Agreement nor any Transaction will be executed or traded on a “trading facility” within the meaning of Section 1a(33) of the CEA;

(iii) (A) the Master Agreement (including the Credit Support Annex) and each Transaction entered into under this Master Confirmation is a “swap agreement” within the meaning given to such term under Section 101(53B) of the United States Bankruptcy Code of 1978, as amended (the “Bankruptcy Code”) and (B) it is a “swap participant” within the meaning given to such term under Section 101(53C) of the Bankruptcy Code;

(iv) with respect to each Bond Transaction, such Bond Transaction is intended to be a “security-based swap” subject to regulation by the Securities and Exchange Commission;

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(v) with respect to each Bond Transaction, it is an “accredited investor” within the meaning given to such term in Regulation D under the Securities Act of 1933, as amended;

(d) Counterparty hereby represents to UBS that on each date on which a Transaction is entered into hereunder:

(i) its investments in and liabilities in respect of each Transaction, which it understands is not readily marketable, is not disproportionate to its net worth, and it is able to bear any loss in connection with any Transaction, including the loss of its entire investment in any Transaction;

(ii) it understands no obligations of UBS to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of UBS or any governmental agency;

(iii) it has elected to treat the A-R Note Reference Entity as an entity disregarded from its owner for United States Federal income tax purposes;

(iv) as of (x) the relevant Obligation Trade Date and (y) any date on which a sale is effected pursuant to Clause 4(a) or on which the Calculation Agent solicits Firm Bids pursuant to Clause 4(b), neither Counterparty nor any of its Affiliates, whether by virtue of the types of relationships described herein or otherwise, is on such date in possession of information regarding any related Reference Entity or any Affiliate of such Reference Entity that is or may be material in the context of such Transaction or the purchase or sale of any related Reference Obligation unless such information (A) is publicly available or (B) has been made available to each registered owner of such Reference Obligation on a basis that permits such registered owner to disclose such information to any assignee of or participant (whether on a funded or unfunded basis) in, or any prospective assignee of or participant (whether on a funded or unfunded basis) in, any rights or obligations under the related Reference Obligation Underlying Instrument;

(v) it can receive all payments on each Portfolio Asset included in the Portfolio without U.S. Federal withholding tax and the relevant Reference Entity or any subsidiary thereof holding a Portfolio Asset, as applicable, can (except to the extent otherwise disclosed with respect to the Portfolio Asset prior to the related Trade Date (as defined in the Reference Obligation Indenture)) receive all such payments without foreign withholding tax (which representation, subject to any such exception, shall also be made for purposes of Section 3(f) of the Master Agreement);

(vi) it could have received all payments on the Reference Obligations in respect of any Transaction without U.S. Federal or foreign withholding tax if it owned such Reference Obligations (which representation shall also be made for purposes of Section 3(f) of the Master Agreement);

(vii) it has delivered an applicable United States Internal Revenue Service form W-9 (or successor form) with respect to withholding tax required to be delivered by it pursuant to Part 3 of the Schedule to the Master Agreement (which representation shall also be made for purposes of Section 3(f) of the Master Agreement);

(viii) it is not, for U.S. Federal income tax purposes, a tax exempt organization for purposes of Section 514 of the U.S. Internal Revenue Code of 1986, as amended, and, unless any

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such organization that invests in Counterparty does so only indirectly through an entity that is not transparent for U.S. Federal income tax purposes, there is disclosure to such organization that such organizations may recognize unrelated business taxable income;

(ix) it has obtained tax advice from its auditors or external legal counsel, in either case of recognized standing in relation to U.S. Federal income tax matters, that considered the U.S. tax treatment of the Transactions to which this Master Confirmation relates; and

(x) it has obtained its own advice as to the proper tax characterization of such Transaction in all jurisdictions, including for the avoidance of doubt the United States, and is not relying on UBS or its advisors in respect of such matters in any respect.

(e) UBS hereby represents to Counterparty that

(i) UBS will provide to the Counterparty and the A-R Note Reference Entity a valid Form W-9 provided by UBS Securities LLC and attached to a valid Form W-8IMY (or successor thereto), that the Counterparty and the A-R Note Reference Entity may reliably associate all payments to be made by either of them pursuant to the Transactions to which this Master Confirmation relates with such forms, and therefore may treat all such payments under such Transactions as made to a U.S. person within the meaning of Treas. Regs. Section 1.1441-1(d)(4);

(ii) each Transaction to which this Master Confirmation relates is entered into by UBS through an office located within the United States, or U.S. personnel of UBS materially participated in each such Transaction for U.S. Federal income tax purposes and UBS is acting solely as an agent of UBS Securities LLC, a person that is a “U.S. person” as that term is defined under IRC Section 7701(a)(30);

(iii) except to the extent necessary to enable UBS to exercise any of its rights under Paragraph 6(c) of the Credit Support Annex, that UBS is under no legal or contractual obligation to treat any Reference Obligation issued to it, any Pledged Note or any Pledged Bond pledged under the Credit Support Annex or any Portfolio Asset as legally or beneficially owned by any person other than the Counterparty; and

(iv) that UBS has obtained its own advice as to the proper tax characterization of such Transaction in all jurisdictions, including for the avoidance of doubt the United States, and is not relying on the Counterparty or its advisors in respect of such matters in any respect.

(f) Except for disclosure authorized pursuant to Clause 7(b)(v), Counterparty agrees to be bound by the confidentiality provisions of the Reference Obligation Underlying Instruments governing each Reference Obligation (and of each credit or loan agreement governing each Portfolio Asset) with respect to all information and documentation in relation to any Reference Entity or any Portfolio Asset Obligor or any Reference Obligation or any Portfolio Asset delivered to Counterparty hereunder. Counterparty acknowledges that such information may include material non-public information concerning one or more of the Reference Entities, the Portfolio Asset Obligors and their respective securities and agrees to use such information in accordance with applicable law, including Federal and State securities laws. In addition, Counterparty agrees to keep confidential any internal rating supplied by UBS to Counterparty with respect to any Reference Obligation or any Portfolio Asset.

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(g) Notwithstanding anything to the contrary in the Schedule to the Master Agreement, Section 2(c)(ii) of the Master Agreement shall not apply to the Transactions to which this Master Agreement relates.

(h) Notwithstanding anything in the Master Agreement to the contrary, UBS will not be required to pay any additional amount under Section 2(d)(i) of the Master Agreement in respect of any deduction or withholding for or on account of any Tax in relation to any payment under any Transaction. If UBS is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding for or on account of any Tax in relation to any payment under any Transaction and UBS does not so deduct or withhold, then Section 2(d)(ii) of the Master Agreement shall be applicable.

(i) If an “Event of Default” under (and as defined in) the Reference Obligation Indenture occurs, then UBS may give notice to Counterparty (so long as such event is continuing on the date of such notice) that UBS, in its capacity as Valuation Agent under (and as defined in) the Reference Obligation Indenture, has elected to exercise exclusively on behalf of the A-R Note Reference Entity and each subsidiary thereof all rights of such Reference Entity to purchase and dispose of, and to exercise all voting and other consensual rights with respect to, and to make all other determinations and decisions with respect to the ownership of, the Portfolio Assets held or to be acquired by such Reference Entity, pursuant to Section 12.1(c) of the Reference Obligation Indenture.

8. ADJUSTMENTS RELATING TO CERTAIN UNPAID OR RESCINDED PAYMENTS.

(a) If (i) UBS makes any payment to Counterparty as provided under Clause 2 and the corresponding Interest and Fee Amount is not paid (in whole or in part) to the holders of the relevant Reference Obligation when due or (ii) any Interest and Fee Amount in respect of a Reference Obligation is required to be returned (in whole or in part) by a holder of such Reference Obligation (including, without limitation, the UBS Holder) to the applicable Reference Entity or paid to any other person or entity or is otherwise rescinded pursuant to any bankruptcy or insolvency law or any other applicable law, then (A) each payment obligation under the Transaction related to such payment shall be recomputed by the Calculation Agent as if such unpaid or returned amount had not been paid and (B) Counterparty will pay to UBS, within five Business Days following receipt of notice from UBS, such amount (or portion thereof) so not paid or so required to be returned, paid or otherwise rescinded. If such returned, paid or otherwise rescinded amount is subsequently paid, UBS shall pay such amount (subject to Clause 8(c)) to Counterparty within five Business Days after the date of such subsequent payment.

(b) If, with respect to any Repaid Obligation, the corresponding payment of principal of the Repaid Obligation is required to be returned (in whole or in part) by a holder thereof (including, without limitation, the UBS Holder) to the applicable Reference Entity or paid to any other person or entity or is otherwise rescinded pursuant to any bankruptcy or insolvency law or any other applicable law, then (i) the parties hereto shall be restored severally and respectively to their former positions hereunder and thereafter all rights and obligations of the parties hereunder shall continue as though no Repayment had occurred and (ii) without limiting the generality of the foregoing, if either party has made a payment to the other party in respect of Capital Appreciation or Capital Depreciation related to such Repayment as provided under Clause 2, then the party that received the payment in respect of such Capital Appreciation or Capital Depreciation, as applicable, shall repay such amount (subject to Clause 8(c)) to the other party. If such returned, paid or otherwise rescinded amount is subsequently paid (in part or in whole) by the related Reference Entity or any such other person or entity, then such payment is also deemed to be a “Repayment”, and the relevant party shall pay the relevant Capital Appreciation or Capital Depreciation, as applicable, on the Total Return Payment Date relating to such Repayment.

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(c) Amounts payable pursuant to this Clause 8 shall be subject to adjustment by the Calculation Agent in good faith and on a commercially reasonable basis, as agreed by UBS and Counterparty, in order to preserve for the parties the intended economic risks and benefits of the relevant Transaction; provided that (i) no amounts in respect of interest shall be payable by either party on any adjusted amount and (ii) the Calculation Agent in performing the calculations pursuant to this Clause 8 will assume that no interest has accrued on any adjusted amount.

(d) The payment obligations of UBS and Counterparty pursuant to this Clause 8 shall survive the termination of the relevant Transaction.

9. CREDIT SUPPORT.

Notwithstanding anything in the Credit Support Annex (the “Credit Support Annex”) to the Schedule to the Master Agreement to the contrary, the following collateral terms shall apply to all Transactions to which this Master Confirmation relates. Capitalized terms used in this Clause 9 but not otherwise defined in this Master Confirmation have the respective meanings given to such terms in the Credit Support Annex. In the event of any conflict between the Credit Support Annex and these “Collateral Provisions”, these “Collateral Provisions” shall prevail.

(a) Counterparty shall Transfer Eligible Collateral to UBS pursuant to the terms of the Credit Support Annex between UBS and Counterparty, as amended hereby. For purposes of said Credit Support Annex, on any Valuation Date the Independent Amount applicable to Counterparty in respect of:

(i) the A-R Note Transaction shall be equal to the aggregate Value of the Pledged Notes, and Counterparty’s obligation to transfer collateral to UBS in respect of such Independent Amount shall at all times be satisfied by the Pledged Notes being Transferred to UBS in accordance with the terms of the Credit Support Annex; and

(ii) any Bond Transaction shall be equal to the Bond Notional Amount of such Bond Transaction, and Counterparty’s obligation to transfer collateral to UBS in respect of such Independent Amount shall at all times be satisfied by Counterparty Transferring to UBS a security equivalent to the related Reference Obligation in accordance with the terms of the Credit Support Annex (each, a “Pledged Bond”). For the purposes hereof, securities are “equivalent” to other securities if they are: (i) of the same issuer, (ii) part of the same issue; and (iii) of an identical type, nominal value, description and amount as those other securities.

(b) The definition of Exposure in Paragraph 12 of the Credit Support Annex is hereby amended and restated in its entirety to read:

UBS’s “Exposure” as Secured Party for the Transactions entered into hereunder and under the Related Confirmation and any Valuation Date or other date for which Exposure is calculated shall mean the sum of (a) the excess, if any, of the Class A-R Net Collateral Value Deficit over the Class A-R Variation Margin Threshold on such date plus (b) the excess, if any, of the Class A Net Collateral Value Deficit over the Class A Variation Margin Threshold on such date, plus (c) the excess, if any, of the Bond Net Collateral Value Deficit over the Bond Variation Margin Threshold on such date.

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(c) The “Minimum Transfer Amount” with respect to Counterparty as of any Valuation Date shall be U.S.$100,000; provided that (i) a single Delivery Amount or Return Amount (as applicable) shall be calculated on each Valuation Date for the Transactions entered into hereunder and under the Related Confirmation for purposes of determining whether or not the Minimum Transfer Amount has been exceeded and (ii) the Minimum Transfer Amount for Counterparty shall be zero (1) for purposes of determining any Delivery Amount required to be Transferred by Counterparty in respect of any Independent Amount and (2) at any time when an Event of Default, Potential Event of Default, Termination Event or event which with the giving of notice or lapse of time would (absent the cure thereof during any applicable grace period) constitute a Termination Event has occurred and is continuing with respect to which Counterparty is (or would be) the Defaulting Party or Affected Party.

(d) Solely for purposes of the first demand (and not any subsequent demand) made by UBS as Secured Party for any Transfer of Eligible Credit Support by Counterparty in respect of a Delivery Amount (or the applicable portion thereof) that is due to an increase in the Exposure of UBS as Secured Party (and not, for the avoidance of doubt, the Transfer of the Pledged Notes in satisfaction of Counterparty’s obligations in respect of the Independent Amount) made or deemed made by UBS pursuant to Clause 9(a) above), Paragraph 4(b) of the Credit Support Annex shall be amended by (i) replacing the words “next Local Business Day” with “tenth Local Business Day thereafter” and (ii) replacing the words “second Local Business Day thereafter” with “eleventh Local Business Day thereafter”. UBS shall make no further demand for the Transfer of Eligible Credit Support by Counterparty in respect of a Delivery Amount (or the applicable portion thereof) that is due to an increase in UBS’ Exposure until such tenth or eleventh (as applicable) Local Business Day period has expired, whereupon the Transfer timing provisions of Paragraph 4(b) shall apply as set forth in the Credit Support Annex without regard to the provisions of this Clause 9(d).

(e) Notwithstanding anything to the contrary herein or in the Credit Support Annex, (i) the Threshold with respect to UBS shall be infinity, (ii) in no event shall Counterparty have any positive Exposure as a Secured Party to UBS with respect to the Transactions to which this Master Confirmation relates and (iii) accordingly, (A) Counterparty shall be the only “Pledgor” and UBS shall be the only “Secured Party” for all purposes of the Credit Support Annex and (B) only the Counterparty makes the pledge and grant in Paragraph 2 of the Credit Support Annex, the acknowledgment in the final sentence of Paragraph 8(a) of the Credit Support Annex and the representations in Paragraph 9 of the Credit Support Annex.

(f) In no event shall Counterparty’s Credit Support Amount as Pledgor be less than the sum of (i) the aggregate of the Independent Amounts for the Transactions to which this Master Confirmation relates, and (ii) the Independent Amount for the Transaction evidenced by the Related Confirmation. Accordingly, (A) with respect to the A-R Note Transaction, in no event shall the Pledged Notes be Transferred to Counterparty until the Termination Date for the A-R Note Transaction, and (B) with respect to each Bond Transaction, in no event shall the Pledged Bond in relation to such Transaction be Transferred to Counterparty until the Termination Date for such Bond Transaction.

(g) UBS shall be the sole Valuation Agent for purposes of the Transactions to which this Master Confirmation relates and each Business Day shall be a Valuation Date.

(h) Notwithstanding anything in this Master Confirmation to the contrary, for purposes of determining the portion of the Exposure that is attributable to a Portfolio Asset (or portion thereof) that is being sold or has been repaid, the Par Amount of such Portfolio Asset shall not be

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reduced to reflect such sale or repayment until the Business Day next succeeding the settlement date of such sale or the date on which such repayment occurs, as the case may be. In addition, if the A-R Note Reference Entity sells any Portfolio Asset and the settlement date for such sale occurs after the date customary for settlement substantially in accordance with the then-current market practice in the principal market for such Portfolio Asset (as determined by the Calculation Agent), then the Net Unrealized Capital Appreciation and the Net Unrealized Capital Depreciation will continue to vary until the actual settlement date (and, for this purpose, each of the Net Unrealized Capital Appreciation and the Net Unrealized Capital Depreciation with respect to such Portfolio Asset shall be determined until such date of actual settlement as if no sale price had been established until the date of settlement of the relevant sale).

(i) Notwithstanding anything in this Master Confirmation to the contrary, for purposes of determining the portion of the Exposure that is attributable to a Terminated Obligation or a Repaid Obligation (or portion thereof) that relates to a Bond Transaction that is being sold or has been repaid, the Bond Reference Amount of such Reference Obligation shall be reduced to reflect such sale or repayment on the relevant Termination Trade Date or the relevant Repayment Date, as the case may be.

(j) The provisions of Paragraph 5 of the Credit Support Annex shall be superseded and replaced in their entirety by Counterparty’s dispute rights with respect to the Current Price of any Portfolio Asset or Pledged Bond as set forth in the definition of “Current Price”.

10. NOTICE AND ACCOUNT DETAILS.

Notices to UBS:

UBS AG, London Branch

Structured Funding

Attn: Ben Stewart

1285 Avenue of the Americas

New York, NY 10019-6064

Tel: (203) 719-1611

E-mail: OL-Cyrus-TRS@ubs.com

With copies to:

E-mail: DL-IR-STM-TEAM@ubs.com

E-mail: SH-OTC-Credit-Setts@ubs.com

E-mail: OL-CTM@ubs.com

Notices to Counterparty:

CM Finance Inc.

399 Park Avenue, 39^th Floor

New York, NY 10022

Attention: Stephon Barnes, Christopher E. Jansen and Michael C. Mauer

Tel: (212) 380-5904

Email: cjansen@cmfn-inc.com, mm@cmfn-inc.com, jagarwal@cmfn-inc.com and ops@cyruscapital.com

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Payments to UBS:

Favour: UBS AG, Stamford Branch Swift Address: UBSWUS33XXX

Further Credit To: UBS AG, London Branch

Swift Address: UBSWGB2LXXX

Account No: 101-WA-140007-000

Payments to Counterparty:

Receiving Bank Name: State Street Bank and Trust Co. NA Boston

Receiving Bank BIC Code: SBOSUS33XXX

Receiving Bank ABA: 011000028

Beneficiary Account Number: 10434322

Beneficiary Account Name: CM Finance Inc

11. OFFICES.

(a) The Office of UBS for the Transactions to which this Master Confirmation relates:

London

(b) The Office of Counterparty for the Transactions to which this Master Confirmation relates:

None

12. SETTLEMENT

The Transactions hereunder are being entered into by a member of the UBS group (“UBS Party”). For the avoidance of doubt, any payment or delivery obligations of the UBS Party in respect of the Transactions to which this Master Confirmation relates may be effected by any of UBS Limited or UBS AG, London Branch or UBS Securities LLC (the “Settlement Agent”). UBS Party has authorized the Settlement Agent to act on its behalf in the same manner and with the same force and effect as UBS Party might or could do in connection with any such payment or delivery obligation.

- signature page follows -

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Please confirm that the foregoing correctly sets forth the terms of our agreement by having a duly authorized officer of Counterparty execute this Master Confirmation and return the same by facsimile to the attention of the individual at UBS indicated on the first page hereof.

Yours faithfully

For and on Behalf of

UBS AG, London Branch

By:	By:
Name:	Name:
Title:	Title:

Confirmation – Signature Page

Acknowledged and agreed by CM Finance Inc., as successor to CM Finance LLC, as of the date specified above.

CM FINANCE INC.,

as TRS Counterparty

By:

Name:

Title:

Confirmation – Signature Page

ANNEX A

ADDITIONAL DEFINITIONS

“Affiliate”, for purposes of this Master Confirmation only, has the meaning given to such term in Rule 405 under the Securities Act of 1933, as amended.

“Approved Dealer” means (a) any entity listed in Annex B hereto and (b) if an entity listed in Annex B hereto is not the principal banking or securities Affiliate within a financial holding company group, the principal banking or securities Affiliate of such listed entity within such financial holding company group; provided that (i) UBS may at any time, upon written notice to Counterparty, delete any name listed in such Annex so long as such deletion is consistent with the general application of its internal credit and risk policies with respect to such Approved Dealer (and not designed to circumvent the rights of Counterparty hereunder) and (ii) the parties may, at any time, agree in writing to add or remove an Approved Dealer to or from Annex B.

“Bond Collateral Value” means, on any date of determination, the sum of the Current Prices of each of the Pledged Bonds pledged as security in favor of UBS pursuant to the terms of the Credit Support Annex on such date in relation to the Transactions outstanding on such date.

“Bond Net Collateral Value Deficit” means, on any date of determination (a) the excess (if any) of (i) the Aggregate Bond Notional Amount on such date over (ii) the Bond Collateral Value on such date, multiplied by (b) two.

“Bond Variation Margin Threshold” means, on any date of determination, an amount equal to 20% of the Aggregate Bond Notional Amount on such date (after giving effect to any repayment on such date).

“Breakage Cost Calculation Period” means, with respect to any termination of all (but not some only) of the Transactions to which this Master Confirmation relates following the delivery of an Accelerated Termination Notice pursuant to Clause 3(a) or 3(b), each period from, and including, one Breakage Cost Hypothetical Payment Date to, but excluding, the next following Breakage Cost Hypothetical Payment Date, except that (a) the initial Breakage Cost Calculation Period will commence on, and include, the Obligation Termination Date, and (b) the final Breakage Cost Calculation Period will end on, but exclude, December 5, 2016.

“Breakage Cost Hypothetical Payment Date” means, with respect to the termination of all (but not some only) of the Transactions to which this Master Confirmation relates following the delivery of an Accelerated Termination Notice pursuant to Clause 3(a) or 3(b), (a) each Payment Date, commencing on the first Payment Date following the date on which such Accelerated Termination Notice is delivered, and (b) the Scheduled Termination Date.

“Breakage Costs” means, with respect to the termination of all (but not some only) of the Transactions to which this Master Confirmation relates following the delivery of an Accelerated Termination Notice pursuant to Clause 3(a) or 3(b), an amount equal to the sum, determined with respect to each Breakage Cost Calculation Period occurring after the date on which such Accelerated Termination Notice is delivered, of the sum of:

(i) product of the following:

(a) USD50,000,000,

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(b) the Fixed Rate Day Count Fraction (determined based on the actual number of days in such Breakage Cost Calculation Period), and

(c) the Second Fixed Spread,

discounted from the Breakage Cost Hypothetical Payment Date occurring immediately following the end of such Breakage Cost Calculation Period to the final Obligation Termination Date; provided that such present value shall be determined using the discount factor implied by the mid-point between the forward bid and offered side LIBOR curves for fixed-for-floating LIBOR swaps of the relevant tenors; plus

(ii) if the Transactions are terminated prior to the Third Floating Rate Payer Payment Date, an amount equal to the Counterparty Third Floating Amount.

“Capital Appreciation” and “Capital Depreciation” mean, for any Total Return Payment Date, the amount determined according to the following formula for the applicable Terminated Obligation or Repaid Obligation:

Final Price – Applicable Notional Amount

where

“Final Price” means, (a) with respect to any Terminated Obligation, the amount determined pursuant to Clause 4, and (b) with respect to any Repaid Obligation, the amount determined pursuant to Clause 5; and

“Applicable Notional Amount” means (a) with respect to any Terminated Obligation related to the A-R Note Transaction, the portion of the Outstanding Class A-R Funded Amount that is the subject of the relevant termination and allocable to such Terminated Obligation (determined immediately prior to the applicable Termination Trade Date), and (b) with respect to any Terminated Obligation or Repaid Obligation related to a Bond Transaction, the Bond Notional Amount for such Terminated Obligation or Repaid Obligation (determined immediately prior to the applicable Termination Trade Date or Repayment Date).

If such amount is positive, such amount is “Capital Appreciation” and if such amount is negative, the absolute value of such amount is “Capital Depreciation”.

“Class A Net Collateral Value Deficit” has the meaning given to such term in the Related Confirmation.

“Class A Notes” means the Class A Notes issued from time to time the A-R Note Reference Entity under the Reference Obligation Indenture.

“Class A Variation Margin Threshold” has the meaning given to such term in the Related Confirmation.

“Class A-R Net Collateral Value” means, on any date of determination, the excess, if any, of (a) the sum of (i) the Class A-R Total Asset Amount on such date plus (ii) the Class A-R Net Unrealized Capital Appreciation on such date over (b) the sum of (i) the Outstanding Class A-R Funded Amount of the Reference Obligation related to the A-R Note Transaction on such date plus (ii) the Class A-R Net Unrealized Capital Depreciation on such date.

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“Class A-R Net Collateral Value Deficit” means, on any date of determination, the excess, if any, of (a) the Outstanding Class A-R Funded Amount of the Reference Obligation related to the A-R Note Transaction on such date over (b) the Class A-R Net Collateral Value on such date.

“Class A-R Net Unrealized Capital Appreciation” means, on any date of determination, the product of (a) the Net Unrealized Capital Appreciation on such date and (b) an amount equal to the quotient of (i) the Outstanding Class A-R Funded Amount on such date divided by (ii) the sum of (A) the Outstanding Class A-R Funded Amount on such date and (B) the Aggregate Principal Amount of Class A Notes that are outstanding on such date.

“Class A-R Net Unrealized Capital Depreciation” means, on any date of determination, the product of (a) the Net Unrealized Capital Depreciation on such date and (b) an amount equal to the quotient of (i) the Outstanding Class A-R Funded Amount on such date divided by (ii) the sum of (A) the Outstanding Class A-R Funded Amount on such date and (B) the Aggregate Principal Amount of Class A Notes that are outstanding on such date.

“Class A-R Notes” means the Class A-R Notes issued from time to time by the A-R Note Reference Entity under the Reference Obligation Indenture.

“Class A-R Total Asset Amount” means, on any date of determination, the product of (a) the Total Asset Amount on such date and (b) an amount equal to the quotient of (i) the Outstanding Class A-R Funded Amount on such date divided by (ii) the sum of (A) the Outstanding Class A-R Funded Amount and (B) the Aggregate Principal Amount of Class A Notes that are outstanding on such date.

“Class A-R Variation Margin Threshold” means, on any date of determination, an amount equal to 10% of the Outstanding Class A-R Funded Amount of the Class A-R Notes then outstanding (after giving effect to any repayment on such date); provided that, the Class A-R Variation Margin Threshold shall be zero while any “Event of Default” under (and as defined in) the Reference Obligation Indenture shall have occurred and be continuing.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Costs of Assignment” means, in the case of any Terminated Obligation, Pledged Bond or Portfolio Asset, the sum of (a) any costs of any purchase, exchange, sale, transfer or assignment transaction with respect to such Terminated Obligation, Pledged Bond or Portfolio Asset paid by a person or entity effecting such transaction (including any UBS Holder) under the terms of such Terminated Obligation, Pledged Bond or Portfolio Asset or otherwise actually imposed on such person or entity by any applicable trustee, administrative agent, registrar, borrower or obligor incurred in connection with any such transaction with respect to such Terminated Obligation, Pledged Bond or Portfolio Asset (including, without limitation, any amounts reimbursable by such person or entity in respect of any tax or other governmental charge incurred with respect thereto), (b) any reasonable expenses that are incurred by such person or entity in connection with any such transaction and (c) any reasonable administrative, legal or accounting fees, costs and expenses (including, without limitation, any fees and expenses of the trustee of or outside counsel to the related Reference Entity) that are incurred by such person or entity in connection with any such transaction.

“Current Price” means, with respect to each Portfolio Asset and each Pledged Bond on any date of determination, the determination by the Valuation Agent of the net cash proceeds that would be received from the sale on such date of determination of such Portfolio Asset (exclusive of accrued interest and capitalized interest and net of the related expected Costs of Assignment) or such Pledged Bond (inclusive of accrued interest and net of the related expected Costs of Assignment). If, with respect to any date of

Page A-3

determination, Counterparty, acting in a commercially reasonable manner and in good faith, disputes any such original determination of the Current Price of any Portfolio Asset or any Pledged Bond by the Valuation Agent, then Counterparty may, no later than two New York Business Hours after the notice of such determination is given to Counterparty, designate at least one Dealer to provide to the Valuation Agent, within such two New York Business Hour period, a Firm Bid to purchase each such Portfolio Asset (with a quotation amount equal to the Par Amount or (in the case of a Delayed Draw Loan) Commitment Amount) or such Pledged Bond (with a quotation amount equal to the outstanding principal amount of such Pledged Bond). Such Firm Bid (or the highest Firm Bid, if more than one) timely received in accordance with the foregoing will be the Current Price of the relevant Portfolio Asset or the relevant Pledged Bond with respect to the relevant date of determination. If no such Firm Bid is timely received in accordance with the foregoing, the Current Price of the relevant Portfolio Asset or the relevant Pledged Bond (as applicable) will be the original determination thereof by the Valuation Agent. For the avoidance of doubt, any determination of any amount herein (other than any portion of such amount that represents an undisputed amount) consequent upon the determination of a Current Price subject to dispute as provided above shall be delayed until the deadline for the provision of Firm Bid(s) (or, if applicable, any such valuation) to the Valuation Agent as aforesaid.

“Dealer” means (a) any entity (other than the Calculation Agent or any of its Affiliates) designated by the Calculation Agent or its designated Affiliate in its sole discretion as a “Dealer” for the purposes of this Master Confirmation and (b) to the extent designated by Counterparty as provided in Clause 4(b) or pursuant to the definition of “Current Price”, either (i) any Approved Dealer or (ii) any other entity approved in advance by UBS, such approval not to be unreasonably withheld or delayed (it being agreed that UBS may reasonably withhold its approval based on the credit standing and its risk assessment of such entity); provided that the Calculation Agent or any Affiliate thereof may be a Dealer if more than one Dealer is designated pursuant to Clause 4.

“Defaulted Portfolio Asset” means any Portfolio Asset as to which (a) there has occurred a default as to the payment of principal and/or interest (without regard to any notice requirement or grace period; provided that any capitalization of interest that is permitted under the terms of the relevant Underlying Instrument shall not constitute a default for purposes of the foregoing), (b) such Portfolio Asset is a Participation Interest with respect to which the relevant Selling Institution has defaulted in any respect in the performance of any of its payment obligations under such Participation Interest or (c) such Portfolio Asset is a Participation Interest in a loan that would, if such loan were a Portfolio Asset, constitute a “Defaulted Portfolio Asset”; provided that, in each of the cases set forth in clauses (a) through (c) above, such Portfolio Asset will only constitute a “Defaulted Portfolio Asset” for so long as such default has not been cured or waived.

“Delayed-Draw Loan” has the meaning given to such term in the Reference Obligation Indenture.

“Firm Bid” means:

(a) (i) with respect to a Terminated Obligation related to the A-R Note Transaction, a good and irrevocable bid for value to purchase all of, and assume all outstanding funding obligations under, such Terminated Obligation, expressed as a dollar amount and determined exclusive of accrued interest and capitalized interest, for scheduled settlement no later than the Relevant Settlement Date, and (ii) with respect to a Terminated Obligation related to a Bond Transaction, a good, actionable and irrevocable bid for value to purchase all or a portion of such Terminated Obligation, expressed as a dollar amount and determined inclusive of accrued interest and capitalized interest, for scheduled settlement no later than the Relevant Settlement Date, in each case, submitted by (A) in the case of a Firm Bid obtained for purposes of Clause 4(a), an Approved Dealer specified by Counterparty in its sole discretion or (B) in the case of a Firm Bid obtained for purposes of Clause 4(b), a Dealer specified by the Calculation Agent in its sole discretion (or, to the extent permitted by Clause 4(b), Counterparty), in each case as of a time during regular business hours in New York City; and

Page A-4

(b) with respect to a Portfolio Asset and any dispute with respect to the determination of the Current Price thereof, a good and irrevocable bid for value to purchase the Par Amount or (in the case of a Delayed Draw Loan) Commitment Amount of such Portfolio Asset, expressed as a dollar amount and determined exclusive of accrued interest and capitalized interest, for scheduled settlement within the standard settlement cycle for such Portfolio Asset (with such cycle commencing on the applicable date of submission), submitted by a Dealer specified by the Calculation Agent in its sole discretion (or, to the extent permitted by Clause 4(b), Counterparty), in each case as of a time during regular business hours in New York City.

“Insolvency Event” has the meaning given to such term in the Reference Obligation Indenture.

“Interest and Fee Amount” means, for any Transaction, the aggregate amount of any interest payments and other distributions (including, without limitation, interest breakage costs, deferred or capitalized interest and interest thereon and/or interest make-whole amounts (as applicable)), fees (including, without limitation, amendment, consent, waiver, tender, facility and/or other similar fees (as applicable)) and other amounts (other than in respect of principal repayments and/or premium paid in respect of principal (as applicable)) actually paid with respect to the related Reference Obligation (after deduction of any withholding taxes for which the relevant Reference Entities are not obligated to reimburse holders of the related Reference Obligation, if applicable) at any time during such Fixed Amount Payer Calculation Period; provided that Interest and Fee Amounts:

(a) shall not include any Purchased Accrued Interest or Sold Accrued Interest;

(b) in the case of any amounts that accrue on a daily or periodic basis, shall not include (i) any amounts that accrue prior to the Effective Date in the case of the A-R Note Transaction, or relevant Obligation Settlement Date in the case of any Bond Transaction, or (ii) any amounts that accrue on or after the relevant Termination Settlement Date, in each case, for the related Reference Obligation or portion thereof;

(c) in the case of any other amounts, shall not include any amounts that (i) are paid with respect to an event occurring (A) prior to the Effective Date in the case of the A-R Note Transaction, or relevant Obligation Settlement Date in the case of any Bond Transaction, or (B) on or after the relevant Termination Trade Date, in each case, for the related Reference Obligation or portion thereof, or (ii) are paid with respect to the related Reference Obligation that is not held by or on behalf of UBS as a hedge for such Transaction; and

(d) shall be determined after deducting all customary and reasonable expenses that would be incurred (i) by a buyer in connection with any purchase of the related Reference Obligation as a hedge for such Transaction or (ii) if the related Reference Obligation is held as a hedge by or on behalf of UBS as a hedge for such Transaction, in connection with the establishment by the UBS Holder of the related hedge in respect of such Transaction.

“Maximum Bond Notional Amount” means USD 40,000,000.

“Maximum RCN Facility Funding Commitment” has the meaning given to such term in the Reference Obligation Revolving Credit Note Agreement.

Page A-5

“Net Unrealized Capital Appreciation” means, with respect to all Portfolio Assets in the Portfolio (other than Non-Approved Portfolio Assets, Zero Value Participation Interests and Defaulted Portfolio Assets) and any date of determination, the greater of (a) zero and (b) an amount equal to:

(i) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price is greater than the Purchase Price of such Portfolio Asset, of (A) such Current Price minus such Purchase Price multiplied by (B) (1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset, minus

(ii) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price of such Portfolio Asset is less than the Purchase Price of such Portfolio Asset, of (A) such Purchase Price minus such Current Price multiplied by (B) (1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset;

provided that, for the purposes of computing the Net Unrealized Capital Appreciation, any such Portfolio Asset that is sold or repaid will be deemed to continue to be outstanding in an amount equal to its Par Amount (or in the case of a Delayed Draw Loan, Commitment Amount) until (but excluding) the date of settlement of such sale or the date of such repayment.

“Net Unrealized Capital Depreciation” means, with respect to all Portfolio Assets in the Portfolio (other than Non-Approved Portfolio Assets, Zero Value Participation Interests and Defaulted Portfolio Assets) and any date of determination, the greater of (a) zero and (b) an amount equal to:

(i) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price of such Portfolio Asset is less than the Purchase Price of such Portfolio Asset, of (A) such Purchase Price minus such Current Price multiplied by (B)(1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset, minus

(ii) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price is greater than the Purchase Price of such Portfolio Asset, of (A) such Current Price minus such Purchase Price multiplied by (B) (1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset;

provided that, for the purposes of computing the Net Unrealized Capital Depreciation, any such Portfolio Asset that is sold or repaid will be deemed to continue to be outstanding in an amount equal to its Par Amount (or in the case of a Delayed Draw Loan, Commitment Amount) until (but excluding) the date of settlement of such sale or the date of such repayment.

“New York Business Hour” means any one-hour period that occurs during the period from 9:00 a.m. (New York time) to 6:00 p.m. (New York time) on any day on which commercial banks are open for business in New York City; provided that if a period is expressed as an amount of New York Business Hours and insufficient New York Business Hours exist prior to 6:00 p.m. (New York time) on the relevant day following the commencement of such period, such period shall be deemed to continue on the next succeeding day on which commercial banks are open for business in New York City until the relevant period of New York Business Hours has expired.

Page A-6

“Non-Approved Portfolio Asset” means any Portfolio Asset which UBS has not approved in writing by notice to Counterparty on or prior to the settlement date of the acquisition thereof by the A-R Note Reference Entity.

“Outstanding Class A-R Funded Amount” has the meaning given to such term in the Reference Obligation Revolving Credit Note Agreement.

“Participation Interest” has the meaning given to such term in the Reference Obligation Indenture.

“Purchased Accrued Interest” means, with respect to any Bond Transaction and the related Reference Obligation, unpaid interest on such Reference Obligation accrued to the Obligation Settlement Date for such Transaction.

“Rate Payments” means the Counterparty First Fixed Amounts.

“Reference Obligation Revolving Credit Note Agreement” means the Revolving Credit Note Agreement dated as of December 4, 2013 between the A-R Note Reference Entity, State Street Bank and Trust Company and the noteholders from time to time party thereto, as amended as of the Amendment Effective Date, as the same may be further amended, modified or otherwise supplemented from time to time.

“Reference Obligation Underlying Instrument” means, (a) with respect to the A-R Note Transaction and the related Reference Obligation, the Reference Obligation Indenture, and (b) with respect to any Bond Transaction and the related Reference Obligation, the indenture, pooling and servicing agreement or other similar agreement governing such Reference Obligation.

“Related Confirmation” means the Amended and Restated Confirmation dated May 23, 2013, with UBS Reference Number: 85138421 between UBS and Counterparty, as amended as of June 6, 2013, as further amended as of December 4, 2013 and as of September 26, 2014, and as further amended as of the Amendment Effective Date, as the same may be further amended, modified or otherwise supplemented from time to time.

“Relevant Settlement Date” means the date customary for settlement substantially in accordance with the then-current market practice in the principal market for the relevant Reference Obligation (as determined by the Calculation Agent with reference to the relevant Termination Trade Date).

“Relevant Source” means (a) in the case of an initial Portfolio Asset, the agreement specified as such in Schedule 1 to the Reference Obligation Indenture, and (b) otherwise, the indenture, credit agreement, loan agreement or other agreement governing such Portfolio Asset.

“Selling Institution” has the meaning given to such term in the Reference Obligation Indenture.

“Sold Accrued Interest” means, with respect to any Bond Transaction and the related Reference Obligation, unpaid interest on such Reference Obligation accrued from and including the most recent interest payment date on such Reference Obligation to the Termination Settlement Date for such Bond Transaction that is paid to the seller of such Reference Obligation on the Termination Settlement Date for such Bond Transaction.

“Terminated Obligation” means any Reference Obligation or portion of any Reference Obligation terminated pursuant to Clause 3.

Page A-7

“Termination Settlement Date” means, for any Terminated Obligation, (a) if the Final Price is determined by reference to the actual sale of a Terminated Obligation pursuant to Clause 4, the date of settlement of such sale and (b) otherwise, the Relevant Settlement Date.

“Termination Trade Date” means, with respect to any Terminated Obligation, (a) where an Approved Dealer identified by Counterparty is acquiring the related Reference Obligation or applicable portion thereof from UBS or its Affiliate pursuant to Section 4(a), the Termination Trade Date specified in the applicable Accelerated Termination Notice, or (b) otherwise, the bid submission deadline for a Firm Bid or combination of Firm Bids for all of the Committed Amount (in the case of the A-R Note Transaction) or the Bond Reference Amount (in the case of a Bond Transaction) of such Terminated Obligation that are the basis for determining the Final Price of such Terminated Obligation as designated by the Calculation Agent pursuant to Clause 4(b) in order to cause the related Total Return Payment Date to occur as promptly as practicable.

“Total Asset Amount” means, on any date of determination by the Valuation Agent, an amount equal to the sum of (a) the aggregate Purchase Amount of all Portfolio Assets in the Portfolio (other than Non-Approved Portfolio Assets, Zero Value Participation Interests and Defaulted Portfolio Assets) on such date; plus (b) the aggregate amount of all cash standing to the credit of the Accounts (excluding any and all Class A-R Prepayment Accounts) on such date plus (c) the aggregate cost of purchase of all “Eligible Investments” (as defined in the Reference Obligation Indenture) held by the A-R Note Reference Entity on such date.

“Total Return Payment Date” means (a) with respect to any Terminated Obligation, the Obligation Termination Date for such Terminated Obligation, and (b) with respect to a Repaid Obligation, the Business Day following the Repayment Date for such Repaid Obligation.

“UBS Holder” means, if UBS or an Affiliate of UBS holds any Reference Obligation or any portion thereof as a result of any Transaction to which this Master Confirmation relates, UBS or such Affiliate, as appropriate.

“Underlying Instrument” means the indenture, credit agreement or other agreement pursuant to which a Portfolio Asset has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such Portfolio Asset or of which the holders of such Portfolio Asset are the beneficiaries.

“Unfunded A-R Note Reference Obligation Amount” means, with respect to the A-R Note Transaction (and the related Reference Obligation) on any date of determination, an amount equal to the excess of (a) the Commitment Amount of such Reference Obligation over (b) the Outstanding Class A-R Funded Amount of such Reference Obligation, in each case on such date of determination.

“Zero Value Participation Interest” means any Participation Interest included in the Portfolio Assets that (a) has not been elevated to a loan directly held and registered in the name of the A-R Note Reference Entity within 90 days of the Effective Date or (b) is acquired by the A-R Note Reference Entity at any time after the Effective Date.

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ANNEX B

APPROVED DEALERS

Bank of America Securities LLC

Barclays Bank plc

BNP Paribas

Cantor Fitzgerald

Castle Oak

CIBC World Markets, Inc.

Citibank, N.A.

Credit Agricole Cheuveux North America, Inc.

Credit Suisse First Boston LLC

Deutsche Bank Securities Inc.

Goldman Sachs & Co.

Guggenheim

Global Hunter

Jefferies & Company Inc.

JPMorgan Chase Bank, N.A.

Macquarie

Miller Tabak Roberts Securities, LLC

Morgan Stanley & Co.

Nomura

RBC Capital Markets Corp.

SG Americas Securities LLC

Sterne, Age & Leach, Inc.

The Royal Bank of Scotland plc.

UBS AG

Wachovia Capital Markets LLC

Page B-1

ANNEX C

FORM OF BOND TRANSACTION SUPPLEMENT

Bond Transaction Supplement

under the Total Return Swap Master Confirmation dated December 4, 2013 (as subsequently

amended and restated) between UBS AG, London Branch and CM Finance Inc.

To: CM Finance Inc.

Date:

The purpose of this Bond Transaction Supplement (the “Bond Transaction Supplement”) is to set forth certain specific terms of the transaction (the “Transaction”) entered into on the Obligation Trade Date set forth below between UBS AG, London Branch (“UBS”) and CM Finance Inc. (“Counterparty”).

This Bond Transaction Supplement supplements, forms part of, and is subject to, the Total Return Swap Master Confirmation dated December 4, 2013 (as subsequently amended and restated) between UBS and Counterparty, as amended and supplemented from time to time (the “Master Confirmation”). Together with the Master Confirmation, this Bond Transaction Supplement will constitute a “Confirmation” for the purposes of, and will be subject to the Master Agreement (as defined in the Master Confirmation).

Reference
Obligation Reference
Entity Bond
Reference
Amount Initial Bond
Market
Price (%) Obligation
Trade Date Obligation
Settlement
Date CUSIP

The Schedule attached hereto is the Bond Transaction List setting forth all the outstanding Bond Transactions subject to the Master Confirmation as of the date of this Bond Transaction Supplement set forth above (after giving effect to the Bond Transactions identified in this Bond Transaction Supplement).¹

Please confirm that the foregoing correctly sets forth the terms of our agreement as to the Transactions identified above by having a duly authorized officer of Counterparty execute this Bond Transaction Supplement and return the same by facsimile to the attention of the individual at UBS indicated on the first page of the Master Confirmation.

Very truly yours,

UBS AG, LONDON BRANCH

By:

Name:

Title:

By:

Name:

Title:

¹  Insert if updated Bond Transaction List provided.

Page C-1

CONFIRMED AND AGREED

AS OF THE DATE FIRST ABOVE WRITTEN:

CM FINANCE INC.

By:

Name:

Title:

Page C-2

ANNEX D

FORM OF BOND TRANSACTION LIST

Bond Transaction List

under the Total Return Swap Master Confirmation dated December 4, 2013 (as subsequently

amended and restated) between UBS AG, London Branch and CM Finance Inc.

DATED AS OF [                    ]

Reference
Obligation Reference
Entity Bond
Reference
Amount Initial Bond
Market
Price (%) Obligation
Trade Date Obligation
Settlement
Date CUSIP

Page D-1

EX-10.38

Exhibit 10.38

UBS AG

100 Liverpool Street

London EC2M 2RH

Tel. +44-20-7567

8000

Date:	May 23, 2013 (as amended and restated as of August 14, 2015)
To	CM Finance Inc., as successor to CM Finance LLC (“Counterparty”)
Attention:	Stephon Barnes, Christopher E. Jansen and Michael C. Mauer
Fax No:	(212) 380-5915
From:	UBS AG, London Branch (“UBS”)
Re:	Total Return Swap Transaction
UBS Reference Number:	85138421

Ladies and Gentlemen:

The purpose of this letter agreement is to set forth the terms and conditions of the Transaction entered into between UBS AG, London Branch (“UBS”) and CM Finance Inc., as successor to CM Finance LLC (“Counterparty”), a corporation incorporated under the law of the State of Maryland, on the Trade Date specified below (the “Transaction”). This letter constitutes a “Confirmation” as referred to in the Master Agreement specified below.

The definitions and provisions contained in the 2006 ISDA Definitions (the “Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Definitions and this Confirmation, this Confirmation shall govern. Capitalized terms used but not defined in this Confirmation have the meanings assigned to them in Annex A. Capitalized terms used but not defined in this Confirmation or in Annex A have the meanings assigned to them in the Definitions or, if not defined in the Definitions, in the Reference Obligation Indenture referred to below.

With effect from the Second Amendment Effective Date specified below, this Confirmation amends and restates the prior Confirmation, dated as of May 23, 2013 and amended and restated as of June 6, 2013, December 4, 2013 and September 26, 2014 (as further amended and restated as of July 20, 2015, and without regard to any subsequent amendments thereto, the “Original Confirmation”) relating to the Transactions described herein, which Original Confirmation (with respect to the period from and after the Second Amendment Effective Date) is hereby superseded and shall be of no further force or effect.

Page 1

1. AGREEMENT

This Confirmation supplements, forms a part of and is subject to, the ISDA Master Agreement (Multicurrency–Cross Border) dated as of May 20, 2013 (as amended, supplemented and otherwise modified and in effect from time to time, the “Master Agreement”), between UBS and Counterparty. All provisions contained in the Master Agreement govern this Confirmation except as expressly modified below.

2. TERMS OF TRANSACTION

The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:
Amendment Effective Date	July 20, 2015
Second Amendment Effective Date	August 14, 2015
Effective Date:	May 23, 2013
Scheduled Termination Date:	December 5, 2018
Termination Date:	The earlier of (i) the Scheduled Termination Date with respect to the Transaction and (ii) the Obligation Termination Date. The obligations of the parties to make payments required to be made hereunder shall survive the Termination Date.
Obligation Termination Date:	In relation to any Terminated Obligation, the related Termination Settlement Date.
Reference Entity:	CM Finance SPV Ltd., an exempted company incorporated with limited liability under the law of the Cayman Islands.
Reference Obligation:	All of the Class A Notes issued from time to time by the Reference Entity under the Reference Obligation Indenture that are not Pledged Notes.
Pledged Notes:	All of the Class A Notes issued by the Reference Entity under the Reference Obligation Indenture that are held by the Counterparty on the Effective Date or issued to Counterparty on the Amendment Effective Date.
Reference Obligation Indenture:	The Indenture, dated as of May 23, 2013 between the Reference Entity and State Street Bank and Trust Company, as trustee (the “Trustee”), as (i) supplemented by the First Supplemental Indenture, dated as of June 6, 2013, (ii) amended and restated as of December 4, 2013, (iii) further amended and restated as of the Amendment Effective Date and (iv) further amended, restated, supplemented or otherwise modified and in effect from time to time.

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Notional Amount:	The outstanding principal amount of the Reference Obligation (determined after giving effect to any reduction in the principal amount thereof pursuant to the terms of the Reference Obligation Indenture). In relation to a Terminated Obligation, the principal amount of the related Reference Obligation that is the subject of such termination.
Portfolio Asset:	Each “Portfolio Asset” under and as defined in the Reference Obligation Indenture.
Portfolio:	At any time, all Portfolio Assets held by the Reference Entity at such time.
Purchase Price:	As defined in the Reference Obligation Indenture.
Purchase Amount:	In relation to any Portfolio Asset that is not a Delayed Draw Loan and any date of determination, the product of the Purchase Price and the Par Amount. In relation to any Portfolio Asset that is a Delayed Draw Loan and any date of determination, the product of the Purchase Price and the Commitment Amount.
Par Amount:	In relation to any Portfolio Asset, the outstanding principal amount of such Portfolio Asset (as the same may be increased in the case of a Delayed Draw Loan pursuant to any amount drawn in respect of such Delayed Draw Loan). The Par Amount of any Delayed Draw Loan on any date shall include the aggregate stated face amount of all letters of credit, bankers’ acceptances and other similar instruments issued in respect of such Delayed Draw Loan to the extent that the holder of such Delayed Draw Loan is obligated to extend credit in respect of any drawing or other similar payment thereunder.
Commitment Amount:	In relation to any Portfolio Asset that is a Delayed Draw Loan as of any date of determination, the maximum outstanding principal amount of such Portfolio Asset that a registered holder of the amount of such Portfolio Asset held by the Reference Entity would on such date be obligated to fund (including all amounts previously funded and outstanding, whether or not such amounts, if repaid, may be reborrowed).

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Portfolio Asset Obligor:	In relation to any Portfolio Asset, the borrower or issuer of the Portfolio Asset set forth in, and identified as the “Obligor” in, the Relevant Source. In addition, “Portfolio Asset Obligor”, unless the context otherwise requires, shall also refer to any guarantor of or other obligor on the Portfolio Asset.
Business Day:	New York, Boston, London and TARGET.
Business Day Convention:	Following (which shall, other than with respect to the definition of “Monthly Period”, apply to any date specified herein for the making of any payment or determination or the taking of any action which falls on a day that is not a Business Day).
Payment Date:	Nine Business Days after the end of each Monthly Period.
Monthly Period:	Each period from, and including, the 15th calendar day of each calendar month (each, a Monthly Date) to, but excluding, the next following Monthly Date, except that (a) the initial Monthly Period will commence on, and include, the Effective Date and will end on, but exclude, the 15th day of June, 2013 and (b) the final Monthly Period will end on, but exclude, the date on which all of the Reference Obligations are paid in full.
Calculation Agent:	UBS. Except as otherwise expressly provided herein, the Calculation Agent shall make all determinations, calculations and adjustments required pursuant to this Confirmation in good faith and in any commercially reasonable manner.
Calculation Agent City:	New York
Payments by Counterparty
Counterparty First Floating Amounts:
First Floating Amount Payer:	Counterparty
First Floating Amount:	In relation to any First Floating Rate Payer Payment Date, the sum of the product of (a) the First Floating Rate Payer Calculation Amount for such First Floating Rate Payer Payment Date multiplied by (b) the Floating Rate Option during the related First Floating Rate Payer Calculation Period plus the Spread multiplied by (c) the Floating Rate Day Count Fraction.

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First Floating Rate Payer Calculation Amount:	In relation to any First Floating Rate Payer Payment Date, the daily average of the Notional Amount during the related First Floating Rate Payer Calculation Period.
First Floating Rate Payer Calculation Period:	Each First Floating Monthly Period, except that (a) the initial First Floating Rate Payer Calculation Period will commence on, and include, the Effective Date and (b) the final First Floating Rate Payer Calculation Period will end on, but exclude, the final Obligation Termination Date.
First Floating Rate Payer Payment Dates:	Each UBS Fixed Amount Payment Date.
First Floating Monthly Period:	Each period from, and including, a First Floating Rate Payer Payment Date to, but excluding, the next following First Floating Rate Payer Payment Date, except that (a) the initial First Floating Monthly Period will commence on, and include, the Effective Date will end on, but exclude the First Floating Rate Payer Payment Date that occurs in June, 2013 and (b) the final First Floating Monthly Period will end on, but exclude, the date on which all of the Reference Obligation is paid in full.
Floating Rate Option:	USD-LIBOR-BBA, provided that the Floating Rate Option for initial First Floating Rate Payer Calculation Period shall be 0.19528%.
Designated Maturity:	One month
Spread:	(a) For the period from and including the Effective Date to but excluding the Amendment Effective Date: 2.85%. (b) From and including the Amendment Effective Date: 2.75%.
Floating Rate Day Count Fraction:	Actual/360
Reset Dates:	As set forth in “Designated Maturity” above
Compounding:	Inapplicable

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Counterparty Second Floating Amounts:
Second Floating Amount Payer:	Counterparty
Second Floating Amount:	In relation to any Terminated Obligation, Capital Depreciation, if any.
Second Floating Rate Payer Payment Dates:	Each Total Return Payment Date.
Counterparty Third Floating Amounts:
Third Floating Amount Payer:	Counterparty
Third Floating Amount:	$48,875.00
Third Floating Rate Payer Payment Dates:	The earlier of (a) September 26, 2014 and (b) the Termination Date.
Counterparty Fourth Floating Amounts:
Fourth Floating Amount Payer:	Counterparty
Fourth Floating Amount:	$258,541.67
Fourth Floating Rate Payer Payment Dates:	The earlier of (a) December 4, 2014 and (b) the Termination Date.
Counterparty Fifth Floating Amounts:
Fifth Floating Amount Payer:	Counterparty
Fifth Floating Amount:	$259,958.33
Fifth Floating Rate Payer Payment Dates:	The earlier of (a) December 4, 2015 and (b) the Termination Date.
Counterparty Sixth Floating Amounts:
Sixth Floating Amount Payer:	Counterparty
Sixth Floating Amount:	$258,541.67

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Sixth Floating Rate Payer Payment Dates:	The earlier of (a) December 5, 2016 and (b) the Termination Date.
Counterparty Seventh Floating Amounts:
Seventh Floating Amount Payer:	Counterparty
Seventh Floating Amount:	$620,500.00
Seventh Floating Rate Payer Payment Dates:	The earlier of (a) December 5, 2017 and (b) the Termination Date.
Payments by UBS:
UBS Fixed Amounts:
Fixed Amount Payer:	UBS
Fixed Amount:	The Interest and Fee Amount for the related Fixed Amount Payer Calculation Period.
Fixed Amount Payer Calculation Periods:	Each Monthly Period; provided that (a) the initial Fixed Amount Payer Calculation Period shall commence on and include the Effective Date and (b) the final Fixed Amount Payer Calculation Period shall end on, but exclude, the final Obligation Termination Date.
UBS Fixed Amount Payment Dates:	The Payment Date following the last day of any Fixed Amount Payer Calculation Period.
UBS Floating Amounts:
Floating Amount Payer:	UBS
Floating Amount:	In relation to any Terminated Obligation, Capital Appreciation, if any.
Floating Rate Payer Payment Dates:	Each Total Return Payment Date.

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3. ACCELERATED TERMINATION.

Collateral Default

(a) If (i) Counterparty defaults in the performance of any of its obligations under Clause 9 in respect of the Transfer by Counterparty as Pledgor of any Eligible Credit Support or (ii) the Reference Entity increases the outstanding principal amount of the Reference Obligations at any time after the Effective Date pursuant to Section 2.13 of the Reference Obligation Indenture, then UBS will have the right but not the obligation to terminate the Transaction in whole (but not in part); provided that (A) in the case of sub-clause (i), UBS may deliver the relevant Accelerated Termination Notice (as defined below) at any time on or prior to the final Termination Trade Date and (B) in the case of sub-clause (ii), UBS must deliver the relevant Accelerated Termination Notice (as defined below) within five Business Days of UBS receiving notice of the relevant increase in order to exercise such termination right. UBS can exercise this termination right by delivering a termination notice to Counterparty (an “Accelerated Termination Notice” for purposes of this Clause 3(a)). Such Accelerated Termination Notice shall specify the final Termination Trade Date and the proposed Termination Settlement Date. Upon the termination of the Transaction pursuant to this Clause 3(a), Counterparty shall pay an additional amount to UBS equal to the applicable Breakage Costs on the Obligation Termination Date (which payment obligation of Counterparty shall survive the termination of the Transaction).

Effect of Designation of Early Termination Date

(b) If there occurs or is effectively designated an Early Termination Date under the Master Agreement, then (i) notwithstanding any contrary or otherwise inconsistent provision of the Master Agreement, the provisions set forth in Section 6(e) of the Master Agreement shall not apply to the Transaction and the amount of all payments in respect of each Terminated Obligation shall not be an amount determined in accordance with Section 6(e) of the Master Agreement but shall instead be the Counterparty Second Floating Amount or UBS Floating Amount (as the case may be) determined in accordance with Clause 4 (subject, in the case of Clause 4(a), to the limitations set forth therein with respect to Counterparty relying on such provision), together with any Counterparty First Floating Amount, the Counterparty Third Floating Amount, the Counterparty Fourth Floating Amount, the Counterparty Fifth Floating Amount, the Counterparty Sixth Floating Amount, the Counterparty Seventh Floating Amount, any UBS Fixed Amount and Breakage Costs (if any) determined in accordance with this Confirmation and subject to netting under the Master Agreement, (ii) the party that designated such Early Termination Date (or the Non-Defaulting Party in the case of an automatic designation) will promptly deliver a notice (an “Accelerated Termination Notice” for purposes of this Clause 3(b)) to the other party (which Accelerated Termination Notice shall specify the final Termination Trade Date and the proposed Termination Settlement Date and may form part of any notice designating such Early Termination Date) and (iii) the amount, if any, payable in respect of such Early Termination Date will be determined in accordance with this Confirmation based upon the delivery of such Accelerated Termination Notice. Notwithstanding the foregoing, upon the termination of the Transaction pursuant to this Clause 3(b) other than as a result of an Event of Default or Termination Event with respect to which UBS is the Defaulting Party or an Affected Party, Counterparty shall pay an additional amount to UBS equal to the applicable Breakage Costs on the Obligation Termination Date (which payment obligation of Counterparty shall survive the termination of the Transaction); provided that Counterparty shall not be required to pay any Breakage Costs in the event of termination of the Transaction as a result of (i) an Additional Termination Event pursuant to Clause 3(c)(i) if the related “Event of Default” (as defined in the Reference Obligation Indenture) is a direct result of any action or omission by Party A or any of its Affiliates or (ii) an Additional Termination Event pursuant to Clause 3(c)(ii).

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Additional Termination Events

(c) Each of the following shall constitute an Additional Termination Event under the Master Agreement with respect to which Counterparty will be the sole Affected Party and each of the Transactions entered into hereunder and under the Related Confirmation will constitute an Affected Transaction:

(i) the delivery of an “Accelerated Termination Notice” by UBS to Counterparty in respect of all Transactions currently outstanding under (and as defined in) the Related Confirmation in accordance with Clause 3(a)(ii) of the Related Confirmation;

(ii) the occurrence of an “Event of Default” under (and as defined in) the Reference Obligation Indenture (provided that, for purposes of this Confirmation and the Master Agreement, the determination of whether an “Event of Default” (as so defined) has occurred with respect to any amount due and payable on the Reference Obligation on the stated maturity thereof shall be made (x) without giving effect to the first sentence of Section 2.7(g) of the Reference Obligation Indenture and (y) without giving effect to any grace period in Section 5.1(a) or Section 5.1(b)(i) of the Reference Obligation Indenture); and

(iii) if and for so long as any UBS Holder holds any part of the Reference Obligation as a hedge for the Transaction, either (A) the ownership by such UBS Holder of the Reference Obligation (or any portion thereof) or (B) the compliance by such UBS Holder with its obligations under the Reference Obligation Indenture or under the Reference Obligation would violate any law, rule or regulation of any governmental, regulatory or judicial authority applicable to such UBS Holder.

4. FINAL PRICE DETERMINATION.

Following the termination of the Transaction (i) pursuant to (or, in the case of Clause 3(b), as described in) Clause 3 or (ii) by reason of the occurrence of the Scheduled Termination Date (other than in connection with a Repayment), the Final Price for each Terminated Obligation will be determined in accordance with this Clause 4.

(a) If any UBS Holder holds the Reference Obligation as a hedge for such Terminated Obligation, subject to sub-clauses (i), (ii) and (iii) below, Counterparty may identify an Approved Dealer that has submitted a Firm Bid to acquire the Reference Obligation from UBS or any such Affiliate, in each case by giving notice of such Firm Bid to UBS. Such notice must be given no later than 10 a.m. (New York time) on the applicable Termination Trade Date. So long as (i) any sale by UBS or such Affiliate of the Reference Obligation or applicable portion thereof to such Approved Dealer (as applicable) is (A) not prohibited under applicable law or regulation and (B) substantially in accordance with the then-current market practice in the principal market for, and transfer restrictions with respect to, the Reference Obligation (as determined by the Calculation Agent) and at prevailing market price, (ii) all payment and collateral delivery obligations of Counterparty have otherwise been satisfied when due under this Confirmation and the Master Agreement and (iii) no Event of Default or Additional Termination Event has occurred or is continuing with respect to Counterparty, in each case on the date Counterparty delivers such notice, (x) if a retransfer is necessary in order for UBS to be able to unwind its hedge position (or

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the applicable portion thereof) and UBS accepts such Firm Bid, UBS or such Affiliate shall take, on or promptly following the Termination Trade Date all actions within its reasonable control necessary to cause such retransfer of the Reference Obligation to UBS or such Affiliate, (y) subject (only where such retransfer is necessary for UBS to unwind its hedge position (or the applicable portion thereof) and UBS accepts such Firm Bid) to such retransfer of the Reference Obligation having occurred in accordance with UBS’ instructions, UBS or such Affiliate shall accept such Firm Bid and transfer the Reference Obligation or portion thereof to such Approved Dealer and (z) the net cash proceeds received by UBS or such Affiliate from the sale of the Reference Obligation or portion thereof (exclusive of accrued interest and capitalized interest), net of the related Costs of Assignment, shall be the “Final Price” for the relevant Reference Obligation or portion thereof. In the event that such transfer of the Reference Obligation or portion thereof to such Approved Dealer does not occur (I) as a result of a breach by UBS of its obligations under this Section 4(a), the Final Price for the Terminated Obligation shall be determined based on the Firm Bid provided by such Approved Dealer or (II) other than as a result of a breach by UBS of its obligations under this Section 4(a), the Final Price for the Terminated Obligation shall be determined pursuant to Section 4(b) below.

(b) If the Final Price for the Terminated Obligation is not determined in accordance with clause (a) above, then the Calculation Agent shall attempt to obtain Firm Bids for the Terminated Obligation with respect to the applicable Termination Trade Date from three or more Dealers. The Calculation Agent will give Counterparty notice of its intention to obtain Firm Bids pursuant to this Clause 4 (such notice to be given telephonically and via electronic mail) not later than 5:00 p.m. New York time on the date three Business Days prior to the bid submission deadline as shall be specified by the Calculation Agent in each of its requests for Firm Bids for the Terminated Obligation with respect to the applicable Termination Trade Date. By notice to UBS not later than such bid submission deadline, Counterparty may, but shall not be obligated to, designate any Dealer to provide a Firm Bid (and the Calculation Agent will seek a Firm Bid from such Dealer if so designated by Counterparty on a timely basis).

In seeking to obtain a Firm Bid from any Dealer, the Calculation Agent will deliver to such Dealer the following information: (1) a copy of the Reference Obligation Indenture (and each Transaction Document referred to (and as defined) therein); and (2) a copy of each Monthly Report delivered under (and as defined in) the Reference Obligation Indenture within the last 12 months. Such Dealers must provide the Calculation Agent with a Firm Bid within one Business Day of the Calculation Agent’s request for such Firm Bid in order for the Calculation Agent to consider such Firm Bid in its determinations of the Final Price under this Clause 4(b). In seeking to obtain a Firm Bid from any Dealer, the Calculation Agent will, to the extent practicable, afford such Dealer with an opportunity, to the extent requested by such Dealer, to ask questions of, and receive information from, the persons or entities responsible for the management of the Reference Entity.

UBS may, but is not obligated to, sell or cause the sale of any portion of a Terminated Obligation to any Dealer that provides a Firm Bid for purposes of this Clause 4(b).

If the Calculation Agent is able to obtain at least one Firm Bid or combination of Firm Bids for all of the Notional Amount allocable to a Terminated Obligation, the Final Price for such Terminated Obligation shall be determined by reference to the highest such Firm Bid or combination of Firm Bids received by the Calculation Agent within one Business Day of its request therefor. If no Firm Bids are obtained as provided above in this Clause 4 for all or a portion of a Terminated Obligation, the Final Price shall be deemed to be zero with respect to each portion of such Terminated Obligation for which no Firm Bid was obtained. The Calculation Agent will conduct the bid process in accordance with the procedures set forth in this Clause 4 and otherwise in a commercially reasonable manner.

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Notwithstanding anything to the contrary herein,

(i) the Calculation Agent shall be entitled to disregard any Firm Bid submitted by a Dealer if, in the Calculation Agent’s commercially reasonable judgment, (x) such Dealer is ineligible to accept assignment or transfer of the relevant Terminated Obligation or portion thereof, as applicable, substantially in accordance with the then-current market practice in the principal market for such Terminated Obligation, as determined by the Calculation Agent, or (y) such Dealer would not, through the exercise of its commercially reasonable efforts, be able to obtain any consent required under any agreement or instrument governing or otherwise relating to such Terminated Obligation to the assignment or transfer of such Terminated Obligation or portion thereof, as applicable, to it; and

(ii) if the Calculation Agent determines that the highest Firm Bid obtained in connection with the applicable Termination Trade Date is not bona fide due to (x) the bankruptcy or insolvency of the bidder or (y) the inability, failure or refusal (or reasonably expected inability, failure or refusal) of the bidder to settle the purchase of such Terminated Obligation or portion thereof, as applicable, or otherwise settle transactions in the relevant market or perform its obligations generally, that Firm Bid shall be disregarded.

If the highest Firm Bid for any portion of such Terminated Obligation is disregarded pursuant to this paragraph, then (i) if there is at least one other available Firm Bid for such portion, the “Final Price” shall be the next highest Firm Bid and (ii) if there are no other available Firm Bids for such portion, the Calculation Agent shall have no obligation to obtain further bids, and the applicable “Final Price” for the portion which was so disregarded shall be deemed to be zero.

If UBS transfers, or causes the transfer of, a Terminated Obligation to the Dealer or Dealers providing the highest Firm Bid or combination of Firm Bids, the net cash proceeds received from the sale of such Terminated Obligation (which sale shall be scheduled to settle no later than the Relevant Settlement Date), exclusive of accrued interest and capitalized interest and net of any Costs of Assignment, shall be the “Final Price” for such Terminated Obligation (or the portion thereof that is sold).

If UBS determines, in its sole discretion, not to sell or cause the sale of any portion of such Terminated Obligation to the entity or entities providing the highest Firm Bid or combination of Firm Bids, the “Final Price” for such unsold portion shall be equal to such highest Firm Bid (or combination of Firm Bids) multiplied by the portion of the Notional Amount allocable to such Terminated Obligation (or the respective portions of the Notional Amount to which such Firm Bids relate). The Calculation Agent may perform any of its duties under this Clause 4(b) through any Affiliate designated by it, but no such designation shall relieve the Calculation Agent of its duties under this Clause 4(b).

(c) In the event that (i) the Final Price for all or any part of the Terminated Obligation is deemed to be zero pursuant to the foregoing and (ii) any UBS Holders holds the Reference Obligation as a hedge for such Terminated Obligation, UBS and Counterparty will make commercially reasonable efforts to accomplish the assignment or other transfer to Counterparty (free of payment by Counterparty other than Costs of Assignment incurred by UBS or any of its Affiliates in effecting the transfer; provided that all other payment and collateral delivery obligations of Counterparty are otherwise fulfilled under the Master Agreement at the time of such transfer) of the relevant Terminated Obligation (or the relevant portion thereof) for which the Final Price is deemed to be zero; and UBS shall not be liable for any losses related to any delay in or failure of such assignment beyond its control. Counterparty shall reimburse UBS for all Costs of Assignment incurred by UBS in effecting the transfer promptly following UBS’ demand therefor.

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5. [RESERVED]

6. ADJUSTMENTS.

If the Reference Obligation or any portion thereof is irreversibly converted or exchanged into or for any securities, obligations or other assets or property (“Exchange Consideration”), or any payment on the Reference Obligation is paid in the form of any Exchange Consideration that is not cash, thereafter such Exchange Consideration will constitute the Reference Obligation or portion thereof and the Calculation Agent shall, after consultation with the parties, adjust the terms of the Transaction as the Calculation Agent determines appropriate to preserve the theoretical value of the Transaction to the parties immediately prior to such exchange or, if such exchange results in a change in value, the proportionate post-exchange value, and determine the effective date of such adjustments.

7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

(a) Each party hereby agrees as follows, so long as either party has or may have any obligation under the Transaction.

(i) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into the Transaction; it being understood that information and explanations related to the terms and conditions of the Transaction shall not be considered investment advice or a recommendation to enter into the Transaction. It has not received from the other party any assurance or guarantee as to the expected results of the Transaction;

(ii) Evaluation and Understanding. It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of the Transaction. It is also capable of assuming, and assumes, the financial and other risks of the Transaction;

(iii) Status of Parties. The other party is not acting as a fiduciary or an advisor for it in respect of the Transaction;

(iv) Reliance on its Own Advisors. Without limiting the generality of the foregoing, in making its decision to enter into, and thereafter to maintain, administer or terminate, the Transaction, it will not rely on any communication from the other party as, and it has not received any representation or other communication from the other party constituting, legal, accounting, business or tax advice, and it will consult its own legal, accounting, business and tax advisors concerning the consequences of the Transaction; and

(v) U.S. Tax Treatment. In connection with the Transaction, it will, for U.S. Federal income tax purposes (and to the extent permitted by law, state and local income tax purposes): (w) treat the Counterparty as having retained beneficial ownership of all of the economic benefits and burdens of ownership of the Reference Obligation, the Pledged Notes and each Portfolio Asset at all times during the pendency of the Transaction (except after a

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default by either party) and all payments made in respect of the Reference Obligation and the Pledged Notes as having been made directly to the Counterparty; (x) treat the Transaction (including the Credit Support Annex to the Transaction), taken together with the issuance of the Reference Obligation to the UBS Holder, as a single loan of USD 102,000,000 from UBS to the Counterparty secured by the Reference Obligation and the Pledged Notes, maturing on the Scheduled Termination Date and which is not a contingent debt instrument described in Treas. Regs. Section 1.1275-4; (y) treat the Counterparty First Floating Amounts as interest paid on an obligation issued in registered form to a U.S. person (within the meaning of Section 7701(a)(30) of the Code) in respect of the loan described in clause (x); and (z) not treat the issuance of the Reference Obligation to the UBS Holder as creating a partnership or otherwise as an equity interest in the Reference Entity. The parties agree to file all tax forms, returns and withholding certificates (including, without limiting the foregoing, U.S. Internal Revenue Service Form 1099 and any withholding certificates required to be provided pursuant to the Schedule to the Master Agreement) consistent with this treatment, and the Counterparty agrees to provide copies of all withholding tax certificates relating to the Reference Obligation and the Portfolio Assets reasonably requested by the trustee under the Reference Obligation Indenture.

References in this Clause 7(a) to “the other party” shall, in the case of UBS and where the context so allows, include references to any Affiliate of UBS.

(b) Each party acknowledges and agrees that, so long as either party has or may have any obligation under the Transaction:

(i) the Transaction does not create any direct or indirect obligation of the Reference Entity or any Portfolio Asset Obligor or any direct or indirect participation in the Reference Obligation, any Portfolio Asset or any other obligation of the Reference Entity or any Portfolio Asset Obligor;

(ii) each party and its Affiliates may deal in the Reference Obligation and any Portfolio Asset and may accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of commercial or investment banking or other business with the Reference Entity, any Portfolio Asset Obligor or any Affiliate of the Reference Entity or any Portfolio Asset Obligor, any other person or entity having obligations relating to the Reference Entity or any Portfolio Asset Obligor and may act with respect to such business in the same manner as if the Transaction did not exist and may originate, purchase, sell, hold or trade, and may exercise consensual or remedial rights in respect of, obligations, securities or other financial instruments of, issued by or linked to the Reference Entity or any Portfolio Asset Obligor, regardless of whether any such action might have an adverse effect on the Reference Entity or any Portfolio Asset Obligor, the value of the Reference Obligation or any Portfolio Asset or the position of the other party to the Transaction or otherwise;

(iii) with respect to information regarding the Reference Entity, any Portfolio Asset Obligor or any Affiliate of the Reference Entity or any Portfolio Asset Obligor that is or may be material in the context of the Transaction:

(A) each party and its Affiliates and the Calculation Agent may, whether by virtue of the types of relationships described herein or otherwise, at the date hereof or at any time hereafter, be in possession of information regarding the Reference Entity, any Portfolio Asset Obligor or any Affiliate of the Reference

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Entity or any Portfolio Asset Obligor that is or may be material in the context of the Transaction and that may or may not be publicly available or known to the other party. In addition, this Confirmation does not create any obligation on the part of such party and its Affiliates to disclose to the other party any such relationship or information (whether or not confidential);

(B) Counterparty understands that UBS and its Affiliates are engaged in a wide range of financial services and businesses, including investment management, financing, securities trading, corporate and investment banking and research (such services and businesses are collectively referred to in this Clause 7(b)(iii) as “Activities”) and may engage in the Activities with or on behalf of one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates. Furthermore, UBS or its Affiliates may, in undertaking the Activities, engage in trading in financial products or undertake other investment businesses for its own account or on behalf of others (including one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates and including holding, for its own account or on behalf of others, equity, debt and similar positions in one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates), including trading in or holding long, short or derivative positions in securities, loans or other financial products of one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates. Counterparty understands and agrees that in engaging in the Activities, (x) UBS or its Affiliates may now or in the future have interests or take actions that may conflict with the interests of Counterparty and (y) officers and employees of UBS or its Affiliates (including those responsible for negotiating the Transaction) may currently have and later may receive or otherwise obtain information concerning one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates (including information concerning mergers, acquisitions, divestitures, restructurings, defaults under material agreements, creditors’ rights proceedings or other matters that may affect the value of the Reference Obligation or any Portfolio Asset or the ability of the Reference Entity or any Portfolio Asset Obligor to perform its obligations thereunder), which information may not be available to Counterparty and may be material to a decision to enter into the Transaction (the “Excluded Information”). Counterparty acknowledges that it has determined to enter into the Transaction notwithstanding its lack of knowledge of the Excluded Information. Counterparty agrees that neither UBS nor any of its Affiliates shall have any liability to Counterparty, and Counterparty waives and releases any claims that it might have against UBS or its Affiliates, whether under applicable securities laws or otherwise, with respect to the nondisclosure of the Excluded Information in connection with this Confirmation or the Transaction; provided that the Excluded Information shall not and does not affect the truth or accuracy of UBS’s representations or warranties in the Master Agreement or this Confirmation;

(C) Counterparty confirms that it (i) is a sophisticated entity with respect to the obligations of the type of the Reference Obligation and the Portfolio Assets, (ii) has adequate information concerning the business and financial condition of the Reference Entity and each Portfolio Asset Obligor to make an informed decision regarding its entry into this Confirmation and the Transaction,

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(iii) possesses (individually or through its Affiliates) such knowledge and experience in financial and business matters that it is capable, without reliance on UBS or its Affiliates, of evaluating the merits and risks (including tax, legal, regulatory, credit, accounting and other financial matters) of entering into this Confirmation and the Transaction and is financially able to bear such risks, (iv) has such knowledge and experience, and has entered into other transactions of a similar economic nature, so as to be aware of the risks and uncertainties inherent in the assumption of rights and obligations of the type contemplated in this Confirmation and the Transaction, and (v) has determined that entering into this Confirmation and the Transaction hereunder is suitable and appropriate for it;

(D) Counterparty acknowledges that (i) it is solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with this Confirmation and the Transaction, (ii) that it has, independently and without reliance upon UBS or its Affiliates, made its own appraisal and investigation of all risks associated with, and its own credit analysis and decision to enter into, this Confirmation and the Transaction based on such documents and information, as it has deemed appropriate and (iii) it will, independently and without reliance upon UBS or its Affiliates, continue to be solely responsible for making its own appraisal and investigation of all risks arising under or in connection with, and its own credit analysis and decision to take or not take action under, this Confirmation and the Transaction, based on such documents and information as it shall from time to time deem appropriate which may include, in each case, any or all of the following (it being understood that neither UBS nor any of its Affiliates is responsible for or has made any representation or warranty with respect to any such matters or information): (x) the financial condition, status and capitalization of the Reference Entity or any Portfolio Asset Obligor; (y) the legality, validity, effectiveness, adequacy or enforceability of any agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with the Reference Obligation or any Portfolio Asset; or (z) the adequacy, accuracy and/or completeness of (A) any document in the form approved by the Reference Entity or any Portfolio Asset Obligor concerning the Reference Entity or such Portfolio Asset Obligor (or any of their respective subsidiaries) which, at the request of the Reference Entity or such Portfolio Asset Obligor and on its behalf, was prepared in relation to the syndication of the Reference Obligation or any Portfolio Asset or other obligations of the Reference Entity or any Portfolio Asset Obligor and which may or may not have been distributed by the arranger(s) of such obligations to selected financial institutions (an “Information Memorandum”) and (B) any other information concerning the Reference Entity or any Portfolio Asset Obligor delivered by UBS or its Affiliates under or in connection with this Confirmation, the Transaction or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with the Reference Obligation or any Portfolio Asset; and

(E) Counterparty agrees that none of (i) the Master Agreement, (ii) the receipt by UBS or its Affiliates of any information (including Excluded Information) concerning one or more of the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates (including information concerning the value of the Reference Obligation or any Portfolio Asset or the ability of the Reference Entity

Page 15

or any Portfolio Asset Obligor to perform their respective obligations thereunder) nor (iii) any other matter, shall give rise to any fiduciary or other similar duties (including without limitation any duty of trust or confidence) owing by UBS or its Affiliates to Counterparty including any such duty that would prevent or restrict UBS or its Affiliates from acting on behalf of customers (including the Reference Entity, the Portfolio Asset Obligors and their respective Affiliates) or for its own account;

(iv) neither UBS nor any of its Affiliates shall be under any obligation to hedge the Transaction or to own or hold the Reference Obligation or any Portfolio Asset as a result of the Transaction, and UBS and its Affiliates may establish, maintain, modify, terminate or re-establish any hedge position or any methodology for hedging at any time without regard to Counterparty. Any such purchases, sales or other transactions will be at the sole discretion of UBS and its Affiliates, and Counterparty acknowledges that such transactions may affect the market price of the Reference Obligation and/or the Portfolio Assets. Counterparty acknowledges and agrees that it is not relying on any representation, warranty or statement by UBS or any of its Affiliates as to whether, at what times, in what manner or by what method UBS or any of its Affiliates may engage in any hedging activities;

(v) notwithstanding any other provision in this Confirmation or any other document, UBS and Counterparty (and each employee, representative, or other agent of UBS or Counterparty) may each disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to them relating to such U.S. tax treatment and U.S. tax structure (as those terms are used in Treasury Regulations under Sections 6011, 6111 and 6112 of the Code), other than any information for which nondisclosure is reasonably necessary in order to comply with applicable securities laws. To the extent not inconsistent with the previous sentence, UBS and Counterparty will each keep confidential (except as required by law) all information unless the other party has consented in writing to the disclosure of such information. In the event of a disclosure with respect to the U.S. tax treatment and U.S. tax structure of this Transaction, the person making the disclosure may disclose all information relevant to an understanding of the U.S. tax treatment and U.S. tax structure of this Transaction, but such person may not disclose the identity of the Counterparty, any Reference Entity or any Portfolio Asset; and

(vi) if UBS chooses to hold (either directly or indirectly) the Reference Obligation as a result of the Transaction, UBS may deal with the Reference Obligation as if the Transaction did not exist (and, without limiting the generality of the foregoing, UBS shall have no duty to Counterparty with respect to any such direct or indirect ownership of the Reference Obligation).

(c) Each of the parties hereby represents that, on the date on which the Transaction is entered into hereunder:

(i) it is entering into the Transaction for investment, financial intermediation, hedging or other commercial purposes;

Page 16

(ii) (x) it is an “eligible contract participant” as defined in the U.S. Commodity Exchange Act, as amended (the “CEA”), (y) the Master Agreement and each Transaction are subject to individual negotiation by each party, and (z) neither the Master Agreement nor the Transaction will be executed or traded on a “trading facility” within the meaning of Section 1a(33) of the CEA; and

(iii) (A) the Master Agreement (including the Credit Support Annex) and each Transaction entered into under this Confirmation is a “swap agreement” within the meaning given to such term under Section 101(53B) of the United States Bankruptcy Code of 1978, as amended (the “Bankruptcy Code”) and (B) it is a “swap participant” within the meaning given to such term under Section 101(53C) of the Bankruptcy Code.

(d) Counterparty hereby represents to UBS that:

(i) its investments in and liabilities in respect of the Transaction, which it understands is not readily marketable, is not disproportionate to its net worth, and it is able to bear any loss in connection with the Transaction, including the loss of its entire investment in the Transaction;

(ii) it understands no obligations of UBS to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of UBS or any governmental agency;

(iii) it has elected to treat the Reference Entity as an entity disregarded from its owner for United States Federal income tax purposes;

(iv) it can receive all payments on each Portfolio Asset included in the Portfolio without U.S. Federal withholding tax and the relevant Reference Entity or any subsidiary thereof holding a Portfolio Asset, as applicable, can (except to the extent otherwise disclosed with respect to the Portfolio Asset prior to the related Trade Date (as defined in the Reference Obligation Indenture)) receive all such payments without foreign withholding tax (which representation, subject to any such exception, shall also be made for purposes of Section 3(f) of the Master Agreement);

(v) it has delivered an applicable United States Internal Revenue Service form W-9 (or successor form) with respect to withholding tax required to be delivered by it pursuant to Part 3 of the Schedule to the Master Agreement (and this representation will also be deemed made pursuant to Section 3(f) of the Master Agreement);

(vi) it is not, for U.S. Federal income tax purposes, a tax exempt organization for purposes of Section 514 of the U.S. Internal Revenue Code of 1986, as amended, and, unless any such organization that invests in Counterparty does so only indirectly through an entity that is not transparent for U.S. Federal income tax purposes, there is disclosure to such organization that such organizations may recognize unrelated business taxable income;

(vii) it has obtained tax advice from its auditors or external legal counsel, in either case of recognized standing in relation to U.S. Federal income tax matters, that considered the U.S. tax treatment of the Transaction to which this Confirmation relates; and

(viii) it has obtained its own advice as to the proper tax characterization of the transaction in all jurisdictions, including for the avoidance of doubt the United States, and is not relying on UBS or its advisors in respect of such matters in any respect.

Page 17

(e) UBS hereby represents to Counterparty that

(i) UBS will provide to the Counterparty and the Reference Entity a valid Form W-9 provided by UBS Securities LLC and attached to a valid Form W-8IMY (or successor thereto), that the Counterparty and the Reference Entity may reliably associate all payments to be made by either of them pursuant to the Transaction with such forms, and therefore may treat all such payments under the Transaction as made to a U.S. person within the meaning of Treas. Regs. Section 1.1441-1(d)(4);

(ii) the Transaction to which this Confirmation relates is entered into by UBS through an office located within the United States, or U.S. personnel of UBS materially participated in this Transaction for U.S. Federal income tax purposes and UBS is acting solely as an agent of UBS Securities LLC, a person that is a “U.S. person” as that term is defined under IRC Section 7701(a)(30);

(iii) except to the extent necessary to enable UBS to exercise any of its rights under Paragraph 6(c) of the Credit Support Annex, that UBS is under no legal or contractual obligation to treat the Reference Obligation issued to it, any Pledged Notes pledged under the Credit Support Annex or any Portfolio Asset as legally or beneficially owned by any person other than the Counterparty; and

(iv) that UBS has obtained its own advice as to the proper tax characterization of the transaction in all jurisdictions, including for the avoidance of doubt the United States, and is not relying on the Counterparty or its advisors in respect of such matters in any respect.

(f) Except for disclosure authorized pursuant to Clause 7(b)(v), Counterparty agrees to be bound by the confidentiality provisions of the Reference Obligation Indenture (and of each credit or loan agreement governing each Portfolio Asset) with respect to all information and documentation in relation to the Reference Entity or any Portfolio Asset Obligor or the Reference Obligation or any Portfolio Asset delivered to Counterparty hereunder. Counterparty acknowledges that such information may include material non-public information concerning one or more of the Reference Entity, the Portfolio Asset Obligors and their respective securities and agrees to use such information in accordance with applicable law, including Federal and State securities laws. In addition, Counterparty agrees to keep confidential any internal rating supplied by UBS to Counterparty with respect to any Portfolio Asset.

(g) Notwithstanding anything in the Master Agreement to the contrary, UBS will not be required to pay any additional amount under Section 2(d)(i) of the Master Agreement in respect of any deduction or withholding for or on account of any Tax in relation to any payment under the Transaction. If UBS is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding for or on account of any Tax in relation to any payment under the Transaction and UBS does not so deduct or withhold, then Section 2(d)(ii) of the Master Agreement shall be applicable.

(h) If an “Event of Default” under (and as defined in) the Reference Obligation Indenture occurs, then UBS may give notice to Counterparty (so long as such event is continuing on the date of such notice) that UBS, in its capacity as Valuation Agent under (and as defined in) the Reference Obligation Indenture, has elected to exercise exclusively on behalf of the Reference Entity and each subsidiary thereof all rights of the Reference Entity to purchase and dispose of, and to exercise all voting and other consensual rights with respect to, and to make all other determinations and decisions with respect to the ownership of, the Portfolio Assets held or to be acquired by the Reference Entity, pursuant to Section 12.1(c) of the Reference Obligation Indenture.

Page 18

8. ADJUSTMENTS RELATING TO CERTAIN UNPAID OR RESCINDED PAYMENTS.

(a) If (i) UBS makes any payment to Counterparty as provided under Clause 2 and the corresponding Interest and Fee Amount is not paid (in whole or in part) when due or (ii) any Interest and Fee Amount in respect of the Reference Obligation is required to be returned (in whole or in part) by a holder of the Reference Obligation (including, without limitation, the UBS Holder) to the applicable Reference Entity or paid to any other person or entity or is otherwise rescinded pursuant to any bankruptcy or insolvency law or any other applicable law, then (i) each payment obligation under the Transaction related to such payment shall be recomputed by the Calculation Agent as if such unpaid or returned amount had not been paid and (ii) Counterparty will pay to UBS, within five Business Days following receipt of notice from UBS, such amount (or portion thereof) so not paid or so required to be returned, paid or otherwise rescinded. If such returned, paid or otherwise rescinded amount is subsequently paid, UBS shall pay such amount (subject to Clause 8(c)) to Counterparty within five Business Days after the date of such subsequent payment.

(b) [reserved]

(c) Amounts payable pursuant to this Clause 8 shall be subject to adjustment by the Calculation Agent in good faith and on a commercially reasonable basis, as agreed by UBS and Counterparty, in order to preserve for the parties the intended economic risks and benefits of the relevant Transaction; provided that (i) no amounts in respect of interest shall be payable by either party on any adjusted amount and (ii) the Calculation Agent in performing the calculations pursuant to this Clause 8 will assume that no interest has accrued on any adjusted amount.

(d) The payment obligations of UBS and Counterparty pursuant to this Clause 8 shall survive the termination of the Transaction.

9. CREDIT SUPPORT.

Notwithstanding anything in the Credit Support Annex (the “Credit Support Annex”) to the Schedule to the Master Agreement to the contrary, the following collateral terms shall apply to the Transaction to which this Confirmation relates. Capitalized terms used in this Clause 9 but not otherwise defined in this Confirmation have the respective meanings given to such terms in the Credit Support Annex. In the event of any conflict between the Credit Support Annex and these “Collateral Provisions”, these “Collateral Provisions” shall prevail.

(a) Counterparty shall Transfer Eligible Collateral to UBS pursuant to the terms of the Credit Support Annex between UBS and Counterparty, as amended hereby. For purposes of said Credit Support Annex, the Independent Amount applicable to Counterparty in respect of the Transaction to which this Confirmation relates shall, on any Valuation Date, be equal to the aggregate Value of the Pledged Notes, and Counterparty’s obligations to transfer collateral to UBS in respect of such Independent Amount shall at all times be satisfied by the Pledged Notes being Transferred to UBS in accordance with the terms of the Credit Support Annex.

Page 19

(b) The definition of Exposure in Paragraph 12 of the Credit Support Annex is hereby amended and restated in its entirety to read:

UBS’s “Exposure” as Secured Party for the Transactions entered into hereunder and under the Related Confirmation and any Valuation Date or other date for which Exposure is calculated shall mean the sum of (a) the excess, if any, of the Class A-R Net Collateral Value Deficit over the Class A-R Variation Margin Threshold on such date plus (b) the excess, if any, of the Class A Net Collateral Value Deficit over the Class A Variation Margin Threshold on such date, plus (c) the excess, if any, of the Bond Net Collateral Value Deficit over the Bond Variation Margin Threshold.

(c) The “Minimum Transfer Amount” with respect to Counterparty as of any Valuation Date shall be U.S.$100,000; provided that (i) a single Delivery Amount or Return Amount (as applicable) shall be calculated on each Valuation Date for the Transactions entered into hereunder and under the Related Confirmation for purposes of determining whether or not the Minimum Transfer Amount has been exceeded and (ii) the Minimum Transfer Amount for Counterparty shall be zero (1) for purposes of determining any Delivery Amount required to be Transferred by Counterparty in respect of any Independent Amount and (2) at any time when an Event of Default, Potential Event of Default, Termination Event or event which with the giving of notice or lapse of time would (absent the cure thereof during any applicable grace period) constitute a Termination Event has occurred and is continuing with respect to which Counterparty is (or would be) the Defaulting Party or Affected Party.

(d) Solely for purposes of the first demand (and not any subsequent demand) made by UBS as Secured Party for any Transfer of Eligible Credit Support by Counterparty in respect of a Delivery Amount (or the applicable portion thereof) that is due to an increase in the Exposure of UBS as Secured Party (and not, for the avoidance of doubt, the Transfer of the Pledged Notes in satisfaction of Counterparty’s obligations in respect of the Independent Amount) made or deemed made by UBS pursuant to Clause 9(a) above), Paragraph 4(b) of the Credit Support Annex shall be amended by (i) replacing the words “next Local Business Day” with “tenth Local Business Day thereafter” and (ii) replacing the words “second Local Business Day thereafter” with “eleventh Local Business Day thereafter”. UBS shall make no further demand for the Transfer of Eligible Credit Support by Counterparty in respect of a Delivery Amount (or the applicable portion thereof) that is due to an increase in UBS’ Exposure until such tenth or eleventh (as applicable) Local Business Day period has expired, whereupon the Transfer timing provisions of Paragraph 4(b) shall apply as set forth in the Credit Support Annex without regard to the provisions of this Clause 9(d).

(e) Notwithstanding anything to the contrary herein or in the Credit Support Annex, (i) the Threshold with respect to UBS shall be infinity, (ii) in no event shall Counterparty have any positive Exposure as a Secured Party to UBS with respect to the Transaction to which this Confirmation relates and (iii) accordingly, (A) Counterparty shall be the only “Pledgor” and UBS shall be the only “Secured Party” for all purposes of the Credit Support Annex and (B) only the Counterparty makes the pledge and grant in Paragraph 2 of the Credit Support Annex, the acknowledgment in the final sentence of Paragraph 8(a) of the Credit Support Annex and the representations in Paragraph 9 of the Credit Support Annex.

(f) In no event shall Counterparty’s Credit Support Amount as Pledgor be less than the sum of (i) the Independent Amount for the Transaction to which this Confirmation relates and (ii) the sum of the Independent Amounts for all of the Transactions evidenced by the Related Confirmation. Accordingly, in no event shall the Pledged Notes be Transferred to Counterparty until the Termination Date.

Page 20

(g) UBS shall be the sole Valuation Agent for purposes of the Transaction to which this Confirmation relates and each Business Day shall be a Valuation Date.

(h) Notwithstanding anything in this Confirmation to the contrary, for purposes of determining the portion of the Exposure that is attributable to a Portfolio Asset (or portion thereof) that is being sold or has been repaid, the Par Amount of such Portfolio Asset shall not be reduced to reflect such sale or repayment until the Business Day next succeeding the settlement date of such sale or the date on which such repayment occurs, as the case may be. In addition, if the Reference Entity sells any Portfolio Asset and the settlement date for such sale occurs after the date customary for settlement substantially in accordance with the then-current market practice in the principal market for such Portfolio Asset (as determined by the Calculation Agent), then Unrealized Capital Appreciation and Unrealized Capital Depreciation will continue to vary until the actual settlement date (and, for this purpose, each of Unrealized Capital Appreciation and Unrealized Capital Depreciation with respect to such Portfolio Asset shall be determined until such date of actual settlement as if no sale price had been established until the date of settlement of the relevant sale).

(i) The provisions of Paragraph 5 of the Credit Support Annex shall be superseded and replaced in their entirety by Counterparty’s dispute rights with respect to the Current Price of any Portfolio Asset as set forth in the definition of “Current Price”.

10. NOTICE AND ACCOUNT DETAILS.

Notices to UBS:

UBS AG, London Branch

Structured Funding

Attn: Ben Stewart

1285 Avenue of the Americas

New York, NY 10019-6064

Tel: (203) 719-1611

E-mail: OL-Cyrus-TRS@ubs.com

With copies to:

E-mail: DL-IR-STM-TEAM@ubs.com

E-mail: SH-OTC-Credit-Setts@ubs.com

E-mail: OL-CTM@ubs.com

Page 21

Notices to Counterparty:

CM Finance Inc.

399 Park Avenue, 39^th Floor

New York, NY 10022

Attention: Stephon Barnes, Christopher E. Jansen and Michael C. Mauer

Tel: (212) 380-5904

Email: cjansen@cmfn-inc.com, mm@cmfn-inc.com, jagarwal@cmfn-inc.com and ops@cyruscapital.com

Payments to UBS:

Favour: UBS AG, Stamford Branch Swift Address: UBSWUS33XXX

Further Credit To: UBS AG, London Branch

Swift Address: UBSWGB2LXXX

Account No: 101-WA-140007-000

Payments to Counterparty:

Receiving Bank Name: State Street Bank and Trust Co. Boston

Receiving Bank BIC Code: SBOSUS33XXX

Receiving Bank ABA: 011000028

Beneficiary Account Number: 10434322

Beneficiary Account Name: CM Finance Inc

11. OFFICES.

(a) The Office of UBS for the Transaction:

London

(b) The Office of Counterparty for the Transaction:

None

12. SETTLEMENT

The Transaction hereunder is being entered into by a member of the UBS group (“UBS Party”). For the avoidance of doubt, any payment or delivery obligations of the UBS Party in respect of the Transaction may be effected by any of UBS Limited or UBS AG, London Branch or UBS Securities LLC (the “Settlement Agent”). UBS Party has authorized the Settlement Agent to act on its behalf in the same manner and with the same force and effect as UBS Party might or could do in connection with any such payment or delivery obligation.

- signature page follows -

Page 22

Please confirm that the foregoing correctly sets forth the terms of our agreement by having a duly authorized officer of Counterparty execute this Confirmation and return the same by facsimile to the attention of the individual at UBS indicated on the first page hereof.

Yours faithfully

For and on Behalf of

UBS AG, London Branch

By:	By:
Name:	Name:
Title:	Title:

Confirmation – Signature Page

Acknowledged and agreed by CM Finance Inc., as successor to CM Finance LLC, as of the date specified above.

CM FINANCE INC.,

as TRS Counterparty

By:

Name:

Title:

Confirmation – Signature Page

ANNEX A

ADDITIONAL DEFINITIONS

“Affiliate”, for purposes of this Confirmation only, has the meaning given to such term in Rule 405 under the Securities Act of 1933, as amended.

“Approved Dealer” means (a) any entity listed in Annex B hereto and (b) if an entity listed in Annex B hereto is not the principal banking or securities Affiliate within a financial holding company group, the principal banking or securities Affiliate of such listed entity within such financial holding company group; provided that (i) UBS may at any time, upon written notice to Counterparty, delete any name listed in such Annex so long as such deletion is consistent with the general application of its internal credit and risk policies with respect to such Approved Dealer (and not designed to circumvent the rights of Counterparty hereunder) and (ii) the parties may, at any time, agree in writing to add or remove an Approved Dealer to or from Annex B.

“Bond Net Collateral Value Deficit” has the meaning given to such term in the Related Confirmation.

“Bond Variation Margin Threshold” has the meaning given to such term in the Related Confirmation.

“Breakage Cost Calculation Period” means, with respect to any termination of the Transaction following the delivery of an Accelerated Termination Notice pursuant to Clause 3(a) or 3(b), each period from, and including, one Breakage Cost Hypothetical Payment Date to, but excluding, the next following Breakage Cost Hypothetical Payment Date, except that (a) the initial Breakage Cost Calculation Period will commence on, and include, the Obligation Termination Date, and (b) the final Breakage Cost Calculation Period will end on, but exclude, December 5, 2018.

“Breakage Cost Hypothetical Payment Date” means, with respect to any termination of the Transaction following the delivery of an Accelerated Termination Notice pursuant to Clause 3(a) or 3(b), (a) each Payment Date, commencing on the first Payment Date following the date on which such Accelerated Termination Notice is delivered, and (b) the Scheduled Termination Date.

“Breakage Costs” means, with respect to any termination of the Transaction following the delivery of an Accelerated Termination Notice pursuant to Clause 3(a) or 3(b), an amount equal to the sum, determined with respect to each Breakage Cost Calculation Period occurring after the date on which such Accelerated Termination Notice is delivered, of the product of the following:

(a) USD 102,000,000,

(b) the Floating Rate Day Count Fraction (determined based on the actual number of days in such Breakage Cost Calculation Period), and

(c) the Spread,

discounted from the Breakage Cost Hypothetical Payment Date occurring immediately following the end of such Breakage Cost Calculation Period to the Obligation Termination Date; provided that such present value shall be determined using the discount factor implied by the mid-point between the forward bid and offered side LIBOR curves for fixed-for-floating LIBOR swaps of the relevant tenors.

Page A-1

“Capital Appreciation” and “Capital Depreciation” mean, for any Total Return Payment Date, the amount determined according to the following formula for the applicable Terminated Obligation:

Final Price – Applicable Notional Amount

where

“Final Price” means, with respect to any Terminated Obligation, the amount determined pursuant to Clause 4, and

“Applicable Notional Amount” means the Notional Amount (determined immediately prior to the applicable Termination Trade Date) allocable to such Terminated Obligation.

If such amount is positive, such amount is “Capital Appreciation” and if such amount is negative, the absolute value of such amount is “Capital Depreciation”.

“Class A Net Collateral Value” means, on any date of determination, the excess, if any, of (a) the sum of (i) the Class A Total Asset Amount on such date plus (ii) the Class A Net Unrealized Capital Appreciation on such date over (b) the sum of (i) the Aggregate Principal Amount of the Reference Obligation outstanding on such date plus (ii) the Class A Net Unrealized Capital Depreciation on such date.

“Class A Net Collateral Value Deficit” means, on any date of determination, the excess, if any, of (a) the Aggregate Principal Amount of the Reference Obligation outstanding on such date over (b) the Class A Net Collateral Value on such date.

“Class A Net Unrealized Capital Appreciation” means, on any date of determination, the product of (a) the Net Unrealized Capital Appreciation on such date and (b) an amount equal to the quotient of (i) the Aggregate Principal Amount of Class A Notes that are outstanding on such date divided by (ii) the sum of (A) the Outstanding Class A-R Funded Amount and (B) the Aggregate Principal Amount of Class A Notes that are outstanding on such date.

“Class A Net Unrealized Capital Depreciation” means, on any date of determination, the product of (a) the Net Unrealized Capital Depreciation on such date and (b) an amount equal to the quotient of (i) the Aggregate Principal Amount of Class A Notes that are outstanding on such date divided by (ii) the sum of (A) the Outstanding Class A-R Funded Amount and (B) the Aggregate Principal Amount of Class A Notes that are outstanding on such date.

“Class A Notes” means the Class A Notes issued from time to time by the Reference Entity under the Reference Obligation Indenture.

“Class A Total Asset Amount” means, on any date of determination, the product of (a) the Total Asset Amount on such date and (b) an amount equal to the quotient of (i) the Aggregate Principal Amount of Class A Notes that are outstanding on such date divided by (ii) the sum of (A) the Outstanding Class A-R Funded Amount and (B) the Aggregate Principal Amount of Class A Notes that are outstanding on such date.

“Class A Variation Margin Threshold” means, on any date of determination, an amount equal to 9% of the Aggregate Principal Amount of the Class A Notes then outstanding (after giving effect to any repayment on such date); provided that, the Class A Variation Margin Threshold shall be zero while any “Event of Default” under (and as defined in) the Reference Obligation Indenture shall have occurred and be continuing.

Page A-2

“Class A-R Net Collateral Value Deficit” has the meaning given to such term in the Related Confirmation.

“Class A-R Notes” means the Class A-R Notes issued from time to time by the Reference Entity under the Reference Obligation Indenture.

“Class A-R Variation Margin Threshold” has the meaning given to such term in the Related Confirmation.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Costs of Assignment” means, in the case of any Terminated Obligation or Portfolio Asset, the sum of (a) any costs of any purchase, exchange, sale, transfer or assignment transaction with respect to such Terminated Obligation or Portfolio Asset paid by a person or entity effecting such transaction (including any UBS Holder) under the terms of such Terminated Obligation or Portfolio Asset or otherwise actually imposed on such person or entity by any applicable trustee, administrative agent, registrar, borrower or obligor incurred in connection with any such transaction with respect to such Terminated Obligation or Portfolio Asset (including, without limitation, any amounts reimbursable by such person or entity in respect of any tax or other governmental charge incurred with respect thereto), (b) any reasonable expenses that are incurred by such person or entity in connection with any such transaction and (c) any reasonable administrative, legal or accounting fees, costs and expenses (including, without limitation, any fees and expenses of the trustee of or outside counsel to the Reference Entity) that are incurred by such person or entity in connection with any such transaction.

“Current Price” means, with respect to each Portfolio Asset on any date of determination, the determination by the Valuation Agent’s loan trading desk of the net cash proceeds that would be received from the sale on such date of determination of such Portfolio Asset, exclusive of accrued interest and capitalized interest and net of the related expected Costs of Assignment. If, with respect to any date of determination, Counterparty, acting in a commercially reasonable manner and in good faith, disputes any such original determination of the Current Price of any Portfolio Asset by the Valuation Agent, then Counterparty may, no later than two New York Business Hours after the notice of such determination is given to Counterparty, designate at least one Dealer to provide to the Valuation Agent, within such two New York Business Hour period, a Firm Bid to purchase each such Portfolio Asset (with a quotation amount equal to the Par Amount or (in the case of a Delayed Draw Loan) Commitment Amount). Such Firm Bid (or the highest Firm Bid, if more than one) timely received in accordance with the foregoing will be the Current Price of the relevant Portfolio Asset with respect to the relevant date of determination. If no such Firm Bid is timely received in accordance with the foregoing, the Current Price of the relevant Portfolio Asset will be the original determination thereof by the Valuation Agent. For the avoidance of doubt, any determination of any amount herein (other than any portion of such amount that represents an undisputed amount) consequent upon the determination of a Current Price subject to dispute as provided above shall be delayed until the deadline for the provision of Firm Bid(s) (or, if applicable, any such valuation) to the Valuation Agent as aforesaid. The “Current Price” shall be (i) expressed as a percentage of (A) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount or (B) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount and (ii) determined exclusive of accrued interest and capitalized interest.

“Dealer” means (a) any entity (other than the Calculation Agent or any of its Affiliates) designated by the Calculation Agent or its designated Affiliate in its sole discretion as a “Dealer” for the purposes of this Confirmation and (b) to the extent designated by Counterparty as provided in Clause 4(b) or pursuant to the definition of “Current Price”, either (i) any Approved Dealer or (ii) any other entity approved in advance by UBS, such approval not to be unreasonably withheld or delayed (it being agreed that UBS

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may reasonably withhold its approval based on the credit standing and its risk assessment of such entity); provided that the Calculation Agent or any Affiliate thereof may be a Dealer if more than one Dealer is designated pursuant to Clause 4.

“Defaulted Portfolio Asset” means any Portfolio Asset as to which (a) there has occurred a default as to the payment of principal and/or interest (without regard to any notice requirement or grace period; provided that any capitalization of interest that is permitted under the terms of the relevant Underlying Instrument shall not constitute a default for purposes of the foregoing), (b) such Portfolio Asset is a Participation Interest with respect to which the relevant Selling Institution has defaulted in any respect in the performance of any of its payment obligations under such Participation Interest or (c) such Portfolio Asset is a Participation Interest in a loan that would, if such loan were a Portfolio Asset, constitute a “Defaulted Portfolio Asset”; provided that, in each of the cases set forth in clauses (a) through (c) above, such Portfolio Asset will only constitute a “Defaulted Portfolio Asset” for so long as such default has not been cured or waived.

“Delayed-Draw Loan” has the meaning given to such term in the Reference Obligation Indenture.

“Firm Bid” means, (a) with respect to a Terminated Obligation, a good and irrevocable bid for value to purchase all of such Terminated Obligation, expressed as a percentage of the portion of the Notional Amount allocable to such Terminated Obligation and determined exclusive of accrued interest and capitalized interest, for scheduled settlement no later than the Relevant Settlement Date, submitted by (i) in the case of a Firm Bid obtained for purposes of Clause 4(a), an Approved Dealer specified by Counterparty in its sole discretion or (ii) in the case of a Firm Bid obtained for purposes of Clause 4(b), a Dealer specified by the Calculation Agent in its sole discretion (or, to the extent permitted by Clause 4(b), Counterparty), in each case as of a time during regular business hours in New York City and (b) with respect to a Portfolio Asset and any dispute with respect to the determination of the Current Price thereof, a good and irrevocable bid for value to purchase the Par Amount or (in the case of a Delayed Draw Loan) Commitment Amount of such Portfolio Asset, expressed as a percentage and determined exclusive of accrued interest and capitalized interest, for scheduled settlement within the standard settlement cycle for such Portfolio Asset (with such cycle commencing on the applicable date of submission), submitted by a Dealer specified by the Calculation Agent in its sole discretion (or, to the extent permitted by Clause 4(b), Counterparty), in each case as of a time during regular business hours in New York City.

“Insolvency Event” has the meaning given to such term in the Reference Obligation Indenture.

“Interest and Fee Amount” means, for any Fixed Amount Payer Calculation Period, the aggregate amount of interest (including, without limitation, interest breakage costs, deferred or capitalized interest and interest thereon), fees (including, without limitation, amendment, consent, tender, facility and other similar fees) and other amounts (other than in respect of principal repayments) actually paid with respect to the Reference Obligation (after deduction of any withholding taxes for which the relevant Reference Entity is not obligated to reimburse holders of the Reference Obligation, if applicable) during such Fixed Amount Payer Calculation Period; provided that Interest and Fee Amounts shall not include any amounts that accrue prior to the Effective Date or that accrue on or after the Obligation Termination Date.

“Net Unrealized Capital Appreciation” means, with respect to all Portfolio Assets in the Portfolio (other than Non-Approved Portfolio Assets, Zero Value Participation Interests and Defaulted Portfolio Assets) and any date of determination, the greater of (a) zero and (b) an amount equal to:

(i) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price is greater than the Purchase Price of such Portfolio Asset, of (A) such Current Price minus such Purchase Price multiplied by (B) (1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset, minus

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(ii) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price of such Portfolio Asset is less than the Purchase Price of such Portfolio Asset, of (A) such Purchase Price minus such Current Price multiplied by (B) (1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset;

provided that, for the purposes of computing the Net Unrealized Capital Appreciation, any such Portfolio Asset that is sold or repaid will be deemed to continue to be outstanding in an amount equal to its Par Amount (or in the case of a Delayed Draw Loan, Commitment Amount) until (but excluding) the date of settlement of such sale or the date of such repayment.

“Net Unrealized Capital Depreciation” means, with respect to all Portfolio Assets in the Portfolio (other than Non-Approved Portfolio Assets, Zero Value Participation Interests and Defaulted Portfolio Assets) and any date of determination, the greater of (a) zero and (b) an amount equal to:

(i) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price of such Portfolio Asset is less than the Purchase Price of such Portfolio Asset, of (A) such Purchase Price minus such Current Price multiplied by (B)(1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset, minus

(ii) the sum, with respect to each such Portfolio Asset in the Portfolio of which the Current Price is greater than the Purchase Price of such Portfolio Asset, of (A) such Current Price minus such Purchase Price multiplied by (B) (1) in the case of a Portfolio Asset that is not a Delayed Draw Loan, the Par Amount of such Portfolio Asset or (2) in the case of a Portfolio Asset that is a Delayed Draw Loan, the Commitment Amount of such Portfolio Asset;

provided that, for the purposes of computing the Net Unrealized Capital Depreciation, any such Portfolio Asset that is sold or repaid will be deemed to continue to be outstanding in an amount equal to its Par Amount (or in the case of a Delayed Draw Loan, Commitment Amount) until (but excluding) the date of settlement of such sale or the date of such repayment.

“New York Business Hour” means any one-hour period that occurs during the period from 9:00 a.m. (New York time) to 6:00 p.m. (New York time) on any day on which commercial banks are open for business in New York City; provided that if a period is expressed as an amount of New York Business Hours and insufficient New York Business Hours exist prior to 6:00 p.m. (New York time) on the relevant day following the commencement of such period, such period shall be deemed to continue on the next succeeding day on which commercial banks are open for business in New York City until the relevant period of New York Business Hours has expired.

“Non-Approved Portfolio Asset” means any Portfolio Asset which UBS has not approved in writing by notice to Counterparty on or prior to the settlement date of the acquisition thereof by the Reference Entity.

“Outstanding Class A-R Funded Amount” has the meaning given to such term in the Reference Obligation Revolving Credit Note Agreement.

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“Reference Obligation Revolving Credit Note Agreement” means the Revolving Credit Note Agreement, dated as of December 4, 2013, between the Reference Entity, State Street Bank and Trust Company and the noteholders from time to time party thereto, as amended as of the Amendment Effective Date, as the same may be further amended, modified or otherwise supplemented from time to time.

“Participation Interest” has the meaning given to such term in the Reference Obligation Indenture.

“Related Confirmation” means the Confirmation relating to certain total return swap transactions referencing the Class A-R Notes and certain bonds, dated as of December 4, 2013, with UBS Reference Number: 85242362 between Party A and Party B, amended and restated as of September 26, 2014 and as further amended as of the Amendment Effective Date, as the same may be further amended, modified or otherwise supplemented from time to time.

“Relevant Settlement Date” means the date customary for settlement substantially in accordance with the then-current market practice in the principal market for the relevant Reference Obligation (as determined by the Calculation Agent with reference to the relevant Termination Trade Date).

“Relevant Source” means (a) in the case of an initial Portfolio Asset, the agreement specified as such in Schedule 1 to the Reference Obligation Indenture, and (b) otherwise, the indenture, credit agreement, loan agreement or other agreement governing such Portfolio Asset.

“Selling Institution” has the meaning given to such term in the Reference Obligation Indenture.

“Terminated Obligation” means the Reference Obligation terminated pursuant to Clause 3.

“Termination Settlement Date” means, for any Terminated Obligation, (a) if the Final Price is determined by reference to the actual sale of a Terminated Obligation pursuant to Clause 4, the date of settlement of such sale and (b) otherwise, the Relevant Settlement Date.

“Termination Trade Date” means, with respect to any Terminated Obligation, (a) where an Approved Dealer identified by Counterparty is acquiring the Reference Obligation or applicable portion thereof from UBS or its Affiliate pursuant to Section 4(a), the Termination Trade Date specified in the applicable Accelerated Termination Notice, or (b) otherwise the bid submission deadline as shall be set forth in each of UBS’ requests issued pursuant to Section 4(b) for Firm Bids for the portion of the Notional Amount allocable to such Terminated Obligation (expressed as a percentage and determined exclusive of accrued interest and capitalized interest) that are the basis for determining the Final Price of such Terminated Obligation.

“Total Asset Amount” means, on any date of determination by the Valuation Agent, an amount equal to the sum of: (a) the aggregate Purchase Amount of all Portfolio Assets in the Portfolio (other than Non-Approved Portfolio Assets, Zero Value Participation Interests and Defaulted Portfolio Assets) on such date; plus (b) the aggregate amount of all cash standing to the credit of the Accounts (excluding any and all Class A-R Prepayment Accounts) on such date; plus (c) the aggregate cost of purchase of all “Eligible Investments” (as defined in the Reference Obligation Indenture) held by the Reference Entity on such date

“Total Return Payment Date” means, with respect to any Terminated Obligation, the Obligation Termination Date in respect of such Terminated Obligation.

“UBS Holder” means, if UBS or an Affiliate of UBS holds the Reference Obligation or any portion thereof as a result of the Transaction, UBS or such Affiliate, as appropriate.

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“Underlying Instrument” means the indenture, credit agreement or other agreement pursuant to which a Portfolio Asset has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such Portfolio Asset or of which the holders of such Portfolio Asset are the beneficiaries.

“Zero Value Participation Interest” means any Participation Interest included in the Portfolio Assets that (a) has not been elevated to a loan directly held and registered in the name of the Reference Entity within 90 days of the Effective Date or (b) is acquired by the Reference Entity at any time after the Effective Date.

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ANNEX B

APPROVED DEALERS

Bank of America Securities LLC

Barclays Bank plc

BNP Paribas

Cantor Fitzgerald

Castle Oak

CIBC World Markets, Inc.

Citibank, N.A.

Credit Agricole Cheuveux North America, Inc.

Credit Suisse First Boston LLC

Deutsche Bank Securities Inc.

Goldman Sachs & Co.

Guggenheim

Global Hunter

Jefferies & Company Inc.

JPMorgan Chase Bank, N.A.

Macquarie

Miller Tabak Roberts Securities, LLC

Morgan Stanley & Co.

Nomura

RBC Capital Markets Corp.

SG Americas Securities LLC

Sterne, Age & Leach, Inc.

The Royal Bank of Scotland plc.

UBS AG

Wachovia Capital Markets LLC

Page B-1

EX-31.1

Exhibit 31.1

I, Michael C. Mauer, Chief Executive Officer of CM Finance Inc certify that:

1. I have reviewed this annual report on Form 10-K of CM Finance Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this 8th day of September 2015.

By:	/s/    Michael C. Mauer
	Michael C. Mauer Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Jai Agarwal, Chief Financial Officer of CM Finance Inc certify that:

1. I have reviewed this annual report on Form 10-K of CM Finance Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this 8th day of September 2015.

By:	/s/    Jai Agarwal
	Jai Agarwal Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

In connection with this Annual Report on Form 10-K (the “Report”) of CM Finance Inc (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Michael C. Mauer, the Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

	/s/  Michael C. Mauer
Name:	Michael C. Mauer
Date:	September 8, 2015

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

In connection with this Annual Report on Form 10-K (the “Report”) of CM Finance Inc (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Jai Agarwal, the Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

	/s/    Jai Agarwal
Name:	Jai Agarwal
Date:	September 8, 2015