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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS
PART C

Table of Contents

As filed with the Securities and Exchange Commission on March 24, 2016

Securities Act File No. 333-203147


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Post-Effective
Amendment No. 3

Main Street Capital Corporation
(Exact name of registrant as specified in charter)

1300 Post Oak Boulevard, 8th Floor
Houston, TX 77056
(713) 350-6000
(Address and telephone number, including area code, of principal executive offices)

Vincent D. Foster
Chairman and Chief Executive Officer
Main Street Capital Corporation
1300 Post Oak Boulevard, 8th Floor
Houston, TX 77056
(Name and address of agent for service)

COPIES TO:

Jason B. Beauvais
Senior Vice President, General Counsel,
Chief Compliance Officer and Secretary
Main Street Capital Corporation
1300 Post Oak Boulevard, 8th Floor
Houston, TX 77056

 

Steven B. Boehm, Esq.
Harry S. Pangas, Esq.
Sutherland Asbill & Brennan LLP
700 Sixth St. NW, Suite 700
Washington, DC 20001-3980
Tel: (202) 383-0100
Fax: (202) 637-3593

Approximate date of proposed public offering:
From time to time after the effective date of this Registration Statement.

        If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box.    ý

        It is proposed that this filing will become effective (check appropriate box):    ý when declared effective pursuant to section 8(c).

   


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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MARCH 24, 2016

PROSPECTUS

$1,500,000,000


LOGO

Common Stock
Preferred Stock
Warrants
Subscription Rights
Debt Securities
Units



          We may offer, from time to time in one or more offerings, up to $1,500,000,000 of our common stock, preferred stock, warrants representing rights to purchase shares of our common stock, preferred stock, or debt securities, subscription rights, debt securities or units, which we refer to, collectively, as the "securities." Our securities may be offered at prices and on terms to be disclosed in one or more supplements to this prospectus. The offering price per share of our common stock, less any underwriting commissions or discounts, will not be less than the net asset value per share of our common stock at the time of the offering, except (i) with the requisite approval of our common stockholders or (ii) under such other circumstances as the Securities and Exchange Commission may permit. We did not seek stockholder authorization to issue common stock at a price below net asset value per share at our 2015 Annual Meetings of Stockholders, and we are not currently seeking such approval at our 2016 Annual Meeting of Stockholders, because our common stock price per share has been trading significantly above the current net asset value per share of our common stock, but we may seek such authorization at future Annual Meetings or Special Meetings of Stockholders. 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, we have received stockholder approval to issue warrants, options or rights to subscribe for, convert to, or purchase shares of our common stock at a price per share below the net asset value per share subject to the applicable requirements of the Investment Company Act of 1940. There is no expiration date on our ability to issue such warrants, options, rights or convertible securities based on this stockholder approval. Moreover, 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 "Sales of Common Stock Below Net Asset Value."

          Shares of closed-end investment companies such as us frequently trade at a discount to their net asset value. This risk 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 above, at or below net asset value. You should read this prospectus and the applicable prospectus supplement carefully before you invest in our common stock.

          Our securities may be offered directly to one or more purchasers through agents designated from time to time by us, or to or through underwriters or dealers. The prospectus supplement relating to the offering will identify any agents or underwriters involved in the sale of our securities, and will disclose any applicable purchase price, fee, commission or discount arrangement between us and our agents or underwriters or among our underwriters or the basis upon which such amount may be calculated. See "Plan of Distribution." We may not sell any of our securities through agents, underwriters or dealers without delivery of a prospectus supplement describing the method and terms of the offering of such securities, which must be delivered to each purchaser at, or prior to, the earlier of delivery of a confirmation of sale or delivery of the securities.

          We are a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $15 million.

          The LMM and Middle Market securities in which we invest generally would be rated below investment grade if they were rated by rating agencies. Below investment grade securities, which are often referred to as "junk," have predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. They may also be difficult to value and are illiquid.

          Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company.

          We are an internally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended.

          Our common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "MAIN." On March 23, 2016, the last reported sale price of our common stock on the NYSE was $30.90 per share, and the net asset value per share of our common stock on December 31, 2015 (the last date prior to the date of this prospectus on which we determined our net asset value per share) was $21.24.



          Investing in our securities involves a high degree of risk, and should be considered highly speculative. See "Risk Factors" beginning on page 13 to read about factors you should consider, including the risk of leverage and dilution, before investing in our securities.

          This prospectus and the accompanying prospectus supplement contain important information about us that a prospective investor should know before investing in our securities. Please read this prospectus and the accompanying prospectus supplement before investing and keep them for future reference. We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, or SEC. This information is available free of charge by contacting us at 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056 or by telephone at (713) 350-6000 or on our website at www.mainstcapital.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider that information to be part of this prospectus. The SEC also maintains a website at www.sec.gov that contains such information.

          Neither the Securities and Exchange Commission nor any state securities commission, nor any other regulatory body, has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.



   

The date of this prospectus is                        , 2016


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  Page  

Prospectus Summary

    1  

Fees and Expenses

    11  

Risk Factors

    13  

Cautionary Statement Concerning Forward-Looking Statements

    35  

Use of Proceeds

    35  

Price Range of Common Stock and Distributions

    36  

Ratios of Earnings to Fixed Charges

    41  

Selected Financial Data

    42  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    44  

Senior Securities

    67  

Business

    69  

Portfolio Companies

    82  

Management

    116  

Certain Relationships and Related Party Transactions

    140  

Control Persons and Principal Stockholders

    140  

Sales of Common Stock Below Net Asset Value

    143  

Dividend Reinvestment Plan

    147  

Description of Common Stock

    148  

Description of Our Preferred Stock

    155  

Description of Our Warrants

    156  

Description of Our Subscription Rights

    157  

Description of Our Debt Securities

    158  

Description of Our Units

    172  

Material U.S. Federal Income Tax Considerations

    173  

Regulation

    180  

Plan of Distribution

    186  

Custodian, Transfer and Distribution Paying Agent and Registrar

    188  

Brokerage Allocation and Other Practices

    188  

Legal Matters

    188  

Independent Registered Public Accounting Firm

    188  

Available Information

    188  

Privacy Notice

    189  

Index to Financial Statements

    F-1  

        This prospectus is part of a registration statement that we have filed with the Securities and Exchange Commission, or SEC, using the "shelf" registration process. Under the shelf registration process, we may offer, from time to time, up to $1,500,000,000 of our securities on terms to be determined at the time of the offering. This prospectus provides you with a general description of the securities that we may offer. Each time we use this prospectus to offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. To the extent required by law, we will amend or supplement the information contained in this prospectus and any accompanying prospectus supplement to reflect any material changes to such information subsequent to the date of the prospectus and any accompanying prospectus supplement and prior to the completion of any offering pursuant to the prospectus and any accompanying prospectus supplement. Please carefully read this prospectus and any accompanying prospectus supplement together with the additional information described under "Available Information" and "Risk Factors" before you make an investment decision.

        No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus or any accompanying supplement to this prospectus. You must not rely on any unauthorized information or representations not contained in this prospectus or


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any accompanying prospectus supplement as if we had authorized it. This prospectus and any accompanying prospectus supplement do not constitute an offer to sell or a solicitation of any offer to buy any security other than the registered securities to which they relate, nor do they constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction. The information contained in this prospectus and any accompanying prospectus supplement is accurate as of the dates on their covers.


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PROSPECTUS SUMMARY

        This summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read the entire prospectus and any prospectus supplement carefully, including the section entitled "Risk Factors." Yield information contained in this prospectus related to debt investments in our investment portfolio is not intended to approximate a return on your investment in us and does not take into account other aspects of our business, including our operating and other expenses, or other costs incurred by you in connection with your investment in us.

Organization

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF") and Main Street Capital II, LP ("MSC II" and, together with MSMF, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receive fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser ("RIA") under Investment Advisers Act of 1940, as amended (the "Advisers Act"). Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that it distributes to its stockholders.

        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes. The External Investment Manager and Main Street Capital Partners, LLC, ("MSCP") are also direct wholly owned subsidiaries that have elected to be taxable entities. The Taxable Subsidiaries, MSCP and the External Investment Manager are each taxed at their normal corporate tax rates based on their taxable income.

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        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries and, beginning April 1, 2013, MSCP.

        The following diagram depicts Main Street's organizational structure:

GRAPHIC


*
Each of the Taxable Subsidiaries is directly or indirectly wholly owned by MSCC.

**
Accounted for as a portfolio investment at fair value, as opposed to a consolidated subsidiary.

Overview

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $15 million. Our private loan ("Private Loan") portfolio investments are primarily debt securities which have been originated through strategic relationships with other investment funds on a collaborative basis. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio.

        We seek to fill the financing gap for LMM businesses, which, historically, have had more limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company's capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a "one stop" financing solution. Providing customized, "one stop" financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date. We believe that our LMM investment strategy has limited correlation to the broader debt and equity markets.

        Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest bearing debt securities in privately held companies that are generally larger in size

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than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

        Our Private Loan portfolio investments are primarily debt securities which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Our external asset management business is conducted through our External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we provide management and other services to the External Investment Manager, as well as access to our employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, we began charging the External Investment Manager for these services.

        Our portfolio investments are generally made through MSCC and the Funds. MSCC and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes (see "Regulation"). An investor's return in MSCC will depend, in part, on the Funds' investment returns as they are wholly owned subsidiaries of MSCC.

        The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

        Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio.

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        During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-publicly traded BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income.

        During April 2014, we received an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide it an incentive to allocate opportunities to HMS Income instead of us.

        You should be aware that investments in our portfolio companies carry a number of risks including, but not limited to, investing in companies which may have limited operating histories and financial resources and other risks common to investing in below investment grade debt and equity investments in private, smaller companies. Please see "Risk Factors—Risks Related to Our Investments" for a more complete discussion of the risks involved with investing in our portfolio companies.

        Our principal executive offices are located at 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056, and our telephone number is (713) 350-6000. We maintain a website at http://www.mainstcapital.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider that information to be part of this prospectus.

Business Strategies

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and realizing capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We have adopted the following business strategies to achieve our investment objective. Please see "Business—Business Strategies" for a more complete discussion of our business strategies.

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Risk Factors

        Investing in our securities involves a high degree of risk. You should consider carefully the information found in "Risk Factors," including the following risks:

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Investment Criteria

        Our investment team has identified the following investment criteria that it believes are important in evaluating prospective portfolio companies. Our investment team uses these criteria in evaluating investment opportunities. However, not all of these criteria have been, or will be, met in connection with each of our investments. Please see "Business—Investment Criteria" for a more complete discussion of our investment criteria.

Recent Developments

        During January 2016, we fully exited our debt and equity investments in Southern RV, LLC, a four-location dealer of new and used recreational vehicles ("RV") and its affiliated real estate entity (together, "Southern RV") through a sale of Southern RV's assets and business. Southern RV has facilities in Tyler, TX, Bossier City, LA, Lafayette, LA, and Biloxi, MS and also engages in financing, parts sales and RV services. Southern RV's predecessor was originally founded in 2000 and offers its customers a variety of Travel Trailers, Fifth Wheels, Toy Haulers, Class A Motorhomes, and Class C Motorhomes from top-selling manufacturers. We made our initial investment in Southern RV in August 2013 and realized a gain of approximately $14.4 million on the exit of our equity investments in Southern RV.

        During February 2016, we led a new portfolio investment totaling $15.0 million of invested capital in UniRush, LLC ("UniRush") to fund UniRush's growth initiatives and refinance existing debt, with us funding $12.0 million of the investment. The investment in UniRush consisted of first-lien, senior secured term debt. In addition, we and our co-investor provided UniRush a $5.0 million delayed draw term loan facility to support its future growth opportunities. Headquartered in Cincinnati, Ohio and founded in 2003, UniRush is a leading provider of prepaid debit card solutions branded under the "RushCard" and "Rapid PayCard". RushCard was one of the first prepaid, reloadable Visa debit card programs, and provides financial services for the more than 65 million individuals in the United States

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who cannot or choose not to establish a traditional banking relationship. Rapid PayCard is a provider of prepaid, payroll debit cards for employers as an alternative to issuing paper checks to employees.

        During February 2016, we declared regular monthly dividends of $0.180 per share for each of April, May and June 2016. These regular monthly dividends equal a total of $0.540 per share for the second quarter of 2016. The second quarter 2016 regular monthly dividends represent a 2.9% increase from the dividends declared for the second quarter of 2015. Including the dividends declared for the second quarter of 2016, we will have paid $16.960 per share in cumulative dividends since our October 2007 initial public offering.

The Offering

        We may offer, from time to time, up to $1,500,000,000 of our securities, on terms to be determined at the time of the offering. Our securities may be offered at prices and on terms to be disclosed in one or more prospectus supplements.

        Our securities may be offered directly to one or more purchasers by us or through agents designated from time to time by us, or to or through underwriters or dealers. The prospectus supplement relating to the offering will disclose the terms of the offering, including the name or names of any agents or underwriters involved in the sale of our securities by us, the purchase price, and any fee, commission or discount arrangement between us and our agents or underwriters or among our underwriters or the basis upon which such amount may be calculated. See "Plan of Distribution." We may not sell any of our securities through agents, underwriters or dealers without delivery of a prospectus supplement describing the method and terms of the offering of our securities.

        Set forth below is additional information regarding the offering of our securities:

Use of proceeds

  We intend to use the net proceeds from any offering to make investments in accordance with our investment objective and strategies described in this prospectus or any prospectus supplement, to make investments in marketable securities and idle funds investments, which may include investments in secured intermediate term bank debt, rated debt securities and other income producing investments, to pay our operating expenses and other cash obligations, and for general corporate purposes. See "Use of Proceeds."

New York Stock Exchange symbols

 

"MAIN" (common stock); and "MSCA" (6.125% notes due 2023).

Dividends and distributions

 

Our dividends and other distributions, if any, will be determined by our Board of Directors from time to time.

 

Our ability to declare dividends depends on our earnings, our overall financial condition (including our liquidity position), maintenance of our RIC status and such other factors as our Board of Directors may deem relevant from time to time.

 

When we make distributions, we are required to determine the extent to which such distributions are paid out of current or accumulated earnings, recognized capital gains or capital. To the extent there is a return of capital (a distribution of the stockholders' invested capital), investors will be required to reduce their basis in our stock for federal tax purposes. In the future, our distributions may include a return of capital.

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Taxation

 

MSCC has elected to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code. Accordingly, we generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that we distribute to our stockholders as dividends. To maintain our qualification as a RIC for U.S. federal income tax purposes, we must meet specified source-of-income and asset diversification requirements and distribute annually 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% U.S. federal 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. See "Material U.S. Federal Income Tax Considerations."

Dividend reinvestment plan

 

We have adopted a dividend reinvestment plan that provides for the reinvestment of dividends on behalf of our registered stockholders who hold their shares with American Stock Transfer and Trust Company, the plan administrator and our transfer agent and registrar, or certain brokerage firms that have elected to participate in our dividend reinvestment plan, unless a stockholder has elected to receive dividends in cash. As a result, if we declare a cash dividend, our registered stockholders (or stockholders holding shares through participating brokerage firms) who have not "opted out" of our dividend reinvestment plan by the dividend record date will have their cash dividend automatically reinvested into additional shares of our common stock.

 

Stockholders who receive dividends in the form of stock will be subject to the same federal, state and local tax consequences as stockholders who elect to receive their dividends in cash. See "Dividend Reinvestment Plan."

Trading at a discount

 

Shares of closed-end investment companies frequently trade at a discount to their net asset value. This risk is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our shares will trade above, at or below net asset value.

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Sales of common stock below net asset value

 

The offering price per share of our common stock, less any underwriting commissions or discounts, will not be less than the net asset value per share of our common stock at the time of the offering, except (i) with the requisite approval of our common stockholders or (ii) under such other circumstances as the Securities and Exchange Commission may permit. 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. We did not seek stockholder authorization to issue common stock at a price below net asset value per share at our 2015 Annual Meetings of Stockholders, and we are not currently seeking such approval at our 2016 Annual Meeting of Stockholders, because our common stock price per share has been trading significantly above the current net asset value per share of our common stock, but we may seek such authorization at future Annual Meetings or Special Meetings of Stockholders.

 

In addition, we have received stockholder approval to issue warrants, options or rights to subscribe for, convert to, or purchase shares of our common stock at a price per share below the net asset value per share subject to the applicable requirements of the 1940 Act. There is no expiration date on our ability to issue such warrants, options, rights or convertible securities based on this stockholder approval.

 

Sales by us of our common stock at a discount from our net asset value pose potential risks for our existing stockholders whether or not they participate in the offering, as well as for new investors who participate in the offering. See "Sales of Common Stock Below Net Asset Value."

Available Information

 

We file annual, quarterly and current reports, proxy statements and other information with the SEC under the Securities Exchange Act of 1934, or the "Exchange Act." You can inspect any materials we file with the SEC, without charge, at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The information we file with the SEC is available free of charge by contacting us at 1300 Post Oak Boulevard, 8th Floor, Houston, TX 77056, by telephone at (713) 350-6000 or on our website at http://www.mainstcapital.com. The SEC also maintains a website that contains reports, proxy statements and other information regarding registrants, including us, that file such information electronically with the SEC. The address of the SEC's website is http://www.sec.gov. Information contained on our website or on the SEC's website about us is not incorporated into this prospectus, and you should not consider information contained on our website or on the SEC's website to be part of this prospectus.

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FEES AND EXPENSES

        The following table is intended to assist you in understanding the costs and expenses that an investor in this offering will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by "you," "us" or "Main Street," or that "we" will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in us.

Stockholder Transaction Expenses:

       

Sales load (as a percentage of offering price)

    —% (1)

Offering expenses (as a percentage of offering price)

    —% (2)

Dividend reinvestment plan expenses

    —% (3)

Total stockholder transaction expenses (as a percentage of offering price)

    —% (4)

Annual Expenses (as a percentage of net assets attributable to common stock):

       

Operating expenses

    2.78% (5)

Interest payments on borrowed funds

    3.01% (6)

Income tax expense

    0.00% (7)

Acquired fund fees and expenses

    0.30% (8)

Total annual expenses

    6.09 %

(1)
In the event that our securities are sold to or through underwriters, a corresponding prospectus supplement will disclose the applicable sales load.

(2)
In the event that we conduct an offering of our securities, a corresponding prospectus supplement will disclose the estimated offering expenses.

(3)
The expenses of administering our dividend reinvestment plan are included in operating expenses.

(4)
Total stockholder transaction expenses may include sales load and will be disclosed in a future prospectus supplement, if any.

(5)
Operating expenses in this table represent the estimated expenses of MSCC and its consolidated subsidiaries, including the Internal Investment Manager.

(6)
Interest payments on borrowed funds represent our estimated annual interest payments on borrowed funds based on current debt levels as adjusted for projected increases (but not decreases) in debt levels over the next twelve months.

(7)
Income tax expense relates to the accrual of (a) deferred tax provision (benefit) on the net unrealized appreciation (depreciation) from portfolio investments held in Taxable Subsidiaries and (b) excise, state and other taxes. Deferred taxes are non-cash in nature and may vary significantly from period to period. We are required to include deferred taxes in calculating our annual expenses even though deferred taxes are not currently payable or receivable. Due to the variable nature of deferred tax expense, which can be a large portion of the income tax expense, and the difficulty in providing an estimate for future periods, this income tax expense estimate is based upon the actual amount of income tax expense for the year ended December 31, 2015. However, since the income tax benefit at December 31, 2015 was $8.7 million, which would have resulted in a (0.81%) percentage of net assets attributable to common stock, 0.00% was used.

(8)
Acquired fund fees and expenses represent the estimated indirect expense incurred due to investments in other investment companies and private funds.

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Example

        The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we would have no additional leverage and that our annual operating expenses would remain at the levels set forth in the table above. In the event that shares to which this prospectus relates are sold to or through underwriters, a corresponding prospectus supplement will restate this example to reflect the applicable sales load.

 
  1 Year   3 Years   5 Years   10 Years  

You would pay the following expenses on a $1,000 investment, assuming a 5.0% annual return

  $ 61   $ 180   $ 296   $ 577  

        The example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses may be greater or less than those shown. While the example assumes, as required by the SEC, a 5.0% annual return, our performance will vary and may result in a return greater or less than 5.0%. In addition, while the example assumes reinvestment of all dividends at net asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by (i) the market price per share of our common stock at the close of trading on the dividend payment date in the event that we use newly issued shares to satisfy the share requirements of the dividend reinvestment plan or (ii) the average purchase price of all shares of common stock purchased by the administrator of the dividend reinvestment plan in the event that shares are purchased in the open market to satisfy the share requirements of the dividend reinvestment plan, which may be at, above or below net asset value. See "Dividend Reinvestment Plan" for additional information regarding our dividend reinvestment plan.

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RISK FACTORS

        Investing in our securities involves a number of significant risks. In addition to the other information contained in this prospectus and any accompanying prospectus supplement, you should consider carefully the following information before making an investment in our securities. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us might also impair our operations and performance. If any of the following events occur, our business, financial condition and results of operations could be materially and adversely affected. In such case, our net asset value and the trading price of our common stock could decline or the value of our other securities may decline, and you may lose all or part of your investment.

RISKS RELATING TO ECONOMIC CONDITIONS

Deterioration in the economy and financial markets increases the likelihood of adverse effects on our financial position and results of operations. Such economic adversity could impair our portfolio companies' financial positions and operating results and affect the industries in which we invest, which could, in turn, harm our operating results.

        The broader fundamentals of the United States economy remain mixed, and unemployment remains uncertain. In the event that the United States economy contracts, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements and an increase in defaults. In addition, a prolonged continuation of the current decline in oil and natural gas prices would adversely affect the credit quality of our debt investments and the underlying operating performance of our equity investments in energy related businesses. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by economic cycles, industry cycles or other conditions, which could also have a negative impact on our future results.

        Although we have been able to secure access to additional liquidity, including through the Credit Facility, periodic follow on equity offerings, public debt issuances and the leverage available through the SBIC program, the potential for volatility in the debt and equity capital markets provides no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all. Further, if the price of our common stock falls below our net asset value per share, we will be limited in our ability to sell new shares if we do not have stockholder authorization to sell shares at a price below net asset value per share. We do not currently have such stockholder authorization, and we do not intend to seek such stockholder authorization at our 2016 stockholder meeting.

RISKS RELATING TO OUR BUSINESS AND STRUCTURE

Our Investment Portfolio is and will continue to be recorded at fair value, with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our determination of fair value and, as a result, there is and will continue to be uncertainty as to the value of our portfolio investments.

        Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there is no readily available market value, at fair value as determined by us with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our determination of fair value and our valuation procedures. Typically, there is not a public market for the securities of the privately held LMM or Private Loan companies in which we have invested and will generally continue to invest. As a result, we value these securities quarterly at fair value based on inputs from management, a nationally recognized independent financial advisory services firm (on a rotational basis) and our audit committee with the oversight, review and approval of our Board of Directors. In addition, the market for investments in Middle Market companies is generally not a liquid market, and therefore, we primarily use a combination of observable inputs in non-active markets for which

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sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs, which are reviewed by our audit committee with the oversight, review and approval of our Board of Directors. See "Note B.1.—Valuation of the Investment Portfolio" in the notes to consolidated financial statements contained in this prospectus for a detailed discussion of our investment portfolio valuation process and procedures.

        The determination of fair value and consequently, the amount of unrealized gains and losses in our portfolio, are to a certain degree, subjective and dependent on a valuation process approved by our Board of Directors. Certain factors that may be considered in determining the fair value of our investments include external events, such as private mergers, sales and acquisitions involving comparable companies. 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 materially from the values that would have been used if a ready market for these securities existed. Due to this uncertainty, our fair value determinations may cause our net asset value on a given date to materially understate or overstate the value that we may ultimately realize on one or more of our investments. As a result, investors purchasing our securities based on an overstated net asset value would pay a higher price than the value of our investments might warrant. Conversely, investors selling our securities during a period in which the net asset value understates the value of our investments may receive a lower price for their securities than the value of our investments might warrant.

Our financial condition and results of operations depends on our ability to effectively manage and deploy capital.

        Our ability to achieve our investment objective of maximizing our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company, depends on our ability to effectively manage and deploy capital, which depends, in turn, on our investment team's ability to identify, evaluate and monitor, and our ability to finance and invest in, companies that meet our investment criteria.

        Accomplishing our investment objective on a cost-effective basis is largely a function of our investment team's handling of the investment process, its ability to provide competent, attentive and efficient services and our access to investments offering acceptable terms. In addition to monitoring the performance of our existing investments, members of our investment team are also called upon, from time to time, to provide managerial assistance to some of our portfolio companies. These demands on their time may distract them or slow the rate of investment.

        Even if we are able to grow and build upon our investment operations, any failure to manage our growth effectively could have a material adverse effect on our business, financial condition, results of operations and prospects. The results of our operations will depend on many factors, including the availability of opportunities for investment, readily accessible short and long-term funding alternatives in the financial markets and economic conditions. Furthermore, if we cannot successfully operate our business or implement our investment policies and strategies as described herein, it could negatively impact our ability to pay dividends.

We may face increasing competition for investment opportunities.

        We compete for investments with other investment funds (including private equity funds, debt funds, mezzanine funds, collateralized loan obligations, or CLOs, BDCs, and SBICs), as well as traditional financial services companies such as commercial banks and other sources of funding. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of capital and

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access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments than we have. These characteristics could allow our competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than we are able to do. We may lose investment opportunities if we do not match our competitors' pricing, terms and structure. If we are forced to match our competitors' pricing, terms and structure, we may not be able to achieve acceptable returns on our investments or may bear substantial risk of capital loss. A significant part of our competitive advantage stems from the fact that the market for investments in LMM companies is underserved by traditional commercial banks and other financing sources. A significant increase in the number and/or the size of our competitors in this target market could force us to accept less attractive investment terms. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC.

We are dependent upon our key investment personnel for our future success.

        We depend on the members of our investment team, particularly Vincent D. Foster, Dwayne L. Hyzak, Curtis L. Hartman, David L. Magdol, Travis L. Haley, Nicholas T. Meserve, and Rodger A. Stout for the identification, review, final selection, structuring, closing and monitoring of our investments. These employees have significant investment expertise and relationships that we rely on to implement our business plan. Although we have entered into a non-compete agreement with Mr. Foster, we have no guarantee that he or any other employees will remain employed with us. If we lose the services of these individuals, we may not be able to operate our business as we expect, and our ability to compete could be harmed, which could cause our operating results to suffer.

Our success depends on attracting and retaining qualified personnel in a competitive environment.

        Our growth will require that we retain new investment and administrative personnel in a competitive market. Our ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors including, but not limited to, our ability to offer competitive wages, benefits and professional growth opportunities. Many of the entities, including investment funds (such as private equity funds and mezzanine funds) and traditional financial services companies, with which we compete for experienced personnel have greater resources than we have.

        The competitive environment for qualified personnel may require us to take certain measures to ensure that we are able to attract and retain experienced personnel. Such measures may include increasing the attractiveness of our overall compensation packages, altering the structure of our compensation packages through the use of additional forms of compensation, or other steps. The inability to attract and retain experienced personnel would have a material adverse effect on our business.

Our business model depends to a significant extent upon strong referral relationships, and our inability to maintain or develop these relationships, as well as the failure of these relationships to generate investment opportunities, could adversely affect our business.

        We expect that members of our management team will maintain their relationships with intermediaries, financial institutions, investment bankers, commercial bankers, financial advisors, attorneys, accountants, consultants and other individuals within our network, and we will rely to a significant extent upon these relationships to provide us with potential investment opportunities. If our management team fails to maintain its existing relationships or develop new relationships with sources of investment opportunities, we will not be able to grow our Investment Portfolio. In addition, individuals with whom members of our management team have relationships are not obligated to provide us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us.

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There are significant potential conflicts of interest which could impact our investment returns.

        Our executive officers and employees, through the External Investment Manager, may manage other investment funds that operate in the same or a related line of business as we do. Accordingly, they may have obligations to such other entities, the fulfillment of which obligations may not be in the best interests of us or our stockholders. During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, which is the investment advisor to HMS Income, a non publicly-traded BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. We and the External Investment Manager agreed to waive all such fees from the effective date of HMS Adviser's registration statement on Form N-2 through December 31, 2013. As a result, as of December 31, 2013, neither we nor the External Investment Manager had received any base management fee or incentive fees under the investment sub-advisory agreement and neither was due any unpaid compensation for any base management fee or incentive fees under the investment sub-advisory agreement through December 31, 2013. The External Investment Manager began accruing such fees on January 1, 2014. The sub-advisory relationship requires us to commit resources to achieving HMS Income's investment objective, while such resources were previously solely devoted to achieving our investment objective. Our investment objective and investment strategies are very similar to those of HMS Income and it is likely that an investment appropriate for us or HMS Income would be appropriate for the other entity. As a result, we and HMS Income requested an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where our co-investing would otherwise be prohibited under the 1940 Act. The SEC granted the exemptive order in April 2014, and we have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. As a consequence, it may be more difficult for us to maintain or increase the size of our Investment Portfolio in the future. Although we will endeavor to allocate investment opportunities in a fair and equitable manner, including in accordance with the conditions set forth in the exemptive order issued by the SEC when relying on such order, we may face conflicts in allocating investment opportunities between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide an incentive to allocate opportunities to HMS Income instead of us. We have implemented an allocation policy to ensure the equitable distribution of investment opportunities and, as a result, may be unable to participate in certain investments based upon such allocation policy.

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Regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capital.

        Our business will require capital to operate and grow. We may acquire such additional capital from the following sources:

        Senior Securities.    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. As a result of issuing senior securities, we will be exposed to additional risks, including the following:

        Additional 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, warrants, options or rights to acquire 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 the best interests of our stockholders, and our stockholders approve such sale. See "—Stockholders may incur dilution if 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 or issue securities to subscribe to, convert to or purchase shares of our common stock" for a discussion of the risks related to us issuing shares of our common stock below net asset value. Our stockholders have authorized us to issue warrants, options or rights to subscribe for, convert to, or purchase shares of our common stock at a price per share below the net asset value per share, subject to the applicable requirements of the 1940 Act. There is no expiration date on our ability to issue such warrants, options, rights or convertible securities based on this stockholder approval. If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, the percentage ownership of our stockholders at that time would decrease, and they may experience dilution. Moreover, we can offer no assurance that we will be able to issue and sell additional equity securities in the future, on favorable terms or at all.

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The Funds are licensed by the SBA, and therefore subject to SBA regulations.

        The Funds, our wholly owned subsidiaries, are licensed to act as SBICs and are regulated by the SBA. The SBA also places certain limitations on the financing terms of investments by SBICs in portfolio companies and prohibits SBICs from providing funds for certain purposes or to businesses in a few prohibited industries. Compliance with SBA requirements may cause the Funds to forego attractive investment opportunities that are not permitted under SBA regulations.

        Further, the SBA regulations require, among other things, that a licensed SBIC be periodically examined by the SBA and audited by an independent auditor, in each case to determine the SBIC's compliance with the relevant SBA regulations. The SBA 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. If the Funds fail to comply with applicable SBIC regulations, the SBA could, depending on the severity of the violation, limit or prohibit their use of SBIC debentures, declare outstanding SBIC debentures immediately due and payable, and/or limit them from making new investments. In addition, the SBA can revoke or suspend a license for willful or repeated violation of, or willful or repeated failure to observe, any provision of the Small Business Investment Act of 1958 or any rule or regulation promulgated thereunder. Such actions by the SBA would, in turn, negatively affect us.

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

        Borrowings, also known as leverage, magnify the potential for loss on investments in our indebtedness and gain or loss on investments in our equity capital. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. We, through the Funds, issue debt securities guaranteed by the SBA and sold in the capital markets. As a result of its guarantee of the debt securities, the SBA has fixed dollar claims on the assets of the Funds that are superior to the claims of our securities holders. We may also borrow from banks and other lenders, including under our Credit Facility, and may issue debt securities or enter into other types of borrowing arrangements in the future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources" for a discussion regarding our outstanding indebtedness. 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 our business. Similarly, any decrease in our income would cause net investment income to decline more sharply than it would have had we not leveraged our business. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments or other payments related to our securities. Use of leverage is generally considered a speculative investment technique.

        As of December 31, 2015, we, through the Funds, had $225.0 million of outstanding indebtedness guaranteed by the SBA, which had a weighted-average annualized interest cost of approximately 4.2%. The debentures guaranteed by the SBA have a maturity of ten years, with a current weighted-average remaining maturity of 5.6 years as of December 31, 2015, and require semi-annual payments of interest. We will need to generate sufficient cash flow to make required interest payments on the debentures. If we are unable to meet the financial obligations under the debentures, the SBA, as a creditor, will have a superior claim to the assets of the Funds over our stockholders in the event we liquidate or the SBA exercises its remedies under such debentures as the result of a default by us.

        In addition, as of December 31, 2015, we had $291.0 million outstanding under our Credit Facility. Borrowings under the Credit Facility bear interest, subject to our election, on a per annum basis at a rate equal to the applicable LIBOR rate (0.24% as of December 31, 2015) plus (i) 1.875% (or the applicable base rate (Prime Rate of 3.50% as of December 31, 2015) plus 0.875%), as long as we maintain an investment grade rating and meet certain agreed upon excess collateral and maximum

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leverage requirements, (ii) 2.0% (or the applicable base rate plus 1.0%) if we maintain an investment grade rating but do not meet certain excess collateral and maximum leverage requirements or (iii) 2.25% (or the applicable base rate plus 1.25%) if we do not maintain an investment grade rating. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. If we are unable to meet the financial obligations under the Credit Facility, the Credit Facility lending group will have a superior claim to the assets of MSCC and its subsidiaries (excluding the assets of the Funds) over our stockholders in the event we liquidate or the lending group exercises its remedies under the Credit Facility as the result of a default by us.

        In April 2013, we issued $92.0 million in aggregate principal amount of 6.125% Notes due 2023 (the "6.125% Notes"). As of December 31, 2015, the outstanding balance of the 6.125% Notes was $90.7 million. The 6.125% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at our option on or after April 1, 2018. The 6.125% Notes bear interest at a rate of 6.125% per year.

        In November 2014, we issued $175.0 million in aggregate principal amount of 4.50% unsecured notes due 2019 (the "4.50% Notes" and, together with the 6.125% Notes, the "Notes") at an issue price of 99.53%. As of December 31, 2015, the outstanding balance of the 4.50% Notes was $175.0 million. The 4.50% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes mature on December 1, 2019, and may be redeemed in whole or in part at any time at our option subject to certain make whole provisions.

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


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(2)

    (20.3 )%   (11.5 )%   (2.8 )%   6.0 %   14.8 %

(1)
Assumes $1,878.9 million in total assets, $781.7 million in debt outstanding, $1,070.9 million in net assets, and a weighted-average interest rate of 3.8%. Actual interest payments may be different.

(2)
In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2015 total assets of at least 1.6%.

        Our ability to achieve our investment objective may depend in part on our ability to access additional leverage on favorable terms by issuing debentures guaranteed by the SBA through the Funds, by borrowing from banks or insurance companies or by issuing other debt securities and there can be no assurance that such additional leverage can in fact be achieved.

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All of our assets are subject to security interests under our secured Credit Facility or subject to a superior claim over our stockholders by the SBA and if we default on our obligations under the Credit Facility or with respect to our SBA-guaranteed debentures, we may suffer adverse consequences, including foreclosure on our assets.

        Substantially all of our assets are currently pledged as collateral under our Credit Facility or are subject to a superior claim over our stockholders by the SBA. If we default on our obligations under the Credit Facility or our SBA-guaranteed debentures, the lenders and/or the SBA may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claim. In such event, we may be forced to sell our investments to raise funds to repay our outstanding borrowings in order to avoid foreclosure and these forced sales may be at times and at prices we would not consider advantageous. Moreover, such deleveraging of our company could significantly impair our ability to effectively operate our business in the manner in which we have historically operated. As a result, we could be forced to curtail or cease new investment activities and lower or eliminate the dividends that we have historically paid to our stockholders. In addition, if the lenders exercise their right to sell the assets pledged under our Credit Facility, such sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts outstanding under the Credit Facility.

Previously proposed 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). Legislation introduced in the U.S. House of Representatives during the 114th Congress proposed to modify this section of the 1940 Act and increase the amount of debt that BDCs may incur by modifying the asset coverage percentage from 200% to 150%. If such legislation is passed, we may be able to incur additional indebtedness in the future and, therefore, your risk of an investment in our securities may increase.

        In addition, in December 2015, the 2016 omnibus spending bill approved by Congress and signed into law by the President increased the amount of SBA-guaranteed debentures that affiliated SBIC funds can have outstanding from $225.0 million to $350.0 million. This new legislation may allow us to issue additional SBIC debentures, subject to SBA approval, above the $225.0 million that we, through the Funds, have outstanding as of December 31, 2015. If we incur this additional indebtedness in the future, your risk of an investment in our securities may increase.

Further downgrades of the U.S. credit rating, automatic spending cuts or another government shutdown could negatively impact our liquidity, financial condition and earnings.

        Recent U.S. debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades and economic slowdowns, or a recession in the U.S. Although U.S. lawmakers passed legislation to raise the federal debt ceiling on multiple occasions, ratings agencies have lowered or threatened to lower the long-term sovereign credit rating on the United States. The impact of this or any further downgrades to the U.S. government's sovereign credit rating or its perceived creditworthiness could adversely affect the U.S. and global financial markets and economic conditions. Absent further quantitative easing by the Federal Reserve, these developments could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. In addition, disagreement over the federal budget has caused the U.S. federal government to shut down for periods of time. Continued adverse political and economic conditions could have a material adverse effect on our business, financial condition and results of operations.

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It is unclear how increased regulatory oversight and changes in the method for determining LIBOR may affect the value of the financial obligations to be held or issued by us that are linked to LIBOR, or how such changes could affect our results of operations or financial condition.

        As a result of concerns about the accuracy of the calculation of LIBOR, a number of British Bankers' Association, or BBA, member banks entered into settlements with certain regulators and law enforcement agencies with respect to the alleged manipulation of LIBOR, and there are ongoing investigations by regulators and governmental authorities in various jurisdictions. Following a review of LIBOR conducted at the request of the U.K. government, on September 28, 2012, recommendations for reforming the setting and governing of LIBOR were released, which are referred to as the Wheatley Review. The Wheatley Review made a number of recommendations for changes with respect to LIBOR, including the introduction of S-5 statutory regulation of LIBOR, the transfer of responsibility for LIBOR from the BBA to an independent administrator, changes to the method of the compilation of lending rates and new regulatory oversight and enforcement mechanisms for rate-setting and a reduction in the number of currencies and tenors for which LIBOR is published. Based on the Wheatley Review and on a subsequent public and governmental consultation process, on March 25, 2013, the U.K. Financial Services Authority published final rules for the U.K. Financial Conduct Authority's regulation and supervision of LIBOR, which are referred to as the FCA Rules. In particular, the FCA Rules include requirements that (1) an independent LIBOR administrator monitor and survey LIBOR submissions to identify breaches of practice standards and/or potentially manipulative behavior, and (2) firms submitting data to LIBOR establish and maintain a clear conflicts of interest policy and appropriate systems and controls. The FCA Rules took effect on April 2, 2013, and on July 9, 2013, NYSE Euronext was chosen to serve as the independent LIBOR administrator commencing in 2014. It is uncertain what additional regulatory changes or what changes, if any, in the method of determining LIBOR may be required or made by the U.K. government or other governmental or regulatory authorities. Accordingly, uncertainty as to the nature of such changes may adversely affect the market for or value of any LIBOR-linked securities, loans, derivatives and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. 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 or value of any LIBOR-linked securities, loans, derivatives and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations.

We may experience fluctuations in our quarterly results.

        We could experience fluctuations in our quarterly operating results due to a number of factors, including our ability or inability to make investments in companies that meet our investment criteria, the interest rate payable on the debt securities we acquire, the level of portfolio dividend and fee income, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

Our Board of Directors may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse.

        Our Board of Directors has the authority to modify or waive our current operating policies, investment criteria and strategies without prior notice and without stockholder approval. We cannot predict the effect any changes to our current operating policies, investment criteria and strategies would have on our business, net asset value, operating results and value of our stock. However, the effects might be adverse, which could negatively impact our ability to pay interest and principal payments to

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holders of our debt instruments and dividends to our stockholders and cause our investors to lose all or part of their investment in us.

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

        To maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source and asset diversification requirements:

        Failure to meet these requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private companies, and therefore will be illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. Moreover, if we fail to maintain RIC tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.

We may not be able to pay distributions to our stockholders, our distributions may not grow over time, and a portion of distributions paid to our stockholders may be a return of capital, which is a distribution of the stockholders' invested capital.

        We intend to pay distributions 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 pay a specified level of cash distributions, previously projected distributions for future periods, or year-to-year increases in

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cash distributions. Our ability to pay distributions might be adversely affected by, among other things, the impact of one or more of the risk factors described herein. In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions. All distributions will be paid at the discretion of our Board of Directors and will depend on our earnings, our financial condition, maintenance of our RIC status, compliance with applicable BDC regulations, compliance with our debt covenants, each of the Funds' compliance with applicable SBIC regulations and such other factors as our Board of Directors may deem relevant from time to time. We cannot assure you that we will pay distributions to our stockholders in the future.

        When we make distributions, we will be required to determine the extent to which such distributions are paid out of current or accumulated earnings, recognized capital gains or capital. To the extent there is a return of capital, investors will be required to reduce their basis in our stock for federal tax purposes, which may result in higher tax liability when the shares are sold, even if they have not increased in value or have lost value. In addition, any return of capital will be net of any sales load and offering expenses associated with sales of shares of our common stock. In the future, our distributions may include a return of capital.

We may have difficulty paying the distributions required to maintain RIC tax treatment under the Code if we recognize income before or without receiving cash representing such income.

        We will include in income certain amounts that we have not yet received in cash, such as: (i) amortization of original issue discount, which may arise if we receive warrants in connection with the origination of a loan such that ascribing a value to the warrants creates original issue discount in the debt instrument, if we invest in a debt investment at a discount to the par value of the debt security or possibly in other circumstances; (ii) contractual payment-in-kind, or PIK, interest, which represents contractual interest added to the loan balance and due at the end of the loan term; (iii) contractual preferred dividends, which represents contractual dividends added to the preferred stock and due at the end of the preferred stock term, subject to adequate profitability at the portfolio company; or (iv) amortization of market discount, which is associated with loans purchased in the secondary market at a discount to par value. Such amortization of original issue discounts, increases in loan balances as a result of contractual PIK arrangements, cumulative preferred dividends, or amortization of market discount will be included in income before we receive the corresponding cash payments. We also may be required to include in income certain other amounts before we receive such amounts in cash. Investments structured with these features may represent a higher level of credit risk compared to investments generating income which must be paid in cash on a current basis. For the year ended December 31, 2015, (i) approximately 2.2% of our total investment income was attributable to PIK income not paid currently in cash, (ii) approximately 1.0% of our total investment income was attributable to amortization of original issue discount, (iii) approximately 1.0% of our total investment income was attributable to cumulative dividend income not paid currently in cash, and (iv) approximately 1.6% of our total investment income was attributable to amortization of market discount on loans purchased in the secondary market at a discount.

        Since, in certain cases, we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the annual distribution requirement necessary to maintain RIC tax treatment under the Code. Accordingly, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax. For additional discussion regarding the tax implications of a RIC, please see "Material U.S. Federal Income Tax Considerations—Taxation as a Regulated Investment Company."

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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 by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The IRS has issued private letter rulings providing that a dividend payable in stock or in cash at the election of the stockholders will be treated as a taxable dividend eligible for the dividends paid deduction provided that at least 20% of the total dividend is payable in cash and certain other requirements are satisfied. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income (or as long-term capital gain to the extent such dividend is properly reported 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.

Each of the Funds, as an SBIC, may be unable to make distributions to us that will enable us to meet or maintain RIC status, which could result in the imposition of an entity-level tax.

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

Because we intend to distribute substantially all of our income to our stockholders to maintain our status as a RIC, we will continue to need additional capital to finance our growth, and regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capital and make distributions.

        In order to satisfy the requirements applicable to a RIC and to minimize corporate-level U.S. federal taxes, we intend to distribute to our stockholders substantially all of our net ordinary income and net capital gain income. We may carry forward excess undistributed taxable income into the next year, net of the 4% U.S. federal excise tax. 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. As a BDC, we generally are required to meet an asset coverage ratio, as defined in the 1940 Act, of at least 200% immediately after each issuance of senior securities. This requirement limits the amount that we may borrow and may prohibit us from making distributions. Because we will continue to need capital to grow our Investment Portfolio, this limitation may prevent us from incurring debt and require us to raise additional equity at a time when it may be disadvantageous to do so.

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        While we expect to be able to borrow and to issue additional debt and equity securities, we cannot assure you that debt and equity financing will be available to us on favorable terms, or at all. In addition, as a BDC, we generally are not permitted to issue equity securities priced below net asset value without stockholder approval. If additional funds are not available to us, we could be forced to curtail or cease new investment activities, and our net asset value could decline.

Stockholders may incur dilution if 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 or issue securities to subscribe to, convert to or purchase shares 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. We did not seek stockholder authorization to sell shares of our common stock at a price below the then current net asset value per share at our 2015 annual meeting of stockholders. As such, we do not currently have such stockholder authorization, and we do not currently intend to seek the stockholder authorization to issue our common stock at a price below net asset value per share at our 2016 annual meeting of stockholders because our common stock price per share has been trading significantly above the current net asset value per share of our common stock. We may, however, seek such authorization at future annual or special meetings of stockholders. Our stockholders have previously approved a proposal to authorize us to issue securities to subscribe to, convert to, or purchase shares of our common stock in one or more offerings. Any decision to sell shares of our common stock below the then current net asset value per share of our common stock or securities to subscribe to, convert to, or purchase shares 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. In addition, if we issue securities to subscribe to, convert to or purchase shares of common stock, the exercise or conversion of such securities would increase the number of outstanding shares of our common stock. Any such exercise would be dilutive on the voting power of existing stockholders, and could be dilutive with regard to dividends and our net asset value, and other economic aspects of the common stock.

        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, or NAV, per share.

        Illustration: Example of Dilutive Effect of the Issuance of Shares Below Net Asset Value.    Assume that Company XYZ has 1,000,000 total shares outstanding, $15,000,000 in total assets and $5,000,000 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 NAV, and the dilution experienced by

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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 NAV per share.

 
  Prior to Sale
Below NAV
  Following Sale
Below NAV
  Percentage
Change
 

Reduction to NAV

                   

Total Shares Outstanding

    1,000,000     1,040,000     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.

Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.

        We, the Funds, and our portfolio companies are subject to applicable local, state and federal laws and regulations, including, without limitation, federal immigration laws and regulations. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect. In addition, any change to the SBA's current debenture SBIC program could have a significant impact on our ability to obtain lower-cost leverage, through the Funds, and therefore, our ability to compete with other finance companies.

        Additionally, any changes to the laws and regulations governing our operations relating 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 herein and may result in our investment focus shifting from the areas of expertise of our investment team to other types of investments in which our investment team may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.

Terrorist attacks, acts of war or natural disasters may affect any market for our securities, impact the businesses in which we invest and harm our business, operating results and financial condition.

        Terrorist acts, acts of war or natural disasters may disrupt our operations, as well as the operations of the businesses in which we invest. Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Future terrorist activities, military or security operations, or natural disasters could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact the businesses in which we invest directly or indirectly and, in turn, could have a material adverse impact on our business, operating results and financial condition. Losses from terrorist attacks and natural disasters are generally uninsurable.

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 pay dividends.

        Our business is highly dependent on our and third parties' communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities.

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Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:

RISKS RELATED TO OUR INVESTMENTS

Our investments in portfolio companies involve higher levels of risk, and we could lose all or part of our investment.

        Investing in our portfolio companies involves a number of significant risks. Among other things, these companies:

        In addition, in the course of providing significant managerial assistance to certain of our portfolio companies, certain of our officers and directors may serve as directors on the boards of such companies. To the extent that litigation arises out of our investments in these companies, our officers and directors may be named as defendants in such litigation, which could result in an expenditure of funds (through our indemnification of such officers and directors) and the diversion of management time and resources.

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Continuation of the current decline in oil and natural gas prices for a prolonged period of time could have a material adverse effect on us.

        A prolonged continuation of the current decline in oil and natural gas prices would adversely affect (i) the credit quality of our debt investments and (ii) the underlying operating performance of our equity investments in energy-related businesses and in geographic areas which are more sensitive to the health of the oil and gas industries. A decrease in credit quality and the operating performance would, in turn, negatively affect the fair value of these investments, which would consequently negatively affect our net asset value. Should the current decline in oil and natural gas prices persist, it is likely that the ability of these investments to satisfy financial or operating covenants imposed by us or other lenders will be adversely affected, thereby negatively impacting their financial condition and their ability to satisfy their debt service and other obligations to us. Likewise, should the current decline in oil and natural gas prices persist, it is likely that our energy-related portfolio companies' and other affected companies' cash flow and profit generating capacities would also be adversely affected thereby negatively impacting their ability to pay us dividends or distributions on our equity investments.

We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest.

        Our investments may include original issue discount and contractual PIK interest, which represents contractual interest added to a loan balance and due at the end of such loan's term. To the extent original issue discount or PIK interest constitute a portion of our income, we are exposed to typical risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash, including the following:

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

        We invest, and will continue to invest in companies whose securities are not publicly traded, and whose securities will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of these investments may make it difficult for us to sell these investments when desired. 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 had previously recorded these investments. As a result, we do not expect to achieve liquidity in our investments in the near-term. Our investments are usually subject to contractual or legal restrictions on resale or are otherwise illiquid because there is usually no established trading market for such investments. The illiquidity of most of our investments may make it difficult for us to dispose of them at a favorable price, and, as a result, we may suffer losses.

We may not have the funds or ability to make additional investments in our portfolio companies.

        We may not have the funds or ability to make additional investments in our portfolio companies. After our initial investment in a portfolio company, we may be called upon from time to time to

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provide additional funds to such company or have the opportunity to increase our investment through the extension of additional loans, the exercise of a warrant to purchase equity securities, or the funding of additional equity investments. There is no assurance that we will make, or will have sufficient funds to make, follow-on investments. Any decisions not to make a follow-on investment or any inability on our part to make such an investment may have a negative impact on a portfolio company in need of such an investment, may result in a missed opportunity for us to increase our participation in a successful operation or may reduce the expected yield on the investment.

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

        We invest primarily in the secured term debt of LMM, Private Loan and Middle Market companies and equity issued by LMM companies. Our portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt in which we invest. By their terms, such debt instruments may entitle the holders to receive payment of interest or principal on or before the dates on which we are entitled to receive payments with respect to the debt instruments 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. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt instruments in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

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.

        Even though we may have structured certain of our investments as secured loans, if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, and based upon principles of equitable subordination as defined by existing case law, a bankruptcy court could subordinate all or a portion of our claim to that of other creditors and transfer any lien securing such subordinated claim to the bankruptcy estate. The principles of equitable subordination defined by case law have generally indicated that a claim may be subordinated only if its holder is guilty of misconduct or where the senior loan is re-characterized as an equity investment and the senior lender has actually provided significant managerial assistance to the bankrupt debtor. We may also be subject to lender liability claims for actions taken by us with respect to a borrower's business or instances where we 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 in rendering significant managerial assistance or actions to compel and collect payments from the borrower outside the ordinary course of business.

Second priority liens on collateral securing loans that we make to our portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us.

        Certain loans that we make are secured by a second priority security interest in the same collateral pledged by a portfolio company to secure senior debt owed by the portfolio company to commercial banks or other traditional lenders. Often the senior lender has procured covenants from the portfolio company prohibiting the incurrence of additional secured debt without the senior lender's consent. Prior to and as a condition of permitting the portfolio company to borrow money from us secured by the same collateral pledged to the senior lender, the senior lender will require assurances that it will control the disposition of any collateral in the event of bankruptcy or other default. In many such

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cases, the senior lender will require us to enter into an "intercreditor agreement" prior to permitting the portfolio company to borrow from us. Typically the intercreditor agreements we are requested to execute expressly subordinate our debt instruments to those held by the senior lender and further provide that the senior lender shall control: (1) the commencement of foreclosure or other proceedings to liquidate and collect on the collateral; (2) the nature, timing and conduct of foreclosure or other collection proceedings; (3) the amendment of any collateral document; (4) the release of the security interests in respect of any collateral; and (5) the waiver of defaults under any security agreement. Because of the control we may cede to senior lenders under intercreditor agreements we may enter, we may be unable to realize the proceeds of any collateral securing some of our loans.

        Finally, the value of the collateral securing our debt investment will ultimately depend on market and economic conditions, the availability of buyers and other factors. Therefore, there can be no assurance that the proceeds, if any, from the sale or sales of all of the collateral would be sufficient to satisfy the loan obligations secured by our first or second priority liens. There is also a risk that such collateral securing our investments will decrease in value over time, will be difficult to sell in a timely manner, will be difficult to appraise and will fluctuate in value based upon the success of the portfolio company and market conditions. If such proceeds are not sufficient to repay amounts outstanding under the loan obligations secured by our 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 company's remaining assets, if any.

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. To the extent that we assume large positions in the securities of a small number of issuers, 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. Beyond our RIC asset diversification requirements, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies.

We generally will not control our portfolio companies.

        We do not, and do not expect to, control the decision making in many of our portfolio companies, even though we may have board representation or board observation rights, and our debt agreements may contain certain restrictive covenants. As a result, we are subject to the risk that a portfolio company in which we invest will make business decisions with which we disagree and the management of such company, as representatives of the holders of their common equity, will take risks or otherwise act in ways that do not serve our interests as debt investors. Due to the lack of liquidity for our investments in non-traded companies, we may not be able to dispose of our interests in our portfolio companies as readily as we would like or at an appropriate valuation. As a result, a portfolio company may make decisions that would decrease the value of our portfolio holdings.

Defaults by our portfolio companies will harm our operating results.

        A portfolio company's failure to satisfy financial or operating covenants imposed by us or other lenders could lead to non-payment of interest and other defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize a portfolio company's ability to meet its obligations under the debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to

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negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.

Any unrealized depreciation we experience in our portfolio may be an indication of future realized losses, which could reduce our income and gains available for distribution.

        As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at the fair value as determined in good faith by our Board of Directors. Decreases in the market values or fair values of our investments will be recorded as unrealized depreciation. Any unrealized depreciation in our portfolio could be an indication of a portfolio company's inability to meet its repayment obligations to us with respect to affected loans or a potential impairment of the value of affected equity investments. This could result in realized losses in the future and ultimately in reductions of our income and gains available for distribution in future periods.

Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.

        We are subject to the risk that the investments we make in our portfolio companies may be repaid prior to maturity. When this occurs, we will generally reinvest these proceeds in temporary investments, pending their future investment in new portfolio companies. 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 in a new portfolio company 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 elect to prepay amounts owed to us. Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market price of our securities.

Changes in interest rates may affect our cost of capital, net investment income and value of our investments.

        Some of our debt investments will bear interest at variable rates and may be negatively affected by changes in market interest rates. An increase in market interest rates would increase the interest costs and reduce the cash flows of our portfolio companies that have variable rate debt instruments, a situation which could reduce the value of the investment. The value of our investments could also be reduced from an increase in market interest rates as rates available to investors could make an investment in our securities less attractive than alternative investments. In addition, an increase in interest rates would make it more expensive for us to use debt to finance our investments. As a result, a significant increase in market interest rates could increase our cost of capital, which would reduce our net investment income. Conversely, decreases in market interest rates could negatively impact the interest income from our variable rate debt investments. A decrease in market interest rates may also have an adverse impact on our returns by requiring us to accept lower yields on our debt investments and by increasing the risk that our portfolio companies will prepay our debt investments, resulting in the need to redeploy capital at potentially lower rates.

We may not realize gains from our equity investments.

        Certain investments that we have made in the past and may make in the future include warrants or other equity securities. Investments in equity securities involve a number of significant risks, including the risk of further dilution as a result of additional issuances, inability to access additional capital and failure to pay current distributions. Investments in preferred securities involve special risks, such as the risk of deferred distributions, credit risk, illiquidity and limited voting rights. In addition, we may from time to time make non-control, equity investments in portfolio companies. Our goal is ultimately to realize gains upon our disposition of such equity interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize

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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. We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests. We often seek puts or similar rights to give us the right to sell our equity securities back to the portfolio company issuer; however, we may be unable to exercise these put rights for the consideration provided in our investment documents if the issuer is in financial distress.

Our Marketable securities and idle funds investments are subject to risks similar to our portfolio company investments.

        Marketable securities and idle funds investments can include, among other things, secured and unsecured debt investments, independently rated debt investments, diversified bond funds and publicly traded debt and equity securities. Many of these investments in debt obligations are, or would be if rated, below investment grade quality. Indebtedness of below investment grade quality is regarded as having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal, similar to our portfolio investments in our portfolio companies. See "—Our investments in portfolio companies involve higher levels of risk, and we could lose all or part of our investment." Many of these Marketable securities and idle funds investments are purchased through over the counter or other markets and are therefore liquid at the time of purchase but may subsequently become illiquid due to events relating to the issuer of the securities, market events, economic conditions or investor perceptions. See "—The lack of liquidity in our investments may adversely affect our business" for a description of risks related to holding illiquid investments. In addition, domestic and foreign markets are complex and interrelated, so that events in one sector of the world markets or economy, or in one geographical region, can reverberate and have materially negative consequences for other market, economic or regional sectors in a manner that may not be foreseen and which may materially affect the market price of our Marketable securities and idle funds investments. Other risks that our portfolio investments are subject to are also applicable to these Marketable securities and idle funds investments.

Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.

        Our investments in foreign securities may involve significant risks in addition to the risks inherent in investments in U.S. securities. Our investment strategy contemplates potential investments in debt securities of foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in securities of U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the U.S., higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

        Although most of our investments will be U.S. dollar denominated, any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments.

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RISKS RELATING TO OUR SECURITIES

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 to 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. In addition, if our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price unless our stockholders approve such a sale and our Board of Directors makes certain determinations. See "—Risks Relating to Our Business and Structure—Stockholders may incur dilution if 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 or issue securities to subscribe to, convert to or purchase shares of our common stock" for a discussion related to us issuing shares of our common stock below net asset value.

We may be unable to invest a significant portion of the net proceeds from an offering or from exiting an investment or other capital on acceptable terms, which could harm our financial condition and operating results.

        Delays in investing the net proceeds raised in an offering or from exiting an investment or other capital may cause our performance to be worse than that of other fully invested BDCs or other lenders or investors pursuing comparable investment strategies. We cannot assure you that we will be able to identify any investments that meet our investment objective or that any investment that we make will produce a positive return. We may be unable to invest the net proceeds of any offering or from exiting an investment or other capital on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and operating results.

        We anticipate that, depending on market conditions and the amount of the capital, it may take us a substantial period of time to invest substantially all the capital in securities meeting our investment objective. During this period, we will invest the capital primarily in Marketable securities and idle funds investments, which may produce returns that are significantly lower than the returns which we expect to achieve when our portfolio is fully invested in securities meeting our investment objective. As a result, any distributions that we pay during such period may be substantially lower than the distributions that we may be able to pay when our portfolio is fully invested in securities meeting our investment objective. In addition, until such time as the net proceeds of any offering or from exiting an investment or other capital are invested in new securities meeting our investment objective, the market price for our securities may decline. Thus, the initial return on your investment may be lower than when, if ever, our portfolio is fully invested in securities meeting our investment objective.

Investing in our securities 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 than alternative investment options and a higher risk of volatility or loss of principal. Our investments in portfolio companies involve higher levels of risk, and therefore, an investment in our securities may not be suitable for someone with lower risk tolerance.

The market price of our securities may be volatile and fluctuate significantly.

        Fluctuations in the trading prices of our securities may adversely affect the liquidity of the trading market for our securities and, if we seek to raise capital through future securities offerings, our ability to raise such capital. The market price and liquidity of the market for our securities may be

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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:

Provisions of the Maryland General Corporation Law and our articles of incorporation and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.

        The Maryland General Corporation Law and our articles of incorporation and bylaws contain provisions that may have the effect of discouraging, delaying or making difficult a change in control of our company or the removal of our incumbent directors. The existence of these provisions, among others, may have a negative impact on the price of our common stock and may discourage third-party bids for ownership of our company. These provisions may prevent any premiums being offered to you for our common stock.

We may in the future determine to issue preferred stock, which could adversely affect the market value of our common stock.

        The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. In addition, the dividends on any preferred stock we issue must be cumulative. Payment of dividends and repayment of the liquidation preference of preferred stock must take preference over any dividends or other payments to our common stockholders, and holders of preferred stock are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference (other than convertible preferred stock that converts into common stock). In addition, under the 1940 Act, preferred stock constitutes a "senior security" for purposes of the 200% asset coverage test.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

        Some of the statements in this prospectus and any accompanying prospectus supplement constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this prospectus and any accompanying prospectus supplement may include statements as to:

        In addition, words such as "anticipate," "believe," "expect" and "intend" indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this prospectus and any accompanying prospectus supplement involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in "Risk Factors" and elsewhere in this prospectus and any accompanying prospectus supplement. Other factors that could cause actual results to differ materially include:

        We have based the forward-looking statements included in this prospectus and will base the forward-looking statements included in any accompanying prospectus supplement on information available to us on the date of this prospectus and any accompanying prospectus supplement, as appropriate, and we assume no obligation to update any such forward-looking statements, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you, including in the form of a prospectus supplement or post-effective amendment to the registration statement, 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.


USE OF PROCEEDS

        We intend to use the net proceeds from any offering to make investments in accordance with our investment objective and strategies described in this prospectus or any prospectus supplement, to make investments in marketable securities and idle funds investments, which may include investments in secured intermediate term bank debt, rated debt securities and other income producing investments, to pay our operating expenses and other cash obligations, and for general corporate purposes. Our ability to achieve our investment objective may be limited to the extent that the net proceeds from an offering, pending full investment, are held in interest-bearing deposits or other short-term instruments. See "Risk Factors—Risks Relating to Our Securities—We may be unable to invest a significant portion of the net proceeds from an offering or from exiting an investment or other capital on acceptable

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terms, which could harm our financial condition and operating results." The supplement to this prospectus relating to an offering will more fully identify the use of proceeds from such an offering.


PRICE RANGE OF COMMON STOCK AND DISTRIBUTIONS

        Our common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "MAIN." Prior to October 14, 2010, our common stock was traded on the NASDAQ Global Select Market under the same symbol "MAIN." Our common stock began trading on the NASDAQ Global Select Market on October 5, 2007. Prior to that date, there was no established public trading market for our common stock.

        The following table sets forth, for each fiscal quarter during 2016, 2015 and 2014, the range of high and low closing prices of our common stock as reported on the NYSE, and the sales price as a percentage of the net asset value per share of our common stock.

 
   
  Price Range   Premium of
High Sales
Price to
NAV(2)
  Premium of
Low Sales
Price to
NAV(2)
 
 
  NAV(1)   High   Low  

Year ending December 31, 2016

                               

First Quarter (through March 23, 2016)

      * $ 31.35   $ 26.35       *     *

Year ending December 31, 2015

                               

Fourth Quarter

  $ 21.24   $ 32.28   $ 27.69     52 %   30 %

Third Quarter

    21.79     33.08     26.38     52 %   21 %

Second Quarter

    21.84     32.59     30.47     49 %   40 %

First Quarter

    21.87     31.47     27.87     44 %   27 %

Year ending December 31, 2014

                               

Fourth Quarter

  $ 20.85   $ 32.68   $ 27.48     57 %   32 %

Third Quarter

    21.08     32.87     30.38     56 %   44 %

Second Quarter

    21.03     33.54     29.55     59 %   41 %

First Quarter

    20.14     35.69     32.23     77 %   60 %

(1)
Net asset value per share, or NAV, is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low sales prices. The net asset values shown are based on outstanding shares at the end of each period. Net asset value has not yet been determined for the first quarter of 2016.

(2)
Calculated as the respective high or low share price divided by NAV for such quarter.

        On March 23, 2016 the last sale price of our common stock on the NYSE was $30.90 per share, and there were approximately 236 holders of record of the common stock which did not include stockholders for whom shares are held in "nominee" or "street name." The net asset value per share of our common stock on December 31, 2015 (the last date prior to the date of this prospectus on which we determined our net asset value per share) was $21.24, and the premium of the March 23, 2016 closing price of our common stock was 45% to this net asset value per share.

        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 our common stock will trade at, above, or below net asset value per share. Since our IPO in October 2007, our shares of common stock have traded at prices both less than and exceeding our net asset value per share.

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        We currently pay regular monthly dividends and semi-annual supplemental dividends to our stockholders. Our monthly dividends, if any, will be determined by our Board of Directors on a quarterly basis. Our semi-annual supplemental dividends, if any, will be determined by our Board of Directors based upon our undistributed taxable income. The following table summarizes our dividends declared to date:

Date Declared
  Record Date   Payment Date   Amount(1)  

Fiscal year 2016

               

February 23, 2016

  May 20, 2016   June 15, 2016   $ 0.180  

February 23, 2016

  April 21, 2016   May 16, 2016   $ 0.180  

February 23, 2016

  March 21, 2016   April 15, 2016   $ 0.180  

November 3, 2015

  February 22, 2016   March 15, 2016   $ 0.180  

November 3, 2015

  January 22, 2016   February 17, 2016   $ 0.180  

November 3, 2015

  December 30, 2015   January 15, 2016   $ 0.180 (2)

          $ 1.080  

Fiscal year 2015

               

October 20, 2015

  December 17, 2015   December 24, 2015   $ 0.275 (2)

August 3, 2015

  November 20, 2015   December 14, 2015   $ 0.180 (2)

August 3, 2015

  October 21, 2015   November 16, 2015   $ 0.180 (2)

August 3, 2015

  September 21, 2015   October 15, 2015   $ 0.180 (2)

May 5, 2015

  August 20, 2015   September 15, 2015   $ 0.175 (2)

May 5, 2015

  July 21, 2015   August 14, 2015   $ 0.175 (2)

May 5, 2015

  July 1, 2015   July 15, 2015   $ 0.175 (2)

April 22, 2015

  June 18, 2015   June 25, 2015   $ 0.275 (2)

February 24, 2015

  May 20, 2015   June 15, 2015   $ 0.175 (2)

February 24, 2015

  April 21, 2015   May 15, 2015   $ 0.175 (2)

February 24, 2015

  March 20, 2015   April 15, 2015   $ 0.175 (2)

November 6, 2014

  February 20, 2015   March 16, 2015   $ 0.170 (2)

November 6, 2014

  January 21, 2015   February 13, 2015   $ 0.170 (2)

November 6, 2014

  December 31, 2014   January 15, 2015   $ 0.170 (3)

Total

          $ 2.650  

Fiscal year 2014

               

October 23, 2014

  December 18, 2014   December 24, 2014   $ 0.275 (3)

August 4, 2014

  November 20, 2014   December 15, 2014   $ 0.170 (3)

August 4, 2014

  October 20, 2014   November 14, 2014   $ 0.170 (3)

August 4, 2014

  September 19, 2014   October 15, 2014   $ 0.170 (3)

May 6, 2014

  August 20, 2014   September 15, 2014   $ 0.165 (3)

May 6, 2014

  July 21, 2014   August 15, 2014   $ 0.165 (3)

May 6, 2014

  June 30, 2014   July 15, 2014   $ 0.165 (3)

April 21, 2014

  June 20, 2014   June 25, 2014   $ 0.275 (3)

February 26, 2014

  May 21, 2014   June 16, 2014   $ 0.165 (3)

February 26, 2014

  April 20, 2014   May 15, 2014   $ 0.165 (3)

February 26, 2014

  March 21, 2014   April 15, 2014   $ 0.165 (3)

November 6, 2013

  February 20, 2014   March 14, 2014   $ 0.165 (3)

November 6, 2013

  January 21, 2014   February 14, 2014   $ 0.165 (3)

November 6, 2013

  December 30, 2013   January 15, 2014   $ 0.165 (4)

Total

          $ 2.545  

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Date Declared
  Record Date   Payment Date   Amount(1)  

Fiscal year 2013

               

November 20, 2013

  December 19, 2013   December 24, 2013   $ 0.250 (4)

August 6, 2013

  November 21, 2013   December 16, 2013   $ 0.160 (4)

August 6, 2013

  October 21, 2013   November 15, 2013   $ 0.160 (4)

August 6, 2013

  September 20, 2013   October 15, 2013   $ 0.160 (4)

May 13, 2013

  July 22, 2013   July 26, 2013   $ 0.200 (4)

May 8, 2013

  May 21, 2013   September 16, 2013   $ 0.155 (4)

May 8, 2013

  July 17, 2013   August 15, 2013   $ 0.155 (4)

May 8, 2013

  June 18, 2013   July 15, 2013   $ 0.155 (4)

March 5, 2013

  May 21, 2013   June 14, 2013   $ 0.155 (4)

March 5, 2013

  April 19, 2013   May 15, 2013   $ 0.155 (4)

March 5, 2013

  March 21, 2013   April 15, 2013   $ 0.155 (4)

November 6, 2012

  February 21, 2013   March 15, 2013   $ 0.150 (4)

November 6, 2012

  January 18, 2013   February 15, 2013   $ 0.150 (4)

November 6, 2012

  January 4, 2013   January 23, 2013   $ 0.350 (4)

November 6, 2012

  December 20, 2012   January 15, 2013   $ 0.150 (5)

Total

          $ 2.660  

 

 
   
   
  Amount(1)  

Fiscal year 2012

               

Total

          $ 1.710 (5)(6)

Fiscal year 2011

               

Total

          $ 1.560 (6)

Fiscal year 2010

               

Total

          $ 1.500 (7)

Fiscal year 2009

               

Total

          $ 1.500 (8)(9)

Fiscal year 2008

               

Total

          $ 1.425 (9)

Fiscal year 2007

               

Total

          $ 0.330 (10)

Cumulative dividends declared or paid

          $ 16.960  

(1)
The determination of the tax attributes of Main Street's distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Ordinary dividend distributions from a RIC do not qualify for the tax rate applicable to "qualified dividend income" from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations.

(2)
These dividends attributable to fiscal year 2015 were comprised of ordinary income of $2.325 per share, long term capital gain of $0.231 per share, and qualified dividend income of $0.105 per share, and included dividends with a record date during fiscal year 2015, including the dividend declared and accrued as of December 31, 2015 and paid on January 15, 2016, pursuant to the Code.

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(3)
These dividends attributable to fiscal year 2014 were comprised of ordinary income of $2.083 per share, long term capital gain of $0.419 per share, and qualified dividend income of $0.048 per share, and included dividends with a record date during fiscal year 2014, including the dividend declared and accrued as of December 31, 2014 and paid on January 15, 2015, pursuant to the Code.

(4)
These dividends attributable to fiscal year 2013 were comprised of ordinary income of $1.872 per share, long term capital gain of $0.346 per share, and qualified dividend income of $0.457 per share, and included dividends with a record date during fiscal year 2013, including the dividend declared and accrued as of December 31, 2013 and paid on January 15, 2014, pursuant to the Code.

(5)
These dividends attributable to fiscal year 2012 were comprised of ordinary income of $0.923 per share, long term capital gain of $0.748 per share, and qualified dividend income of $0.054 per share, and included dividends with a record date during fiscal year 2012, including the dividend declared and accrued as of December 31, 2012 and paid on January 15, 2013, pursuant to the Code.

(6)
These dividends attributable to fiscal year 2011 were comprised of ordinary income of $1.253 per share, long term capital gain of $0.373 per share, and qualified dividend income of $0.069 per share, and included dividends with a record date during fiscal year 2011, including the dividend declared and accrued as of December 31, 2011 and paid on January 16, 2012, pursuant to the Code.

(7)
These dividends attributable to fiscal year 2010 were comprised of ordinary income of $1.220 per share, long term capital gain of $0.268 per share, and qualified dividend income of $0.012 per share.

(8)
These dividends attributable to fiscal year 2009 were comprised of ordinary income of $1.218 per share and long term capital gain of $0.157 per share and excluded the $0.125 paid on January 15, 2009 which had been declared and accrued as of December 31, 2008.

(9)
These dividends attributable to fiscal year 2008 were comprised of ordinary income of $0.953 per share and long term capital gain of $0.597 per share, and included dividends with a record date during fiscal year 2008, including the $0.125 per share dividend declared and accrued as of December 31, 2008 and paid on January 15, 2009, pursuant to the Code.

(10)
This quarterly dividend attributable to fiscal year 2007 was comprised of ordinary income of $0.105 per share and long term capital gain of $0.225 per share.

        In accordance with the IRC sections 871(k) and 881(e), the following percentages represent the portion of our dividends that constitute interest-related dividends and short-term capital gains dividends for non-U.S. residents and foreign corporations. These percentages should be combined with the long-term capital gains discussed above to derive the total dividends which are exempt from United States withholding tax.

Payment Dates
  Interest-Related
Dividends and
Short-Term
Capital Gain
Dividends
 

From 2/13/2015 to 5/15/2015

    69.29 %

6/15/2015

    71.51 %

From 6/25/2015 to 1/15/2016

    75.79 %

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        To the extent non-U.S. resident taxes were withheld on ordinary dividends distributed, this information may be considered in connection with any claims for refund of such taxes to be filed by the non-U.S. resident shareholder with the Internal Revenue Service.

        To obtain and maintain 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. We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed taxable income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our net ordinary taxable income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending December 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years on which we paid no U.S. federal income tax (the "Excise Tax Avoidance Requirement"). Dividends declared and paid by us in a year will generally differ from taxable income for that year, as such dividends may include the distribution of current year taxable income, less amounts carried over into the following year, and the distribution of prior year taxable income carried over into and distributed in the current year. For amounts we carry over into the following year, we will be required to pay a 4% U.S. federal excise tax on the amount by which 98% of our annual ordinary taxable income and 98.2% of capital gains exceeds our distributions for the year. We may retain for investment some or all of our net 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 stockholders. If we do this, our stockholders will be treated as if they had received actual distributions of the capital gains we retained and then reinvested the net after-tax proceeds in our common stock. In general, our stockholders also would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to their allocable shares of the tax we paid on the capital gains deemed distributed to them. 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 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 by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The IRS has issued private letter rulings providing that a dividend payable in stock or in cash at the election of the stockholders will be treated as a taxable dividend eligible for the dividends paid deduction provided that at least 20% of the total dividend is payable in cash and certain other requirements are satisfied. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income (or as long-term capital gain to the extent such dividend is properly reported 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.

        We have adopted a dividend reinvestment plan ("DRIP") that provides for the reinvestment of dividends on behalf of our stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if we declare a cash dividend, our stockholders who have not "opted out" of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan

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administrator. Newly-issued shares will be valued based upon the final closing price of MSCC's common stock on a valuation date determined for each dividend by our Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator, before any associated brokerage or other costs.


RATIOS OF EARNINGS TO FIXED CHARGES

        The following table contains our ratio of earnings to fixed charges for the periods indicated, computed as set forth below. You should read these ratios of earnings to fixed charges in connection with our consolidated financial statements, including the notes to those statements, included in this prospectus.

 
  For the Year
Ended
December 31,
2015
  For the Year
Ended
December 31,
2014
  For the Year
Ended
December 31,
2013
  For the Year
Ended
December 31,
2012
  For the Year
Ended
December 31,
2011
 

Earnings to Fixed Charges(1)

    3.98     5.54     5.78     8.37     6.21  

(1)
Earnings include net realized and unrealized gains or losses. Net realized and unrealized gains or losses can vary substantially from period to period.

        For purposes of computing the ratios of earnings to fixed charges, earnings represent net increase in net assets resulting from operations plus (or minus) income tax expense (benefit) including excise tax expense plus fixed charges. Fixed charges include interest and credit facility fees expense and amortization of debt issuance costs.

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SELECTED FINANCIAL DATA

        The selected financial and other data below reflects the consolidated financial condition and the consolidated statement of operations of Main Street and its subsidiaries as of and for the years ended December 31, 2015, 2014, 2013, 2012 and 2011. The selected financial data as of and for the years ended December 31, 2015, 2014, 2013, 2012 and 2011 have been derived from consolidated financial statements that have been audited by Grant Thornton LLP, an independent registered public accounting firm. You should read this selected financial and other data in conjunction with our "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Senior Securities" and the financial statements and related notes in this prospectus.

 
  Years Ended December 31,  
 
  2015   2014   2013   2012   2011  
 
  (dollars in thousands, except per share amounts)
 

Statement of operations data:

                               

Investment income:

                               

Total interest, fee and dividend income

  $ 163,603   $ 139,939   $ 115,158   $ 88,858   $ 65,045  

Interest from idle funds and other

    986     824     1,339     1,662     1,195  

Total investment income

    164,589     140,763     116,497     90,520     66,240  

Expenses:

                               

Interest

    (32,115 )   (23,589 )   (20,238 )   (15,631 )   (13,518 )

Compensation

    (14,852 )   (12,337 )   (8,560 )        

General and administrative

    (8,621 )   (7,134 )   (4,877 )   (2,330 )   (2,483 )

Share-based compensation

    (6,262 )   (4,215 )   (4,210 )   (2,565 )   (2,047 )

Expenses charged to the External Investment Manager

    4,335     2,048              

Expenses reimbursed to MSCP

            (3,189 )   (10,669 )   (8,915 )

Total expenses

    (57,515 )   (45,227 )   (41,074 )   (31,195 )   (26,963 )

Net investment income

    107,074     95,536     75,423     59,325     39,277  

Total net realized gain (loss) from investments

    (21,316 )   23,206     7,277     16,479     2,639  

Total net realized loss from SBIC debentures

            (4,775 )        

Total net change in unrealized appreciation (depreciation) from investments

    10,871     (776 )   14,503     44,464     34,989  

Total net change in unrealized appreciation (depreciation) from SBIC debentures and investment in the Internal Investment Manager

    (879 )   (10,931 )   4,392     (5,004 )   (6,511 )

Income tax benefit (provision)

    8,687     (6,287 )   35     (10,820 )   (6,288 )

Net increase in net assets resulting from operations

    104,437     100,748     96,855     104,444     64,106  

Noncontrolling interest

                (54 )   (1,139 )

Net increase in net assets resulting from operations attributable to common stock

  $ 104,437   $ 100,748   $ 96,855   $ 104,390   $ 62,967  

Net investment income per share — basic and diluted

  $ 2.18   $ 2.20   $ 2.06   $ 2.01   $ 1.69  

Net increase in net assets resulting from operations attributable to common stock per share — basic and diluted

  $ 2.13   $ 2.31   $ 2.65   $ 3.53   $ 2.76  

Weighted average shares outstanding — basic and diluted

    49,071,492     43,522,397     36,617,850     29,540,114     22,850,299  

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  As of December 31,  
 
  2015   2014   2013   2012   2011  
 
  (dollars in thousands)
 

Balance sheet data:

                               

Assets:

                               

Total portfolio investments at fair value

  $ 1,799,996   $ 1,563,330   $ 1,286,188   $ 924,431   $ 658,093  

Marketable securities and idle funds investments

    3,693     9,067     13,301     28,535     26,242  

Cash and cash equivalents

    20,331     60,432     34,701     63,517     42,650  

Interest receivable and other assets

    37,638     46,406     16,054     14,580     6,539  

Deferred financing costs, net of accumulated amortization

    13,267     14,550     9,931     5,162     4,168  

Deferred tax asset, net

    4,003                  

Total assets

  $ 1,878,928   $ 1,693,785   $ 1,360,175   $ 1,036,225   $ 737,692  

Liabilities and net assets:

                               

Credit facility

  $ 291,000   $ 218,000   $ 237,000   $ 132,000   $ 107,000  

SBIC debentures at fair value(1)

    223,660     222,781     187,050     211,467     201,887  

4.50% Notes

    175,000     175,000              

6.125% Notes

    90,738     90,823     90,882          

Dividend payable

    9,074     7,663     6,577     5,188     2,856  

Interest payable

    3,959     4,848     2,556     3,562     3,984  

Accounts payable and other liabilities

    12,292     10,701     10,549     8,593     7,001  

Payable for securities purchased

    2,311     14,773     27,088     20,661      

Deferred tax liability, net

        9,214     5,940     11,778     3,776  

Total liabilities

    808,034     753,803     567,642     393,249     326,504  

Total net asset value

    1,070,894     939,982     792,533     642,976     405,711  

Noncontrolling interest

                    5,477  

Total liabilities and net assets

  $ 1,878,928   $ 1,693,785   $ 1,360,175   $ 1,036,225   $ 737,692  

Other data:

                               

Weighted average effective yield on LMM debt investments(2)

    12.2 %   13.2 %   14.7 %   14.3 %   14.8 %

Number of LMM portfolio companies

    71     66     62     56     54  

Weighted average effective yield on Middle Market debt investments(2)

    8.0 %   7.8 %   7.8 %   8.0 %   9.5 %

Number of Middle Market portfolio companies

    86     86     92     79     57  

Weighted average effective yield on Private Loan debt investments(2)

    9.5 %   10.1 %   11.3 %   14.8 %    

Number of Private Loan portfolio companies

    40     31     15     9      

Expense ratios (as percentage of average net assets):

                               

Total expenses, including income tax expense

    4.6 %   5.8 %   5.8 %   8.2% (3)   9.8% (3)

Operating expenses

    5.5 %   5.1 %   5.8 %   6.1% (3)   8.0% (3)

Operating expenses, excluding interest expense

    2.4 %   2.4 %   3.0 %   3.0% (3)   4.0% (3)

(1)
SBIC debentures for December 31, 2015, 2014, 2013, 2012 and 2011 are $225,000, $225,000, $200,200, $225,000 and $220,000 at par, respectively, with par of $75,200 for December 31, 2015, 2014 and 2013, $100,000 for December 31, 2012, and $95,000 for December 31, 2011 recorded at fair value of $73,860, $72,981, $62,050, $86,467 and 76,887, as of December 31, 2015, 2014, 2013, 2012 and 2011, respectively.

(2)
Weighted-average effective yield is calculated based on our debt investments at the end of each period and includes amortization of deferred debt origination fees and accretion of original issue discount, but excludes liquidation fees payable upon repayment and any debt investments on non-accrual status.

(3)
Ratios are net of amounts attributable to MSC II non-controlling interest.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with our financial statements and the notes thereto included elsewhere in this prospectus.

        Statements we make in the following discussion which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including the risks and uncertainties we have referred to under the headings "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" in this prospectus.

ORGANIZATION

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF") and Main Street Capital II, LP ("MSC II" and, together with MSMF, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receive fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser ("RIA") under Investment Advisers Act of 1940, as amended (the "Advisers Act"). Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that it distributes to its stockholders.

        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax

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purposes. The External Investment Manager and Main Street Capital Partners, LLC, ("MSCP") are also direct wholly owned subsidiaries that have elected to be taxable entities. The Taxable Subsidiaries, MSCP and the External Investment Manager are each taxed at their normal corporate tax rates based on their taxable income.

        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries and, beginning April 1, 2013, MSCP.

OVERVIEW

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $15 million. Our private loan ("Private Loan") portfolio investments are primarily debt securities which have been originated through strategic relationships with other investment funds on a collaborative basis. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio.

        We seek to fill the financing gap for LMM businesses, which, historically, have had more limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company's capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a "one stop" financing solution. Providing customized, "one stop" financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date. We believe that our LMM investment strategy has limited correlation to the broader debt and equity markets.

        Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest bearing debt securities in privately held companies that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

        Our Private Loan portfolio investments are primarily debt securities which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur

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indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Our external asset management business is conducted through our External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we provide management and other services to the External Investment Manager, as well as access to our employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, we began charging the External Investment Manager for these services. Our total expenses for the years ended December 31, 2015 and 2014 are net of expenses charged to the External Investment Manager of $4.3 million and $2.0 million, respectively. The total contribution of the External Investment Manager to our net investment income consists of the combination of the expenses charged to the External Investment Manager and dividend income from the External Investment Manager. For the years ended December 31, 2015 and 2014, the total contribution to our net investment income was $6.5 million and $2.5 million, respectively.

        The following tables provide a summary of our investments in the LMM, Middle Market and Private Loan portfolios as of December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

 
  As of December 31, 2015  
 
  LMM(a)   Middle
Market
  Private
Loan
 
 
  (dollars in millions)
 

Number of portfolio companies

    71     86     40  

Fair value

  $ 862.7   $ 586.9   $ 248.3  

Cost

  $ 685.6   $ 637.2   $ 268.6  

% of portfolio at cost—debt

    70.4 %   98.3 %   94.3 %

% of portfolio at cost—equity

    29.6 %   1.7 %   5.7 %

% of debt investments at cost secured by first priority lien

    91.8 %   86.6 %   87.3 %

Weighted-average annual effective yield(b)

    12.2 %   8.0 %   9.5 %

Average EBITDA(c)

  $ 6.0   $ 98.8   $ 13.1  

(a)
At December 31, 2015, we had equity ownership in approximately 96% of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 36%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2015, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. Weighted-average annual effective yield is higher than what an investor in shares of our common stock will realize on its investment because it does not reflect our expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including five LMM portfolio companies, three Middle Market portfolio companies and six Private Loan portfolio companies, as

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  As of December 31, 2014  
 
  LMM(a)   Middle
Market
  Private
Loan
 
 
  (dollars in millions)
 

Number of portfolio companies

    66     86     31  

Fair value

  $ 733.2   $ 542.7   $ 213.0  

Cost

  $ 599.4   $ 561.8   $ 224.0  

% of portfolio at cost—debt

    71.5 %   99.8 %   95.6 %

% of portfolio at cost—equity

    28.5 %   0.2 %   4.4 %

% of debt investments at cost secured by first priority lien

    89.6 %   85.1 %   87.8 %

Weighted-average annual effective yield(b)

    13.2 %   7.8 %   10.1 %

Average EBITDA(c)

  $ 5.0   $ 77.2   $ 18.1  

(a)
At December 31, 2014, we had equity ownership in approximately 95% of our LMM portfolio companies, and our average fully diluted equity ownership in those portfolio companies was approximately 35%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2014, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. Weighted-average annual effective yield is higher than what an investor in shares of our common stock will realize on its investment because it does not reflect our expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including two LMM portfolio companies, one Middle Market portfolio company and five Private Loan portfolio companies as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

        As of December 31, 2015, we had Other Portfolio investments in ten companies, collectively totaling approximately $74.8 million in fair value and approximately $75.2 million in cost basis and which comprised approximately 4.2% of our Investment Portfolio (as defined in "—Critical Accounting Policies—Basis of Presentation" below) at fair value. As of December 31, 2014, we had Other Portfolio investments in six companies, collectively totaling approximately $58.9 million in fair value and approximately $56.2 million in cost basis and which comprised approximately 3.8% of our Investment Portfolio at fair value.

        As previously discussed, the External Investment Manager is a wholly owned subsidiary that is treated as a portfolio investment. As of December 31, 2015, there was no cost basis in this investment and the investment had a fair value of $27.3 million, which comprised 1.5% of our Investment Portfolio at fair value. As of December 31, 2014, there was no cost basis in this investment and the investment had a fair value of $15.6 million, which comprised 1.0% of our Investment Portfolio at fair value.

        Our portfolio investments are generally made through MSCC and the Funds. MSCC and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes. An investor's return in MSCC will depend, in part, on the Funds' investment returns as they are wholly owned subsidiaries of MSCC.

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        The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

        Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio. For both of the years ended December 31, 2015 and 2014, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.4%.

        During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-publicly traded BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source of income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. Based upon several fee waiver agreements with HMS Income and HMS Adviser, the External Investment Manager did not begin accruing the base management fee and incentive fees, if any, until January 1, 2014. Beginning January 1, 2015, the External Investment Manager conditionally agreed to waive a limited amount of the base management fee and incentive fees otherwise earned during the year ended December 31, 2015. During the years ended December 31, 2015 and 2014, the External Investment Manager earned $7.8 million and $2.8 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

        During April 2014, we received an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide it an incentive to allocate opportunities to HMS Income instead of us.

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CRITICAL ACCOUNTING POLICIES

        Our financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For each of the periods presented herein, our consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of our investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments, and the investment in the External Investment Manager, but excludes all "Marketable securities and idle funds investments". "Marketable securities and idle funds investments" are classified as financial instruments and are reported separately on our consolidated balance sheets and consolidated schedules of investments due to the nature of such investments. Our results of operations and cash flows for the years ended December 31, 2015, 2014 and 2013 and financial position as of December 31, 2015 and 2014, are presented on a consolidated basis. The effects of all intercompany transactions between us and our consolidated subsidiaries have been eliminated in consolidation. Certain reclassifications have been made to prior period balances to conform to the current presentation, including reclassifying the expenses charged to the External Investment Manager.

        Under regulations pursuant to Article 6 of Regulation S-X applicable to BDCs and Accounting Standards Codification ("Codification" or "ASC") 946, Financial Services—Investment Companies ("ASC 946"), we are precluded from consolidating other entities in which we have equity investments, including those in which we have a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if we hold a controlling interest in an operating company that provides all or substantially all of its services directly to us or to any of our portfolio companies. Accordingly, as noted above, our consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. Beginning April 1, 2013, our consolidated financial statements also include the financial position and operating results for MSCP, as the wholly owned subsidiary provides all of its services directly or indirectly to us or our portfolio companies. For all periods up to and including the period ending March 31, 2013, MSCP was accounted for as a portfolio investment. We have determined that all of our portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, our Investment Portfolio is carried on the consolidated balance sheet at fair value with any adjustments to fair value recognized as "Net Change in Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net Realized Gain (Loss)."

        The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. As of December 31, 2015 and 2014, our Investment Portfolio valued at fair value represented approximately 96% and 92% of our total assets, respectively. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See "Note B.1.—Valuation of the Investment Portfolio" in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

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        Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

        Our Board of Directors has the final responsibility for overseeing, reviewing and approving, in good faith, our determination of the fair value for our Investment Portfolio and our valuation procedures, consistent with 1940 Act requirements. We believe our Investment Portfolio as of December 31, 2015 and 2014 approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on those reporting dates.

        We record interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with our valuation policies, we evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we otherwise do not expect the debtor to be able to service all of its debt or other obligations, we will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security's status significantly improves regarding the debtor's ability to service the debt or other obligations, or if a loan or debt security is fully impaired, sold or written off, we remove it from non-accrual status.

        We may periodically provide services, including structuring and advisory services, to our portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into interest income over the life of the financing.

        We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31, 2015,

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2014 and 2013 (i) approximately 2.2%, 3.3% and 4.3% respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.0%, 1.3% and 1.2%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash.

        We account for our share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

        MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment company taxable income" (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S Federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S federal income tax return for the applicable fiscal year or (ii) fifteenth day of the ninth month following the close of the year which generated such taxable income.

        The Taxable Subsidiaries hold certain portfolio investments for us. The Taxable Subsidiaries permit us to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with us for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in our consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in our consolidated financial statements.

        As noted above, beginning April 1, 2013, MSCC's wholly owned subsidiary MSCP is included in our consolidated financial statements for financing reporting purposes. For tax purposes, MSCP has elected to be treated as a taxable entity, and therefore is not consolidated with MSCC for income tax purposes and is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The taxable income, or loss, of MSCP may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in our consolidated financial statements.

        The Taxable Subsidiaries and MSCP use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets

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and liabilities and their reported amounts in the financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

        Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

INVESTMENT PORTFOLIO COMPOSITION

        Our LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Our LMM portfolio companies generally have annual revenues between $10 million and $150 million, and our LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, generally bear interest at fixed rates, and generally have a term of between five and seven years from the original investment date. In most LMM portfolio companies, we receive nominally priced equity warrants and/or make direct equity investments in connection with a debt investment.

        Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $15 million. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our Private Loan portfolio investments are primarily debt securities which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our Other Portfolio investments primarily consist of investments which are not consistent with the typical profiles for LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Our external asset management business is conducted through our External Investment Manager. We have entered into an agreement to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income. Through this agreement, we provide management and other services to the External Investment Manager, as well as access to our employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, we began charging the External Investment Manager for these services. Our total expenses for the years ended December 31, 2015 and 2014 are net of expenses charged to the External Investment Manager of $4.3 million and $2.0 million, respectively. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive

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fees, or a carried interest, based on the performance of the funds managed. The total contribution of the External Investment Manager to our net investment income consists of the combination of the expenses charged to the External Investment Manager and dividend income from the External Investment Manager. For the years ended December 31, 2015 and 2014, the total contribution to our net investment income was $6.5 million and $2.5 million, respectively.

        The following tables summarize the composition of our total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments as of December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  December 31,
2015
  December 31,
2014
 

First lien debt

    75.8 %   75.7 %

Equity

    13.5 %   11.6 %

Second lien debt

    8.7 %   10.0 %

Equity warrants

    0.9 %   1.5 %

Other

    1.1 %   1.2 %

    100.0 %   100.0 %

 

Fair Value:
  December 31,
2015
  December 31,
2014
 

First lien debt

    66.1 %   66.9 %

Equity

    24.9 %   21.9 %

Second lien debt

    7.7 %   9.2 %

Equity warrants

    0.6 %   1.0 %

Other

    0.7 %   1.0 %

    100.0 %   100.0 %

        Our LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments carry a number of risks including, but not limited to: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment grade debt and equity investments in our Investment Portfolio. Please see "Risk Factors—Risks Related to Our Investments" for a more complete discussion of the risks involved with investing in our Investment Portfolio.

PORTFOLIO ASSET QUALITY

        We utilize an internally developed investment rating system to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including each investment's expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company's future outlook and other factors that are deemed to be significant to the portfolio company.

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        All new LMM portfolio investments receive an initial Investment Rating of 3.

        The following table shows the distribution of our LMM portfolio investments on the 1 to 5 investment rating scale at fair value as of December 31, 2015 and 2014:

 
  As of December 31, 2015   As of December 31, 2014  
Investment Rating
  Investments at
Fair Value
  Percentage of
Total Portfolio
  Investments at
Fair Value
  Percentage of
Total Portfolio
 
 
  (dollars in thousands)
 

1

  $ 332,606     38.6 % $ 287,693     39.2 %

2

    143,268     16.6 %   133,266     18.2 %

3

    277,160     32.1 %   239,100     32.6 %

4

    107,926     12.5 %   61,475     8.4 %

5

    1,750     0.2 %   11,657     1.6 %

Total

  $ 862,710     100.0 % $ 733,191     100.0 %

        Based upon our investment rating system, the weighted-average rating of our LMM portfolio was approximately 2.2 as of both December 31, 2015 and 2014.

        As of December 31, 2015, our total Investment Portfolio had six investments on non-accrual status, which comprised approximately 0.4% of its fair value and 3.7% of its cost. As of December 31, 2014, our total Investment Portfolio had five investments on non-accrual status, which comprised approximately 1.7% of its fair value and 4.7% of its cost.

        The operating results of our portfolio companies are impacted by changes in the broader fundamentals of the United States economy. In the event that the United States economy contracts, it is likely that the financial results of small-to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, 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 portfolio companies will not be negatively impacted by economic cycles or other conditions, which could also have a negative impact on our future results.

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DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

 
  Twelve Months
Ended
December 31,
  Net Change  
 
  2015   2014   Amount   %  
 
  (dollars in thousands)
 

Total investment income

  $ 164,589   $ 140,763   $ 23,826     17 %

Total expenses

    (57,515 )   (45,227 )   (12,288 )   27 %

Net investment income

    107,074     95,536     11,538     12 %

Net realized gain (loss) from investments

    (21,316 )   23,206     (44,522 )      

Net change in net unrealized appreciation (depreciation) from:

                         

Portfolio investments

    11,048     (824 )   11,872        

SBIC debentures and marketable securities and idle funds          

    (1,056 )   (10,883 )   9,827        

Total net change in net unrealized appreciation (depreciation)

    9,992     (11,707 )   21,699        

Income tax benefit (provision)

    8,687     (6,287 )   14,974        

Net increase in net assets resulting from operations

  $ 104,437   $ 100,748   $ 3,689     4 %

 

 
  Twelve Months
Ended
December 31,
  Net Change  
 
  2015   2014   Amount   %  
 
  (dollars in thousands, except per
share amounts)

 

Net investment income

  $ 107,074   $ 95,536   $ 11,538     12 %

Share-based compensation expense

    6,262     4,215     2,047     49 %

Distributable net investment income(a)

  $ 113,336   $ 99,751   $ 13,585     14 %

Distributable net investment income per share—Basic and diluted(a)

  $ 2.31   $ 2.29   $ 0.02     1 %

(a)
Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share based compensation expense which is non cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share based compensation does not require settlement in cash. However, distributable net investment income is a non U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

        For the year ended December 31, 2015, total investment income was $164.6 million, a 17% increase over the $140.8 million of total investment income for the corresponding period of 2014. This comparable period increase was principally attributable to (i) a $21.0 million net increase in interest income primarily related to higher average levels of portfolio debt investments, (ii) a $0.7 million net increase in fee income and (iii) a $2.0 million net increase in dividend income from Investment

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Portfolio equity investments. The $23.8 million increase in total investment income in the year ended December 31, 2015 includes a decrease of $1.7 million primarily related to a decrease in interest income due to lower accelerated prepayment and repricing activity for certain Investment Portfolio debt investments when compared to the same period in 2014 and a decrease of $1.6 million related to dividend income activity from portfolio companies that is considered to be less consistent on a recurring basis during the period when compared to the same period in 2014.

        For the year ended December 31, 2015, total expenses increased to $57.5 million from $45.2 million for the corresponding period of 2014. This comparable period increase in operating expenses was principally attributable to (i) a $8.5 million increase in interest expense, primarily due to a $7.3 million increase as a result of the issuance of our 4.50% Notes in November 2014 and an increase of $0.8 million related to interest on the Credit Facility due to the higher average balance outstanding in 2015, both when compared to the prior year, and (ii) a $2.5 million increase in compensation expense related to increases in the number of personnel, base compensation levels and incentive compensation accruals, (iii) a $2.0 million increase in share-based compensation expense and (iv) a $1.5 million increase in general and other administrative expenses, with these increases partially offset by a $2.3 million increase in the expenses charged to the External Investment Manager (see further discussion in "Overview"), in each case when compared to the prior year. For the years ended December 31, 2015 and 2014, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.4%.

        For the year ended December 31, 2015, distributable net investment income increased 14% to $113.3 million, or $2.31 per share, compared with $99.8 million, or $2.29 per share, in the corresponding period of 2014. The increase in distributable net investment income was primarily due to the higher level of total investment income, partially offset by higher operating expenses as discussed above. Distributable net investment income on a per share basis for the year ended December 31, 2015 reflects (i) a decrease of approximately $0.05 per share from the comparable period in 2014 attributable to the net decrease in the comparable levels of accelerated prepayment and repricing activity for certain Investment Portfolio debt investments as discussed above, (ii) a decrease of approximately $0.04 per share attributable to the decrease in the dividend income that is considered to be less consistent on a recurring basis as discussed above and (iii) a greater number of average shares outstanding compared to the corresponding period in 2014 primarily due to the April 2014 and March 2015 equity offerings, the shares issued through the ATM Program (as defined in "—Liquidity and Capital Resources—Capital Resources" below) and shares issued pursuant to our dividend reinvestment plan.

        Net investment income for the year ended December 31, 2015 was $107.1 million, or a 12% increase, compared to net investment income of $95.5 million for the corresponding period of 2014. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses as discussed above.

        The net increase in net assets resulting from operations during the year ended December 31, 2015 was $104.4 million, or $2.13 per share, compared with $100.7 million, or $2.31 per share, during the year ended December 31, 2014. This increase from the prior year period was primarily the result of (i) a $11.5 million increase in net investment income as discussed above and (ii) a $21.7 million

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increase in net change in unrealized appreciation (depreciation) to net unrealized appreciation of $10.0 million for the year ended December 31, 2015 and (iii) a $15.0 million increase due to the change in the income tax benefit (provision) from the prior year period to an income tax benefit of $8.7 million for the year ended December 31, 2015, with these changes partially offset by a $44.5 million decrease due to the change in the net realized gain (loss) from investments from a net realized gain of $23.2 million during the year ended December 31, 2014 to a net realized loss of $21.3 million for the year ended December 31, 2015. The net realized loss of $21.3 million for the year ended December 31, 2015 was primarily the result of (i) the net realized losses relating to the restructure of two Private Loan investments totaling $13.8 million and two Middle Market investments totaling $9.1 million, (ii) the net realized loss on the exit of a Private Loan investment of $4.7 million and (iii) the exits of several Marketable securities and idle funds investments of $1.4 million, partially offset by the net realized gains on the exits of three LMM investments totaling $5.4 million and from an Other Portfolio investment of $2.5 million.

        The following table provides a summary of the total net unrealized appreciation of $10.0 million for the year ended December 31, 2015:

 
  Twelve Months Ended December 31, 2015  
 
  LMM(a)   MM   PL   Other(b)   Total  
 
  (dollars in millions)
 

Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized gains/losses recognized during period

  $ (5.0 ) $ 6.9   $ 13.1   $ (2.6 ) $ 12.4  

Net change in unrealized appreciation (depreciation) relating to portfolio investments

    48.4     (38.1 )   (22.8 )   11.2     (1.3 )

Total net change in unrealized appreciation (depreciation) relating to portfolio investments

  $ 43.4   $ (31.2 ) $ (9.7 ) $ 8.6   $ 11.1  

Net change in unrealized depreciation relating to marketable securities

                            (0.2 )

Unrealized depreciation relating to SBIC debentures(c)

                            (0.9 )

Total net change in unrealized appreciation (depreciation)

                          $ 10.0  

(a)
LMM includes unrealized appreciation on 36 LMM portfolio investments and unrealized depreciation on 21 LMM portfolio investments.

(b)
Other includes $11.7 million of unrealized appreciation relating to the External Investment Manager, offset by $0.5 million of net unrealized depreciation relating to the Other Portfolio.

(c)
Relates to unrealized depreciation on the SBIC debentures held by MSC II which are accounted for on a fair value basis.

        The income tax benefit for the year ended December 31, 2015 of $8.7 million principally consisted of a deferred tax benefit of $11.7 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in net operating loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book tax differences, partially offset by other current taxes of $3.0 million, which includes $1.8 million related to accruals for U.S. federal income, state and other taxes and $1.2 million for excise taxes.

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  Twelve Months
Ended
December 31,
  Net Change  
 
  2014   2013   Amount   %  
 
  (dollars in thousands)
 

Total investment income

  $ 140,763   $ 116,497   $ 24,266     21 %

Total expenses

    (45,227 )   (41,074 )   (4,153 )   10 %

Net investment income

    95,536     75,423     20,113     27 %

Net realized gain (loss) from investments

    23,206     7,277     15,929     219 %

Net realized loss from SBIC debentures

        (4,775 )   4,775        

Net change in net unrealized appreciation (depreciation) from:

                         

Portfolio investments

    (824 )   16,155     (16,979 )      

SBIC debentures and marketable securities and idle funds

    (10,883 )   2,740     (13,623 )      

Total net change in net unrealized appreciation (depreciation)

    (11,707 )   18,895     (30,602 )      

Income tax benefit (provision)

    (6,287 )   35     (6,322 )      

Net increase in net assets resulting from operations

  $ 100,748   $ 96,855   $ 3,893     4 %

 

 
  Twelve Months
Ended
December 31,
  Net Change  
 
  2014   2013   Amount   %  
 
  (dollars in thousands, except per
share amounts)

 

Net investment income

  $ 95,536   $ 75,423   $ 20,113     27 %

Share-based compensation expense

    4,215     4,210     5     0 %

Distributable net investment income(a)

  $ 99,751   $ 79,633   $ 20,118     25 %

Distributable net investment income per share—Basic and diluted(a)

  $ 2.29   $ 2.17   $ 0.12     6 %

(a)
Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share based compensation expense which is non cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share based compensation does not require settlement in cash. However, distributable net investment income is a non U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

        For the year ended December 31, 2014, total investment income was $140.8 million, a 21% increase over the $116.5 million of total investment income for the corresponding period of 2013. This comparable period increase was principally attributable to (i) a $15.9 million increase in interest income from higher average levels of portfolio debt investments, (ii) an $8.1 million increase in dividend income from Investment Portfolio equity investments and (iii) a $0.8 million increase in fee income

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from higher origination activity and refinancing and prepayment activity, partially offset by a $0.6 million decrease in interest and dividend income due to a lower level of Marketable securities and idle funds investments. The $24.3 million increase in total investment income in the year ended December 31, 2014 includes a $1.3 million net decrease in investment income related to accelerated prepayment and repricing activity for certain Investment Portfolio debt investments and Marketable securities and idle funds investments and $1.6 million of unusual dividend income.

        For the year ended December 31, 2014, total expenses increased to $45.2 million from $41.1 million for the corresponding period of 2013. This comparable period increase in operating expenses was principally attributable to (i) a $3.4 million increase in interest expense, primarily as a result of (a) the issuance of our 6.125% Notes due 2023 (the "6.125% Notes") in April 2013, (b) the issuance of our 4.50% Notes due 2019 (the "4.50% Notes") in November 2014 and (c) a higher average outstanding balance on our credit facility ("Credit Facility") when compared to prior year, partially offset by a decrease in interest expense from our SBIC debentures due to a lower average interest rate, in both cases when compared to the prior year, (ii) a $1.0 million increase in compensation expense related to increases in the number of personnel, base compensation and other incentive compensation accruals and (iii) a $1.8 million increase related to other general and administrative expenses, partially offset by (i) a $2.0 million decrease in expenses related to the expenses charged to the External Investment Manager (see further discussion in "Overview"), in each case when compared to the prior year. Share-based compensation expense was $4.2 million for 2014, which is unchanged from 2013, due to the net effect of the non-recurring accelerated vesting of restricted stock of our retired Executive Vice Chairman in 2013, which resulted in additional share-based compensation expense of $1.3 million in the prior year, which was offset by an increase of $1.3 million related to non-cash amortization for the vesting of restricted share grants in 2014. For the year ended December 31, 2014, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.4% compared to 1.7% for the year ended December 31, 2013 (the prior year comparison excluding the effect of the accelerated vesting as discussed above). Including the effect of the accelerated vesting of restricted stock, the ratio would have been 1.8% for the year ended December 31, 2013.

        Distributable net investment income increased 25% to $99.8 million, or $2.29 per share, compared with $79.6 million, or $2.17 per share, in the corresponding period of 2013. The increase in distributable net investment income was primarily due to the higher level of total investment income partially offset by higher operating expenses, due to the changes discussed above. Distributable net investment income on a per share basis for the year ended December 31, 2014 reflects (i) a decrease of approximately $0.06 per share from the comparable period in 2013 attributable to the net decrease in the comparable levels of accelerated prepayment and repricing activity for certain investment portfolio debt investments, (ii) approximately $0.04 per share attributable to the unusual dividend income as discussed above and (iii) a greater number of average shares outstanding compared to the corresponding period in 2013 primarily due to the August 2013 and April 2014 follow-on equity offerings.

        Net investment income for the year ended December 31, 2014 was $95.5 million, or a 27% increase, compared to net investment income of $75.4 million for the corresponding period of 2013. The increase in net investment income was principally attributable to the increase in total investment income partially offset by higher operating expenses as discussed above.

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        The net increase in net assets resulting from operations during the year ended December 31, 2014 was $100.7 million, or $2.31 per share, compared with $96.9 million, or $2.65 per share, during the year ended December 31, 2013. This increase from the prior year was primarily the result of (i) a $20.1 million increase in net investment income and (ii) a $15.9 million increase in the net realized gain (loss) from investments and (iii) the $4.8 million decrease in the net realized loss from SBIC debentures, partially offset by (i) a $30.6 million decrease in net change in unrealized appreciation (depreciation) to $11.7 million of net unrealized depreciation for the year ended December 31, 2014 compared to $18.9 million of net unrealized appreciation in the prior year and (ii) a $6.3 million increase in the income tax provision from the prior year. The net realized gain from investments of $23.2 million during the year ended December 31, 2014 was primarily attributable to (i) $27.1 million of realized gains recognized on the exits of four LMM portfolio investments in 2014 and (ii) net realized gains on several Middle Market investments totaling $2.0 million, partially offset by a net realized loss of $6.5 million in conjunction with a change in control transaction involving a LMM portfolio company in the second quarter of 2014.

        The following table provides a summary of the total net change in unrealized depreciation of $11.7 million for the year ended December 31, 2014:

 
  Twelve Months Ended December 31, 2014  
 
  LMM(a)   MM   PL   Other(b)   Total  
 
  (dollars in millions)
 

Accounting reversals of net unrealized appreciation recognized in prior periods due to net realized gains/losses recognized during period

  $ (16.0 ) $ (3.5 ) $ (0.9 ) $ (0.3 ) $ (20.7 )

Net change in unrealized appreciation (depreciation) relating to portfolio investments

    33.7     (18.7 )   (9.9 )   14.8     19.9  

Total net change in unrealized appreciation (depreciation) relating to portfolio investments

  $ 17.7   $ (22.2 ) $ (10.8 ) $ 14.5   $ (0.8 )

Net change in unrealized depreciation relating to marketable securities

                             

Unrealized depreciation relating to SBIC debentures(c)

                            (10.9 )

Total net change in unrealized depreciation

                          $ (11.7 )

(a)
LMM includes unrealized appreciation on 39 LMM portfolio investments and unrealized depreciation on 12 LMM portfolio investments.

(b)
Other includes $14.5 million of unrealized appreciation relating to the External Investment Manager and $0.3 million of net unrealized appreciation relating to the Other Portfolio.

(c)
Relates to unrealized depreciation on the SBIC debentures held by MSC II which are accounted for on a fair value basis.

        The income tax provision for the year ended December 31, 2014 of $6.3 million principally consisted of deferred taxes of $3.3 million, which is primarily the result of the impact on deferred taxes related to the utilization of net operating losses and net unrealized appreciation on our portfolio investments held in our Taxable Subsidiaries, and other taxes of $3.0 million, which includes a $1.4 million accrual for excise tax on our estimated spillover taxable income and $1.6 million related to accruals for state and other taxes.

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        For the year ended December 31, 2015, we experienced a net decrease in cash and cash equivalents in the amount of $40.1 million, which is the net result of $131.4 million of cash used for our operating activities and $91.3 million of cash provided by financing activities.

        During the period, we used $131.4 million of cash for our operating activities, which resulted primarily from (i) cash flows we generated from the operating profits earned through our operating activities totaling $101.8 million, which is our $113.3 million of distributable net investment income, excluding the non-cash effects of the accretion of unearned income of $8.9 million, payment-in-kind interest income of $3.6 million, cumulative dividends of $1.6 million and the amortization expense for deferred financing costs of $2.6 million, (ii) cash uses totaling $848.0 million which primarily resulted from (a) the funding of new portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2014, which together total $838.4 million, (b) the funding of new Marketable securities and idle funds investments totaling $5.8 million, (c) $2.3 million related to decreases in payables and accruals and (d) increases in other assets of $1.5 million, and (iii) cash proceeds totaling $614.8 million from (a) $605.3 million in cash proceeds from the repayments of debt investments and sales of equity investments in portfolio companies and (b) $9.5 million of cash proceeds from the sale of Marketable securities and idle funds investments.

        During the year ended December 31, 2015, $91.3 million in cash was provided by financing activities, which principally consisted of (i) $132.0 million in net cash proceeds from a public equity offering in March 2015 and through equity issuances under the ATM Program in the fourth quarter of 2015 and (ii) $73.0 million in net cash proceeds from the Credit Facility, partially offset by (iii) $110.7 million in cash dividends paid to stockholders and (iv) $3.0 million for payment of deferred loan costs, SBIC debenture fees and other costs.

        For the year ended December 31, 2014, we experienced a net increase in cash and cash equivalents in the amount of $25.7 million, which is the net result of $190.9 million of cash used for our operating activities and $216.6 million provided by financing activities.

        During the period, we used $190.9 million of cash for our operating activities, which resulted primarily from (i) cash flows we generated from the ordinary operating profits earned through our operating activities totaling $84.5 million, which is our $99.8 million of distributable net investment income, excluding the non-cash effects of the accretion of unearned income of $10.5 million, payment-in-kind interest income of $4.7 million, cumulative dividends of $1.8 million and the amortization expense for deferred financing costs of $1.7 million, (ii) cash uses totaling $858.2 million from (a) the funding of new portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2013, which together total $831.2 million, (b) the funding of new Marketable securities and idle funds investments and settlement of accruals for Marketable securities and idle funds investments existing as of December 31, 2013, which together total $22.7 million and (c) increases in other assets of $4.3 million, and (iii) cash proceeds totaling $582.8 million from (a) $554.7 million in cash proceeds from the repayments of debt investments and sales of equity investments in portfolio companies, (b) $27.0 million of cash proceeds from the sale of Marketable securities and idle funds investments and (c) $1.1 million related to increases in payables and accruals.

        During 2014, $216.6 million in cash was provided by financing activities, which principally consisted of (i) $175.0 million in proceeds from the issuance of the 4.50% Notes in November 2014, (ii) $139.7 million in net cash proceeds from a follow-on public equity offering in April 2014 and (iii) $24.8 million in cash proceeds from the issuance of SBIC debentures, partially offset by (i) $95.9 million in cash dividends paid to stockholders, (ii) $19.0 million in net cash repayments of the

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Credit Facility, (iii) $6.4 million in loan costs associated with our SBIC debentures, the 4.50% Notes and the Credit Facility and (iv) $1.5 million in other costs.

        As of December 31, 2015, we had $20.3 million in cash and cash equivalents, $3.7 million in Marketable securities and idle funds investments and $264.0 million of unused capacity under the Credit Facility, which we maintain to support our investment and operating activities. As of December 31, 2015, our net asset value totaled $1,070.9 million, or $21.24 per share.

        The Credit Facility, which provides additional liquidity to support our investment and operational activities, provides for commitments from a diversified group of fourteen lenders. The Credit Facility was amended during 2015 to change the total commitments to $555.0 million, increase the accordion feature of the Credit Facility from $650.0 million to $750.0 million, increase the amount of unsecured debt we are permitted to incur, providing us additional financial flexibility in our capital structure, decrease the interest rate to the rates described below and to extend the maturity one year to September 2020. The accordion feature allows Main Street to increase the total commitments under the facility from new and existing lenders on the same terms and conditions as the existing commitments.

        Borrowings under the Credit Facility bear interest, subject to our election, on a per annum basis at a rate equal to the applicable LIBOR rate (0.24% as of December 31, 2015) plus (i) 1.875% (or the applicable base rate (Prime Rate of 3.50% as of December 31, 2015) plus 0.875%), as long as we maintain an investment grade rating and meet certain agreed upon excess collateral and maximum leverage requirements, (ii) 2.0% (or the applicable base rate plus 1.0%) if we maintain an investment grade rating but do not meet certain excess collateral and maximum leverage requirements or (iii) 2.25% (or the applicable base rate plus 1.25%), if we do not maintain an investment grade rating. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. The Credit Facility contains certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio of at least 1.5 to 1.0, and (iv) maintaining a minimum tangible net worth. The Credit Facility is provided on a revolving basis through its final maturity date in September 2020, and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval. As of December 31, 2015, we had $291.0 million in borrowings outstanding under the Credit Facility, the interest rate on the Credit Facility was 2.1% and we were in compliance with all financial covenants of the Credit Facility.

        Due to each of the Funds' status as a licensed SBIC, we have the ability to issue, through the Funds, debentures guaranteed by the SBA at favorable interest rates and favorable terms and conditions. In addition, in December 2015, the 2016 omnibus spending bill approved by Congress and signed into law by the President increased the amount of SBA-guaranteed debentures that affiliated SBIC funds can have outstanding from $225.0 million to $350.0 million. This new legislation may allow us to issue additional SBIC debentures, subject to SBA approval, above the $225.0 million that we, through the Funds, have outstanding as of December 31, 2015. Debentures guaranteed by the SBA have fixed interest rates that equal prevailing 10-year Treasury Note rates plus a market spread and have a maturity of ten years with interest payable semi-annually. The principal amount of the debentures is not required to be paid before maturity, but may be pre-paid at any time with no prepayment penalty. On December 31, 2015, through our two wholly owned SBICs, we had $225.0 million of outstanding SBIC debentures guaranteed by the SBA, which bear a weighted-average annual fixed interest rate of approximately 4.2%, paid semi-annually, and mature ten years from

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issuance. The first maturity related to our SBIC debentures does not occur until 2017, and the remaining weighted-average duration is approximately 5.6 years as of December 31, 2015.

        In April 2013, we issued $92.0 million, including the underwriters' full exercise of their over-allotment option, in aggregate principal amount of the 6.125% Notes. The 6.125% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at our option on or after April 1, 2018. We may from time to time repurchase 6.125% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2015, the outstanding balance of the 6.125% Notes was $90.7 million.

        The indenture governing the 6.125% Notes (the "6.125% Notes Indenture") contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 6.125% Notes and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 6.125% Notes Indenture.

        In November 2014, we issued $175.0 million in aggregate principal amount of the 4.50% Notes at an issue price of 99.53%. The 4.50% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes mature on December 1, 2019, and may be redeemed in whole or in part at any time at our option subject to certain make whole provisions. The 4.50% Notes bear interest at a rate of 4.50% per year payable semi-annually on June 1 and December 1 of each year, beginning June 1, 2015. We may from time to time repurchase 4.50% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2015, the outstanding balance of the 4.50% Notes was $175.0 million.

        The indenture governing the 4.50% Notes (the "4.50% Notes Indenture") contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 4.50% Notes and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes Indenture.

        During April 2014, we completed a follow-on public equity offering of 4,600,000 shares of common stock, including the underwriters' full exercise of their option to purchase 600,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by us, of approximately $139.7 million.

        During March 2015, we completed a follow-on public equity offering of 4,370,000 shares of common stock, including the underwriters' full exercise of their option to purchase 570,000 additional

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shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by us, of approximately $127.8 million.

        During November 2015, we entered into a program (the "ATM Program") with underwriters through which we could sell, by means of at-the-market offerings from time to time, up to 1,000,000 shares of our common stock. During the fourth quarter of 2015, we sold 140,568 shares of our common stock at a weighted-average price of $31.98 per share and raised $4.5 million of gross proceeds under the ATM Program. Net proceeds were $4.3 million after commissions to the underwriter on shares sold and offering costs. As of December 31, 2015, 859,432 shares were available for sale under the ATM Program.

        We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, the liquidation of Marketable securities and idle funds investments, and a combination of future debt and equity capital. Our primary uses of funds will be investments in portfolio companies, operating expenses and cash distributions to holders of our common stock.

        We periodically invest excess cash balances into Marketable securities and idle funds investments. The primary investment objective of Marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our LMM, Middle Market and Private Loan portfolio investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments. The composition of Marketable securities and idle funds investments will vary in a given period based upon, among other things, changes in market conditions, the underlying fundamentals in our Marketable securities and idle funds investments, our outlook regarding future LMM, Middle Market and Private Loan portfolio investment needs, and any regulatory requirements applicable to us.

        If our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price unless our stockholders approve such a sale and our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2015 annual meeting of stockholders because our common stock price per share had been trading significantly above the current net asset value per share of our common stock, and we do not currently expect to seek such approval at our 2016 annual meeting of stockholders for the same reason. We would therefore need future approval from our stockholders to issue shares below the then current net asset value per share.

        In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to spillover certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income. In addition, as a BDC, we generally are required to meet a coverage ratio of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200%. This requirement limits the amount that we may borrow. In January 2008, we received an exemptive order from the SEC to exclude SBA guaranteed debt securities issued by MSMF and any other wholly owned subsidiaries of ours which operate as SBICs from the asset coverage requirements of the 1940 Act as applicable to us, which, in turn, enables us to fund more investments with debt capital.

        Although we have been able to secure access to additional liquidity, including recent public equity and historical debt offerings, our $555.0 million Credit Facility, and the available leverage through the SBIC program, there is no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all.

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        In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-9 supersedes the revenue recognition requirements under ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. The FASB tentatively decided to defer the effective date of the new revenue standard for public entities under U.S. GAAP for one year. If finalized, the new guidance will be effective for the annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. Early adoption would be permitted for annual reporting periods beginning after December 15, 2016. We are currently evaluating the impact the adoption of this new accounting standard will have on our consolidated financial statements.

        In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The impact of the adoption of this new accounting standard on our consolidated financial statements is currently being evaluated.

        In May 2015, the FASB issued ASU 2015-07, Fair Value Measurements—Disclosures for Certain Entities that Calculate Net Asset Value per Share. This amendment updates guidance intended to eliminate the diversity in practice surrounding how investments measured at net asset value under the practical expedient with future redemption dates have been categorized in the fair value hierarchy. Under the updated guidance, investments for which fair value is measured at net asset value per share using the practical expedient should no longer be categorized in the fair value hierarchy, while investments for which fair value is measured at net asset value per share but the practical expedient is not applied should continue to be categorized in the fair value hierarchy. The updated guidance requires retrospective adoption for all periods presented and is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. The impact of the adoption of this new accounting standard on our consolidated financial statements is currently being evaluated.

        From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are not yet effective will not have a material impact on our financial statements upon adoption.

        Inflation has not had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, and may in the future

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experience, the impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials and third party services and required energy consumption.

        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. These instruments include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At December 31, 2015, we had a total of $144.3 million in outstanding commitments comprised of (i) 27 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) nine investments with capital commitments that had not been fully called.

        As of December 31, 2015, the future fixed commitments for cash payments in connection with our SBIC debentures and the 4.50% Notes and the 6.125% Notes for each of the next five years and thereafter are as follows:

 
  2016   2017   2018   2019   2020 and
thereafter
  Total  
 
  (dollars in thousands)
 

SBIC debentures

  $   $ 15,000   $ 10,200   $ 20,000   $ 179,800   $ 225,000  

Interest due on SBIC debentures

    9,446     9,423     8,130     7,807     17,601     52,407  

Notes 6.125%

                    90,738     90,738  

Interest due on 6.125% Notes

    4,168     5,558     5,558     5,558     19,452     40,294  

4.50% Notes

                175,000         175,000  

Interest due on 4.50% Notes

    7,875     7,875     7,875     7,875         31,500  

Total

  $ 21,489   $ 37,856   $ 31,763   $ 216,240   $ 307,591   $ 614,939  

        As of December 31, 2015, we had $291.0 million in borrowings outstanding under our Credit Facility, and the Credit Facility is currently scheduled to mature in September 2020. The Credit Facility contains two, one-year extension options which could extend the maturity to September 2022. See further discussion of the Credit Facility terms in "—Liquidity and Capital Resources—Capital Resources".

        As discussed further above, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of our Investment Portfolio. At December 31, 2015, we had a receivable of $2.0 million due from the External Investment Manager which included approximately $1.3 million primarily related to operating expenses incurred by us as required to support the External Investment Manager's business, along with dividends declared but not paid by the External Investment Manager of approximately $0.7 million.

        In June 2013, our board of directors approved and adopted the Deferred Compensation Plan for Non-Employee Directors (the "2013 Deferred Compensation Plan") for the non-employee members of our board of directors, which allowed the directors at their option to defer all or a portion of the fees paid for their services as directors and have such deferred fees paid in shares of our common stock within 90 days after the participant's end of service as a director. As of December 31, 2015, $1.1 million of directors' fees had been deferred under this plan. These deferred fees represented 34,645 shares of our common shares. These shares will not be issued or included as outstanding on the consolidated statement of changes in net assets until each applicable participant's end of service as a

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director, but are included in operating expenses and weighted-average shares outstanding on our consolidated statement of operations as earned.

        In November 2015, our board of directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the "2015 Deferred Compensation Plan"). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the 2013 Deferred Compensation Plan. Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units.


SENIOR SECURITIES

        Information about our senior securities is shown in the following table as of December 31 for the years indicated in the table, unless otherwise noted. Grant Thornton LLP's report on the senior securities table as of December 31, 2015, is an exhibit to the registration statement of which this prospectus is a part.

Class and Year
  Total Amount
Outstanding
Exclusive of
Treasury
Securities(1)
  Asset
Coverage
per Unit(2)
  Involuntary
Liquidating
Preference
per Unit(3)
  Average
Market Value
per Unit(4)
 
 
  (dollars
in thousands)

   
   
   
 

SBIC Debentures

                         

2007

  $ 55,000     3,094         N/A  

2008

    55,000     3,043         N/A  

2009

    65,000     2,995         N/A  

2010

    180,000     2,030         N/A  

2011

    220,000     2,202         N/A  

2012

    225,000     2,763         N/A  

2013

    200,200     2,476         N/A  

2014

    225,000     2,323         N/A  

2015

    225,000     2,368         N/A  

Credit Facility

                         

2010

  $ 39,000     2,030         N/A  

2011

    107,000     2,202         N/A  

2012

    132,000     2,763         N/A  

2013

    237,000     2,476         N/A  

2014

    218,000     2,323         N/A  

2015

    291,000     2,368         N/A  

6.125% Notes

                         

2013

  $ 90,882     2,476       $ 24.35  

2014

    90,823     2,323           24.78  

2015

    90,738     2,368         25.40  

4.50% Notes

                         

2014

  $ 175,000     2,323         N/A  

2015

    175,000     2,368         N/A  

(1)
Total amount of each class of senior securities outstanding at the end of the period presented.

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(2)
Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.

(3)
The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. The "—" indicates information which the Securities and Exchange Commission expressly does not require to be disclosed for certain types of senior securities.

(4)
Average market value per unit for our 6.125% Notes represents the average of the daily closing prices as reported on the NYSE during the period presented. Average market value per unit for our SBIC Debentures, Credit Facility and 4.50% Notes are not applicable because these are not registered for public trading.

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BUSINESS

Organization

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF") and Main Street Capital II, LP ("MSC II" and, together with MSMF, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receive fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser ("RIA") under Investment Advisers Act of 1940, as amended (the "Advisers Act"). Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that it distributes to its stockholders.

        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes. The External Investment Manager and Main Street Capital Partners, LLC, ("MSCP") are also direct wholly owned subsidiaries that have elected to be taxable entities. The Taxable Subsidiaries, MSCP and the External Investment Manager are each taxed at their normal corporate tax rates based on their taxable income.

        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries and, beginning April 1, 2013, MSCP.

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        The following diagram depicts Main Street's organizational structure:

GRAPHIC


*
Each of the Taxable Subsidiaries is directly or indirectly wholly owned by MSCC.

**
Accounted for as a portfolio investment at fair value, as opposed to a consolidated subsidiary.

Overview of our Business

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $15 million. Our private loan ("Private Loan") portfolio investments are primarily debt securities which have been originated through strategic relationships with other investment funds on a collaborative basis. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio.

        We seek to fill the financing gap for LMM businesses, which, historically, have had more limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company's capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a "one stop" financing solution. Providing customized, "one stop" financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date. We believe that our LMM investment strategy has limited correlation to the broader debt and equity markets.

        Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest bearing debt securities in privately held companies that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

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        Our Private Loan portfolio investments are primarily debt securities which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Our external asset management business is conducted through our External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we provide management and other services to the External Investment Manager, as well as access to our employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, we began charging the External Investment Manager for these services.

        Our portfolio investments are generally made through MSCC and the Funds. MSCC and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes (see "Regulation"). An investor's return in MSCC will depend, in part, on the Funds' investment returns as they are wholly owned subsidiaries of MSCC.

        The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

        Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio.

        During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-publicly traded BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining

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required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income.

        During April 2014, we received an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide it an incentive to allocate opportunities to HMS Income instead of us.

Business Strategies

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and realizing capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We have adopted the following business strategies to achieve our investment objective:

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Investment Criteria

        Our investment team has identified the following investment criteria that it believes are important in evaluating prospective portfolio companies. Our investment team uses these criteria in evaluating investment opportunities. However, not all of these criteria have been, or will be, met in connection with each of our investments:

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Investment Portfolio

        The Investment Portfolio, as used herein, refers to all of our investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments, and the investment in the External Investment Manager, but excludes all "Marketable securities and idle funds investments". Our LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments that we originate on a collaborative basis with other investment funds, and are often referred to in the debt markets as "club deals." Our Other Portfolio investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Historically, we have made LMM debt investments principally in the form of single tranche debt. Single tranche debt financing involves issuing one debt security that blends the risk and return profiles of both first-lien secured and subordinated debt. We believe that single tranche debt is more appropriate for many LMM companies given their size in order to reduce structural complexity and potential conflicts among creditors.

        Our LMM debt investments generally have a term of five to seven years from the original investment date, with limited required amortization prior to maturity, and provide for monthly or quarterly payment of interest at fixed interest rates generally between 10% and 14% per annum, payable currently in cash. In some instances, we have provided floating interest rates for our single tranche debt securities. In addition, certain LMM debt investments may have a form of interest that is not paid currently but is accrued and added to the loan balance and paid at maturity. We refer to this form of interest as payment-in-kind, or PIK, interest. We typically structure our LMM debt investments with the maximum seniority and collateral that we can reasonably obtain while seeking to achieve our total return target. In most cases, our LMM debt investment will be collateralized by a first priority lien on substantially all the assets of the portfolio company. In addition to seeking a senior lien position in the capital structure of our LMM portfolio companies, we seek to limit the downside potential of our LMM debt investments by negotiating covenants that are designed to protect our LMM debt investments while affording our portfolio companies as much flexibility in managing their businesses as is reasonable. Such restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control or change of management provisions, key-man life insurance, guarantees, equity pledges, personal guaranties, where appropriate, and put rights. In addition, we typically seek board representation or observation rights in all of our LMM portfolio companies.

        While we will continue to focus our LMM debt investments primarily on single tranche debt investments, we also anticipate structuring some of our debt investments as mezzanine loans. We anticipate that these mezzanine loans will be primarily junior secured or unsecured, subordinated loans that provide for relatively high fixed interest rates payable currently in cash that will provide us with significant interest income plus the additional opportunity for income and gains through PIK interest and equity warrants and other similar equity instruments issued in conjunction with these mezzanine loans. These loans typically will have interest-only payments in the early years, with amortization of principal deferred to the later years of the mezzanine loan term. Typically, our mezzanine loans will

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have maturities of three to five years. We will generally target fixed interest rates of 12% to 14%, payable currently in cash for our mezzanine loan investments with higher targeted total returns from equity warrants or PIK interest.

        We also pursue debt investments in Middle Market companies. Our Middle Market portfolio investments primarily consist of direct investments or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. The debt investments in our Middle Market portfolio have rights and protections that are similar to those in our LMM debt investments, which may include affirmative and negative covenants, default penalties, lien protection, change of control provisions, guarantees and equity pledges. The Middle Market debt investments generally have floating interest rates at LIBOR plus a margin, and are typically subject to LIBOR floors.

        Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments which have been originated through strategic relationships with other investment funds on a collaborative basis. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien and typically have a term of between three and seven years from the original investment date.

        In connection with a portion of our LMM debt investments, we have historically received equity warrants to establish or increase our equity interest in the LMM portfolio company. Warrants we receive in connection with a LMM debt investment typically require only a nominal cost to exercise, and thus, as a LMM portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We typically structure the warrants to provide provisions protecting our rights as a minority-interest holder, as well as secured or unsecured put rights, or rights to sell such securities back to the LMM portfolio company, upon the occurrence of specified events. In certain cases, we also may obtain registration rights in connection with these equity interests, which may include demand and "piggyback" registration rights.

        We also will seek to make direct equity investments in situations where it is appropriate to align our interests with key management and stockholders of our LMM portfolio companies, and to allow for participation in the appreciation in the equity values of our LMM portfolio companies. We usually make our direct equity investments in connection with debt investments. In addition, we may have both equity warrants and direct equity positions in some of our LMM portfolio companies. We seek to maintain fully diluted equity positions in our LMM portfolio companies of 5% to 50%, and may have controlling equity interests in some instances. We have a value orientation toward our direct equity investments and have traditionally been able to purchase our equity investments at reasonable valuations.

Investment Process

        Our investment committee is responsible for all aspects of our LMM investment process. The current members of our investment committee are Vincent D. Foster, our Chairman and Chief Executive Officer, Dwayne L. Hyzak, our President, Chief Operating Officer and Senior Managing

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Director, Curtis L. Hartman, our Vice Chairman, Chief Credit Officer and Senior Managing Director, and David Magdol, our Vice Chairman, Chief Investment Officer and Senior Managing Director.

        Our credit committee is responsible for all aspects of our Middle Market portfolio investment process. The current members of our credit committee are Messrs. Foster, Hartman and Rodger A. Stout, our Executive Vice President.

        Investment process responsibility for each Private Loan portfolio investment is delegated to either the investment committee or the credit committee based upon the nature of the investment and the manner in which it was originated. Similarly, the investment processes for each Private Loan portfolio investment, from origination to close and to eventual exit, will follow the processes for our LMM portfolio investments or our Middle Market portfolio investments as outlined below, or a combination thereof.

        Our investment strategy involves a "team" approach, whereby potential transactions are screened by several members of our investment team before being presented to the investment committee or the credit committee, as applicable. Our investment committee and credit committee each meet on an as needed basis depending on transaction volume. We generally categorize our investment process into seven distinct stages:

        Deal generation and origination is maximized through long-standing and extensive relationships with industry contacts, brokers, commercial and investment bankers, entrepreneurs, service providers such as lawyers, financial advisors, accountants and current and former portfolio companies and investors. Our investment team has focused its deal generation and origination efforts on LMM and Middle Market companies, and we have developed a reputation as a knowledgeable, reliable and active source of capital and assistance in these markets.

        During the screening process, if a transaction initially meets our investment criteria, we will perform preliminary due diligence, taking into consideration some or all of the following information:

        Upon successful screening of a proposed LMM transaction, the investment team makes a recommendation to our investment committee. If our investment committee concurs with moving forward on the proposed LMM transaction, we typically issue a non-binding term sheet to the company. For Middle Market portfolio investments, the initial term sheet is typically issued by the borrower, through the syndicating bank, and is screened by the investment team which makes a recommendation to our credit committee.

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        For proposed LMM transactions, the non-binding term sheet will include the key economic terms based upon our analysis performed during the screening process as well as a proposed timeline and our qualitative expectation for the transaction. While the term sheet for LMM investments is non-binding, we typically receive an expense deposit in order to move the transaction to the due diligence phase. Upon execution of a term sheet, we begin our formal due diligence process.

        For proposed Middle Market transactions, the initial term sheet will include key economic terms and other conditions proposed by the borrower and its representatives and the proposed timeline for the investment, which are reviewed by our investment team to determine if such terms and conditions are in agreement with our investment objectives.

        Due diligence on a proposed LMM investment is performed by a minimum of two of our investment professionals, whom we refer to collectively as the investment team, and certain external resources, who together conduct due diligence to understand the relationships among the prospective portfolio company's business plan, operations and financial performance. Our LMM due diligence review includes some or all of the following:

        Due diligence on a proposed Middle Market investment is generally performed on materials and information obtained from certain external resources and assessed internally by a minimum of two of our investment professionals, who work to understand the relationships among the prospective portfolio company's business plan, operations and financial performance using the accumulated due diligence information. Our Middle Market due diligence review includes some or all of the following:

        During the due diligence process, significant attention is given to sensitivity analyses and how the company might be expected to perform given downside, base-case and upside scenarios. In certain cases, we may decide not to make an investment based on the results of the diligence process.

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        Upon completion of a satisfactory due diligence review of a proposed LMM portfolio investment, the investment team presents the findings and a recommendation to our investment committee. The presentation contains information which can include, but is not limited to, the following:

        Upon completion of a satisfactory due diligence review of a proposed Middle Market portfolio investment, the investment team presents the findings and a recommendation to our credit committee. The presentation contains information which can include, but is not limited to, the following:

        If any adjustments to the transaction terms or structures are proposed by the investment committee or credit committee, as applicable, such changes are made and applicable analyses are updated prior to approval of the transaction. Approval for the transaction must be made by the affirmative vote from a majority of the members of the investment committee or credit committee, as applicable, with the committee member managing the transaction, if any, abstaining from the vote.

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Upon receipt of transaction approval, we will re-confirm regulatory compliance, process and finalize all required legal documents, and fund the investment.

        We continuously monitor the status and progress of the portfolio companies. We generally offer managerial assistance to our portfolio companies, giving them access to our investment experience, direct industry expertise and contacts. The same investment team that was involved in the investment process will continue its involvement in the portfolio company post-investment. This provides for continuity of knowledge and allows the investment team to maintain a strong business relationship with key management of our portfolio companies for post-investment assistance and monitoring purposes. As part of the monitoring process of LMM portfolio investments, the investment team will analyze monthly and quarterly financial statements versus the previous periods and year, review financial projections, meet and discuss issues or opportunities with management, attend board meetings and review all compliance certificates and covenants. While we maintain limited involvement in the ordinary course operations of our LMM portfolio companies, we maintain a higher level of involvement in non-ordinary course financing or strategic activities and any non-performing scenarios. We also monitor the performance of our Middle Market portfolio investments; however, due to the larger size and higher sophistication level of these Middle Market companies in comparison to our LMM portfolio companies, it is not necessary or practical to have as much direct management interface.

        We utilize an internally developed investment rating system to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including, but not limited to, each investment's expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company's future outlook and other factors that are deemed to be significant to the portfolio company.

        All new LMM portfolio investments receive an initial Investment Rating of 3.

        While we generally exit most investments through the refinancing or repayment of our debt and redemption of our equity positions, we typically assist our LMM portfolio companies in developing and planning exit opportunities, including any sale or merger of our portfolio companies. We may also assist in the structure, timing, execution and transition of the exit strategy. The refinancing or repayment of Middle Market debt investments typically does not require our assistance due to the additional resources available to these larger, Middle Market companies.

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Determination of Net Asset Value and Investment Portfolio Valuation Process

        We determine the net asset value per share of our common stock on a quarterly basis. The net asset value per share is equal to our total assets minus liabilities and any noncontrolling interests outstanding divided by the total number of shares of common stock outstanding.

        We are required to report our investments at fair value. As a result, the most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We follow the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("Codification" or "ASC") 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

        We determine in good faith the fair value of our Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by our Board of Directors and in accordance with the 1940 Act. Our valuation policies and processes are intended to provide a consistent basis for determining the fair value of our Investment Portfolio. See "Note B.1.—Valuation of the Investment Portfolio" in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

        Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

        As described below, we undertake a multi-step valuation process each quarter in connection with determining the fair value of our investments, with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our determination of the fair value for our Investment Portfolio and our valuation procedures, consistent with 1940 Act requirements. In addition, the Audit Committee of our Board of Directors periodically evaluates the performance and methodologies of the financial advisory services firm that we consult in connection with valuing our LLM portfolio company investments.

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        Determination of fair value involves subjective judgments and estimates. The notes to our financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial results and financial condition.

Competition

        We compete for investments with a number of investment funds (including private equity funds, mezzanine funds, BDCs, and SBICs), as well as traditional financial services companies such as commercial banks and other sources of financing. Many of the entities that compete with us are larger and have more resources available to them. We believe we are able to be competitive with these entities primarily on the basis of our focus toward the underserved LMM, the experience and contacts of our management team, our responsive and efficient investment analysis and decision-making processes, our comprehensive suite of customized financing solutions and the investment terms we offer.

        We believe that some of our competitors make senior secured loans, junior secured loans and subordinated debt investments with interest rates and returns that are comparable to or lower than the rates and returns that we target. Therefore, we do not seek to compete primarily on the interest rates and returns that we offer to potential portfolio companies. For additional information concerning the competitive risks we face, see "Risk Factors—Risks Related to Our Business and Structure—We may face increasing competition for investment opportunities".

Employees

        As of December 31, 2015, we had 50 employees. These employees include investment and portfolio management professionals, operations professionals and administrative staff. As necessary, we will hire additional investment professionals and administrative personnel. All of our employees are located in our Houston, Texas office.

Properties

        We do not own any real estate or other physical properties materially important to our operations. Currently, we lease office space in Houston, Texas for our corporate headquarters.

Legal Proceedings

        We may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.

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PORTFOLIO COMPANIES

        The following table sets forth certain unaudited information as of December 31, 2015 (dollars in thousands), for the portfolio companies in which we had a debt or equity investment. Other than these investments, our only formal relationships with our portfolio companies are the managerial assistance ancillary to our investments and the board observer or participation rights we may receive. As of December 31, 2015, none of our portfolio company investments constituted five percent or more of our total assets. The following table excludes our investments in marketable securities and idle funds investments.

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Control Investments(5)

 

 

 

 

                   

                           

Access Media Holdings, LLC(10)
900 Commerce Drive, Suite 200
Oak Brook, IL 60523

 

Private Cable Operator

 

 

                   

     

5.00% Current / 5.00% PIK Secured Debt (Maturity — July 22, 2020)

  $ 21,554   $ 21,554   $ 20,380  

     

Preferred Member Units (4,500,000 units; 12% cumulative)

          4,394     2,000  

     

Member Units (45 units)

          1      

                  25,949     22,380  

                           

AmeriTech College, LLC
12257 Business Park Dr, Ste. 108
Draper, UT 84020

 

For-Profit Nursing and Healthcare College

 

 

                   

     

10% Secured Debt (Maturity — May 15, 2016)

    514     514     514  

     

10% Secured Debt (Maturity — November 30, 2019)

    489     489     489  

     

10% Secured Debt (Maturity — January 31, 2020)

    3,025     3,025     3,025  

     

Preferred Member Units (294 units; 5%)(8)

          2,291     2,291  
   

 

 

 

               

                  6,319     6,319  

                           

ASC Interests, LLC
16500 Westheimer Parkway
Houston, TX 77082

 

Recreational and Educational Shooting Facility

                       

     

11% Secured Debt (Maturity — July 31, 2018)

    2,500     2,470     2,500  

     

Member Units (1,500 units)(8)

          1,500     2,230  

                  3,970     4,730  

                           

Bond-Coat, Inc.
11901 West CR 125
Odessa, TX 79765

 

Casing and Tubing Coating Services

 

 

                   

     

12% Secured Debt (Maturity — December 28, 2017)

    11,596     11,521     11,596  

     

Common Stock (57,508 shares)

          6,350     9,140  
   

 

 

 

               

                  17,871     20,736  

                           

Café Brazil, LLC
202 West Main Street, Ste. 100
Allen, TX 75013

 

Casual Restaurant Group

 

 

                   

     

Member Units (1,233 units)(8)

          1,742     7,330  

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Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

CBT Nuggets, LLC
44 Club Rd., Ste. 150
Eugene, OR 97401

 

Produces and Sells IT Training Certification Videos

                       

     

Member Units (416 units)(8)

          1,300     42,120  

                           

CMS Minerals LLC
3040 Stout Street
Denver, CO 80205

 

Oil & Gas Exploration & Production

 

 

                   

     

Preferred Member Units (458 units)(8)

          2,967     6,914  

                           

Datacom, LLC
100 Enterprise Boulevard
Lafayette, LA 70506

 

Technology and Telecommunications Provider

 

 

                   

     

10.5% Secured Debt (Maturity — May 31, 2019)

    11,205     11,122     10,970  

     

Class A Preferred Member Units (15% cumulative)(8)

          1,181     1,181  

     

Class B Preferred Member Units (6,453 units)

          6,030     5,079  
   

 

 

 

               

                  18,333     17,230  

                           

Garreco, LLC
430 Hiram Rd.
Heber Springs, AR 72543

 

Manufacturer and Supplier of Dental Products

 

 

                   

     

14% Secured Debt (Maturity — January 12, 2018)

    5,800     5,739     5,739  

     

Member Units (1,200 units)

          1,200     1,270  

                  6,939     7,009  

                           

GRT Rubber Technologies LLC
201 Dana Dr.
Paragould, AR 72450

 

Manufacturer of Engineered Rubber Products

 

 

                   

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — December 19, 2019)(9)

    16,122     15,988     15,988  

     

Member Units (5,879 units)

          13,065     15,580  
   

 

 

 

               

                  29,053     31,568  

                           

Gulf Manufacturing, LLC
1221 Indiana St.
Humble, TX 77396

 

Manufacturer of Specialty Fabricated Industrial Piping Products

 

 

                   

     

9% PIK Secured Debt (Ashland Capital IX, LLC) (Maturity — June 30, 2017)

    777     777     777  

     

Member Units (438 units)(8)

          2,980     13,770  

                  3,757     14,547  

                           

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Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Harrison Hydra-Gen, Ltd.
10827 Tower Oaks Blvd.
Houston, TX 77070

 

Manufacturer of Hydraulic Generators

 

 

                   

     

9% Secured Debt (Maturity — January 8, 2016)

    5,010     5,010     5,010  

     

Preferred Stock (8% cumulative)(8)

          1,361     1,361  

     

Common Stock (107,456 shares)

          718     2,600  
   

 

 

 

               

                  7,089     8,971  

Hawthorne Customs and Dispatch Services, LLC
9370 Wallisville Rd
Houston, TX 77013

 

Facilitator of Import Logistics, Brokerage, and Warehousing

 

 

                   

     

Member Units (500 units)(8)

          589     460  

     

Member Units (Wallisville Real Estate, LLC) (588,210 units)(8)

          1,215     2,220  

                  1,804     2,680  

                           

HW Temps LLC
32 Norfolk Ave
South Easton, MA 02375

 

Temporary Staffing Solutions

 

 

                   

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity July 2, 2020)(9)

    9,976     9,884     9,884  

     

Preferred Member Units (3,200 units)(8)

          3,942     3,942  
   

 

 

 

               

                  13,826     13,826  

                           

Hydratec, Inc.
325 Road 192
Delano, CA 93215

 

Designer and Installer of Micro-Irrigation Systems

 

 

                   

     

Common Stock (7,095 shares)(8)

          7,095     14,950  

                           

IDX Broker, LLC
1551 Pearl Street
Eugene, OR 97401

 

Provider of Marketing and CRM Tools for the Real Estate Industry

 

 

                   

     

12.5% Secured Debt (Maturity — November 15, 2018)

    11,350     11,281     11,350  

     

Member Units (5,400 units)

          5,606     6,440  
   

 

 

 

               

                  16,887     17,790  

                           

Indianapolis Aviation Partners, LLC
8501 Telephone Road
Houston, TX 77061

 

Fixed Base Operator

 

 

                   

     

15% Secured Debt (Maturity — January 15, 2016)

    3,100     3,095     3,100  

     

Warrants (1,046 equivalent units)

          1,129     2,540  

                  4,224     5,640  

                           

84


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Jensen Jewelers of Idaho, LLC
130 Second Avenue North
Twin Falls, ID 83301

 

Retail Jewelry Store

 

 

                   

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 10.25%, Secured Debt (Maturity — November 14, 2016)(9)

    4,055     4,028     4,055  

     

Member Units (627 units)(8)

          811     4,750  
   

 

 

 

               

                  4,839     8,805  

                           

Lamb's Venture, LLC
11675 Jollyville Rd., Ste. 300
Austin, TX 78759

 

Aftermarket Automotive Services Chain

 

 

                   

     

11% Secured Debt (Maturity — May 31, 2018)

    7,962     7,961     7,962  

     

Preferred Equity (non-voting)

          328     328  

     

Member Units (742 units)

          5,273     4,690  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity — October 1, 2025)

    919     919     919  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

          625     1,240  

                  15,106     15,139  

                           

Lighting Unlimited, LLC
4125 Richmond Ave
Houston, TX 77027

 

Commercial and Residential Lighting Products and Design Services

 

 

                   

     

8% Secured Debt (Maturity — August 22, 2016)

    1,514     1,514     1,514  

     

Preferred Equity (non-voting)

          434     430  

     

Warrants (71 equivalent units)

          54     40  

     

Member Units (700 units)(8)

          100     350  
   

 

 

 

               

                  2,102     2,334  

                           

Marine Shelters Holdings, LLC
6800 Harborside Dr.
Galveston, TX 77554

 

Fabricator of Marine and Industrial Shelters

 

 

                   

     

12% PIK Secured Debt (Maturity — December 28, 2017)

    9,053     8,967     8,870  

     

Preferred Member Units (3,810 units)

          5,352     4,881  

                  14,319     13,751  

                           

85


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

MH Corbin Holding, LLC
8355 Rausch Dr.
Plain City, OH 43064

 

Manufacturer and distributor of traffic safety products

 

 

                   

     

10% Secured Debt (Maturity — August 31, 2020)

    14,000     13,869     13,869  

     

Preferred Member Units (4,000 shares)

          6,000     6,000  
   

 

 

 

               

                  19,869     19,869  

                           

Mid-Columbia Lumber Products, LLC
380 NW Adler St
Madras, OR 97741

 

Manufacturer of Finger-Jointed Lumber Products

 

 

                   

     

10% Secured Debt (Maturity — December 18, 2017)

    1,750     1,750     1,750  

     

12% Secured Debt (Maturity — December 18, 2017)

    3,900     3,900     3,900  

     

Member Units (2,829 units)

          1,244     2,580  

     

9.5% Secured Debt (Mid — Columbia Real Estate, LLC) (Maturity — May 13, 2025)

    881     881     881  

     

Member Units (Mid — Columbia Real Estate, LLC) (250 units)(8)

          250     550  

                  8,025     9,661  

                           

MSC Adviser I, LLC(16)
1300 Post Oak Boulevard, 8th Floor
Houston, TX 77056

 

Third Party Investment Advisory Services

                       

     

Member Units (Fully diluted 100.0%)(8)

              27,272  

                           

Mystic Logistics Holdings, LLC
2187 NW London Tpke
South Glastonbury, CT 06073

 

Logistics and Distribution Services Provider for Large Volume Mailers

 

 

                   

     

12% Secured Debt (Maturity — August 15, 2019)

    9,448     9,282     9,448  

     

Common Stock (5,873 shares)(8)

          2,720     5,970  

                  12,002     15,418  

                           

NAPCO Precast, LLC
6949 Low Bid Lane
San Antonio, TX 78250

 

Precast Concrete Manufacturing

 

 

                   

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — January 31, 2016)(9)

    625     625     625  

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — February 1, 2016)(9)

    3,380     3,379     3,380  

     

18% Secured Debt (Maturity — February 1, 2016)

    4,924     4,923     4,924  

     

Member Units (2,955 units)(8)

          2,975     8,590  
   

 

 

 

               

                  11,902     17,519  

                           

NRI Clinical Research, LLC
2010 Wilshire Blvd
Los Angeles, CA 90057

 

Clinical Research Service Provider

 

 

                   

     

14% Secured Debt (Maturity — September 8, 2017)

    4,617     4,539     4,539  

     

Warrants (251,723 equivalent units)

          252     340  

     

Member Units (1,454,167 units)

          765     1,342  

                  5,556     6,221  

                           

86


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

NRP Jones, LLC
210 Philadelphia St
LaPorte, IN 46350

 

Manufacturer of Hoses, Fittings and Assemblies

 

 

                   

     

12% Secured Debt (Maturity — December 22, 2016)

    13,224     12,948     12,948  

     

Warrants (14,331 equivalent units)

          817     450  

     

Member Units (50,877 units)

          2,900     1,480  
   

 

 

 

               

                  16,665     14,878  

                           

OMi Holdings, Inc.
1515 E I-30 Service Road
Royse City, TX 75189

 

Manufacturer of Overhead Cranes

 

 

                   

     

Common Stock (1,500 shares)

          1,080     13,640  

                           

Pegasus Research Group, LLC (Televerde)
4636 E. University Drive
Phoenix, AZ 85034

 

Provider of Telemarketing and Data Services

 

 

                   

     

Member Units (460 units)(8)

          1,290     6,840  

                           

PPL RVs, Inc.
10777 Southwest Freeway
Houston, TX 77074

 

Recreational Vehicle Dealer

 

 

                   

     

11.1% Secured Debt (Maturity — July 1, 2016)

    9,710     9,710     9,710  

     

Common Stock (1,962 shares)

          2,150     9,770  

                  11,860     19,480  

                           

Principle Environmental, LLC
201 W. Ranch Court
Weatherford, TX 76088

 

Noise Abatement Service Provider

 

 

                   

     

12% Secured Debt (Maturity — April 30, 2017)

    4,060     4,039     4,060  

     

12% Current / 2% PIK Secured Debt (Maturity — April 30, 2017)

    3,310     3,309     3,310  

     

Preferred Member Units (19,631 units)(8)

          4,663     6,060  

     

Warrants (1,036 equivalent units)

          1,200     310  
   

 

 

 

               

                  13,211     13,740  

                           

Quality Lease Service, LLC
501 East Kennedy Blvd, Suite 801
Tampa, FL 33602

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

 

 

                   

     

8% PIK Secured Debt (Maturity — June 8, 2020)

    6,538     6,538     6,538  

     

Member Units (1,000 units)

          568     2,638  

                  7,106     9,176  

                           

87


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

River Aggregates, LLC
PO Box 8609
The Woodlands, TX 77387

 

Processor of Construction Aggregates

 

 

                   

     

Zero Coupon Secured Debt (Maturity — June 30, 2018)

    750     556     556  

     

Member Units (1,150 units)(8)

          1,150     3,830  

     

Member Units (RA Properties, LLC) (1,500 units)

          369     2,360  
   

 

 

 

               

                  2,075     6,746  

                           

SoftTouch Medical Holdings, LLC
1800 Sandy Plains Ind Pkwy NE #224
Marietta, GA 30066

 

Home Provider of Pediatric Durable Medical Equipment

 

 

                   

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — October 31, 2019)(9)

    8,075     8,010     8,010  

     

Member Units (4,450 units)(8)

          4,930     5,710  

                  12,940     13,720  

                           

Southern RV, LLC
3625 Bossier City
Bossier City, LA 71112

 

Recreational Vehicle Dealer

 

 

                   

     

13% Secured Debt (Maturity — August 8, 2018)

    11,400     11,296     11,400  

     

Member Units (1,680 units)(8)

          1,680     15,100  

     

13% Secured Debt (Southern RV Real Estate, LLC) (Maturity — August 8, 2018)

    3,250     3,220     3,250  

     

Member Units (Southern RV Real Estate, LLC) (480 units)

          480     1,200  
   

 

 

 

               

                  16,676     30,950  

The MPI Group, LLC
319 North Hills Road
Corbin, KY 40701

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

 

 

                   

     

9% Secured Debt (Maturity — October 2, 2018)

    2,924     2,921     2,921  

     

Series A Preferred Units (2,500 units; 10% Cumulative)

          2,500     690  

     

Warrants (1,424 equivalent units)

          1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100% Fully diluted)(8)

          2,300     2,230  

                  8,817     5,841  

                           

Travis Acquisition LLC
13955 FM 529 Rd
Houston, TX 77041

 

Manufacturer of Aluminum Trailers

 

 

                   

     

12% Secured Debt (Maturity — August 30, 2018)

    3,513     3,471     3,513  

     

Member Units (7,282 units)

          7,100     14,480  
   

 

 

 

               

                  10,571     17,993  

                           

Uvalco Supply, LLC
2521 E. Main St.
Uvalde, TX 78801

 

Farm and Ranch Supply Store

 

 

                   

     

9% Secured Debt (Maturity — January 1, 2019)

    1,314     1,314     1,314  

     

Member Units (2,011 units)(8)

          3,843     5,460  

                  5,157     6,774  

                           

88


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Vision Interests, Inc.
6630 Arroyo Springs St., Ste. 600
Las Vegas, NV 89113

 

Manufacturer / Installer of Commercial Signage

 

 

                   

     

13% Secured Debt (Maturity — December 23, 2016)

    3,071     3,052     3,052  

     

Series A Preferred Stock (3,000,000 shares)

          3,000     3,550  

     

Common Stock (1,126,242 shares)

          3,706     210  
   

 

 

 

               

                  9,758     6,812  

                           

Ziegler's NYPD, LLC
13901 North 73rd St., #219
Scottsdale, AZ 85260

 

Casual Restaurant Group

 

 

                   

     

6.5% Secured Debt (Maturity — October 1, 2019)

    1,000     992     992  

     

12% Secured Debt (Maturity — October 1, 2019)

    500     500     500  

     

14% Secured Debt (Maturity — October 1, 2019)

    2,750     2,750     2,750  

     

Warrants (587 equivalent units)

          600     50  

     

Preferred Member Units (10,072 units)

          2,834     3,400  

                  7,676     7,692  

                           

Subtotal Control Investments

                $ 387,727   $ 555,011  
   

 

 

 

               

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Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Affiliate Investments(6)

 

 

 

 

                   

                           

AFG Capital Group, LLC
900 McDuff Avenue
Grandview, TX 76050

 

Provider of Rent-to-Own Financing Solutions and Services

 

 

                   

     

11% Secured Debt (Maturity — November 7, 2019)

  $ 12,960   $ 12,611   $ 12,790  

     

Warrants (42 equivalent units)

          259     490  

     

Member Units (186 units)

          1,200     2,020  

                  14,070     15,300  

                           

Boss Industries, LLC
1761 Genesis Drive
LaPorte, IN 46350

 

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

 

 

                   

     

Preferred Member Units (2,242 units)(8)

          2,246     2,586  

                           

Bridge Capital Solutions Corporation
300 Motor Parkway, Suite 215
Hauppauge, NY 11788

 

Financial Services and Cash Flow Solutions Provider

 

 

                   

     

13% Secured Debt (Maturity — April 18, 2017)

    7,000     6,890     6,890  

     

Warrants (22 equivalent shares)

          200     1,300  

                  7,090     8,190  

                           

Buca C, LLC
4700 Millenua Blvd., #400
Orlando, FL 32839

 

Casual Restaurant Group

 

 

                   

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity — June 30, 2020)(9)

    25,530     25,299     25,299  

     

Preferred Member Units (6 units; 6% cumulative)(8)

          3,711     3,711  
   

 

 

 

               

                  29,010     29,010  

                           

CAI Software LLC
36 Thurber Boulevard
Smithfield, RI 02917

 

Provider of Specialized Enterprise Resource Planning Software

 

 

                   

     

12% Secured Debt (Maturity — October 10, 2019)

    4,661     4,624     4,661  

     

Member Units (65,356 units)

          654     1,000  

                  5,278     5,661  

                           

Condit Exhibits, LLC
5151 Bannock St
Denver, CO 80435

 

Tradeshow Exhibits / Custom Displays Provider

 

 

                   

     

Member Units (3,936 units)(8)

          100     1,010  

                           

Congruent Credit Opportunities Funds(12)(13)
3131 McKinney Ave., Suite 850
Dallas, TX 75204

 

Investment Partnership

 

 

                   

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

          6,612     2,834  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

          12,020     12,024  

                  18,632     14,858  

                           

90


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Daseke, Inc.
15455 Dallas Parkway, Ste. 400
Addison, TX 75001

 

Specialty Transportation Provider

 

 

                   

     

12% Current / 2.5% PIK Secured Debt (Maturity — July 31, 2018)

    21,253     21,003     21,253  

     

Common Stock (19,467 shares)

          5,213     22,660  
   

 

 

 

               

                  26,216     43,913  

                           

Dos Rios Partners(12)(13)
3411 Richmond Avenue, Suite 420
Houston, TX 77046

 

Investment Partnership

 

 

                   

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)

          3,104     2,031  

     

LP Interests (Dos Rios Partners — A, LP) (Fully diluted 6.4%)

          986     648  

                  4,090     2,679  

                           

East Teak Fine Hardwoods, Inc.
1106 Drake Road
Donalds, SC 29638

 

Distributor of Hardwood Products

 

 

                   

     

Common Stock (6,250 shares)(8)

          480     860  

                           

East West Copolymer & Rubber, LLC
5955 Scenic Highway
Baton Rouge, LA 70805

 

Manufacturer of Synthetic Rubbers

 

 

                   

     

12% Secured Debt (Maturity — October 17, 2019)

    9,600     9,463     9,463  

     

Warrants (2,510,790 equivalent units)

          50     50  

                  9,513     9,513  

                           

EIG Traverse Co-Investment, L.P.(12)(13)
301 N.W. 63rd, Suite 600
Oklahoma City, OK 73116

 

Investment Partnership

 

 

                   

     

LP Interests (Fully diluted 6.6%)(8)

          4,755     4,755  

                           

Freeport Financial Funds(12)(13)
300 N. La Salle Street, Suite 5300
Chicago, Il 60654

 

Investment Partnership

 

 

                   

     

LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.9%)(8)

          5,974     6,045  

     

LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.4%)

          2,077     2,077  

                  8,051     8,122  

                           

Gault Financial, LLC (RMB Capital, LLC)
409 Bearden Circle
Knoxville, TN 37919

 

Purchases and Manages Liquidation of Distressed Assets

 

 

                   

     

10% Secured Debt (Maturity — November 21, 2016)

    13,046     12,896     10,930  

     

Warrants (29,025 equivalent units)

          400      
   

 

 

 

               

                  13,296     10,930  

                           

Glowpoint, Inc.
430 Mountain Avenue., Ste. 301
Murray Hill, NJ 07974

 

Provider of Cloud Managed Video Collaboration Services

 

 

                   

     

8% Secured Debt (Maturity — October 18, 2018)

    400     397     397  

     

12% Secured Debt (Maturity — October 18, 2018)

    9,000     8,929     8,929  

     

Common Stock (7,711,517 shares)

          3,958     3,840  

                  13,284     13,166  

                           

91


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Guerdon Modular Holdings, Inc.
5556 S Federal Way
Boise, ID 83716

 

Multi-Family and Commercial Modular Construction Company

 

 

                   

     

13% Secured Debt (Maturity — August 13, 2019)

    10,400     10,280     10,280  

     

Common Stock (170,577 shares)

          2,983     1,990  
   

 

 

 

               

                  13,263     12,270  

                           

Houston Plating and Coatings, LLC
1315 Georgia St
South Houston, TX 77587

 

Provider of Plating and Industrial Coating Services

 

 

                   

     

Member Units (248,082 units)(8)

          996     8,440  

                           

I-45 SLF LLC(12)(13)
5400 Lyndon B Johnson Freeway
Suite 1300
Dallas, TX 75240

 

Investment Partnership

 

 

                   

     

Member units (Fully diluted 20.0%; 24.4% profits interest)

          7,200     7,200  

                           

Indianhead Pipeline Services, LLC
13167 County Hwy 00
Chippewa Falls, WI 54729

 

Provider of Pipeline Support Services

 

 

                   

     

12% Secured Debt (Maturity — February 6, 2017)

    6,000     5,853     5,853  

     

Preferred Member Units (33,819 units; 8% cumulative)

          2,302     2,302  

     

Warrants (31,928 equivalent units)

          459      

     

Member Units (14,732 units)

          1      

                  8,615     8,155  

                           

KBK Industries, LLC
East Hwy 96
Rush Center, KS 67575

 

Manufacturer of Specialty Oilfield and Industrial Products

 

 

                   

     

12.5% Secured Debt (Maturity — September 28, 2017)

    5,900     5,875     5,900  

     

Member Units (250 units)(8)

          341     3,680  
   

 

 

 

               

                  6,216     9,580  

                           

L.F. Manufacturing Holdings, LLC(10)
P.O. Box 578
Giddings, TX 78942

 

Manufacturer of Fiberglass Products

 

 

                   

     

Member Units (2,179,001 units)(8)

          2,019     1,485  

                           

MPS Denver, LLC
7025 South Fulton Street, Suite 100
Centennial, CO 80112

 

Specialty Card Printing

 

 

                   

     

Member Units (13,800 units)

          1,130     1,130  

                           

OnAsset Intelligence, Inc.
3080 Story Road West
Irving, TX 75038

 

Provider of Transportation Monitoring / Tracking Products and Services

 

 

                   

     

12% PIK Secured Debt (Maturity — December 31, 2015)(17)

    4,006     4,006     4,006  

     

Preferred Stock (912 shares; 7% cumulative)(8)

          1,981     1,380  

     

Warrants (5,333 equivalent shares)

          1,919      

                  7,906     5,386  

                           

92


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

OPI International Ltd.(13)
4545 Post Oak Place Drive
Houston, TX 77027

 

Provider of Man Camp and Industrial Storage Services

 

 

                   

     

10% Unsecured Debt (Maturity — April 8, 2018)

    473     473     473  

     

Common Stock (20,766,317 shares)

          1,371     3,200  
   

 

 

 

               

                  1,844     3,673  

                           

PCI Holding Company, Inc.
12201 Magnolia Avenue
Riverside, CA 92503

 

Manufacturer of Industrial Gas Generating Systems

 

 

                   

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)

          2,762     4,887  

                           

Radial Drilling Services Inc.
4921 Spring Cypress
Spring, TX 77379

 

Oil and Gas Lateral Drilling Technology Provider

 

 

                   

     

12% Secured Debt (Maturity — November 22, 2016)(14)

    4,200     3,941     1,500  

     

Warrants (316 equivalent shares)

          758      
   

 

 

 

               

                  4,699     1,500  

                           

Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)
501 East Kennedy Blvd, Suite 801
Tampa, FL 33602

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

 

 

                   

     

12% Secured Debt (Maturity — January 8, 2018)(14)(18)

    30,785     30,281     250  

     

Preferred Member Units (250 units)

          2,500      

                  32,781     250  

                           

Samba Holdings, Inc.
1730 Montano Road NW, Suite F
Albuquerque, NM 87107

 

Provider of Intelligent Driver Record Monitoring Software and Services

 

 

                   

     

12.5% Secured Debt (Maturity — November 17, 2016)

    24,662     24,553     24,662  

     

Common Stock (170,963 shares)

          2,087     30,220  
   

 

 

 

               

                  26,640     54,882  

                           

Tin Roof Acquisition Company
1516 Demonbreun Street
Nashville, TN 37203

 

Casual Restaurant Group

 

 

                   

     

12% Secured Debt (Maturity — November 13, 2018)

    13,994     13,807     13,807  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)

          2,477     2,477  

                  16,284     16,284  

                           

93


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

UniTek Global Services, Inc.(11)
1777 Sentry Parkway West
Gwynedd Hall, Suite 202
Blue Bell, PA 19422

 

Provider of Outsourced Infrastructure Services

 

 

                   

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — January 13, 2019)(9)

    2,826     2,826     2,812  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50% / 1.00% PIK, Current Coupon Plus PIK 10.50%, Secured Debt (Maturity — January 13, 2019)(9)

    1,261     1,261     1,255  

     

15% PIK Unsecured Debt (Maturity — July 13, 2019)

    641     641     638  

     

Preferred Stock (4,935,377 shares)

          4,935     5,540  

     

Common Stock (705,054 shares)

               
   

 

 

 

               

                  9,663     10,245  

                           

Universal Wellhead Services Holdings, LLC(10)
5729 Leopard St. Bldg 9
Corpus Christi, TX 78408

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

 

 

                   

     

Class A Preferred Units (4,000,000 units; 4.5% cumulative)(8)

          4,000     3,000  

                           

Volusion, LLC
1835 Kramer Lane #100
Austin, TX 78758

 

Provider of Online Software-as-a-Service eCommerce Solutions

 

 

                   

     

10.5% Secured Debt (Maturity — January 26, 2020)

    17,500     16,199     16,199  

     

Preferred Member Units (4,876,670 units)

          14,000     14,000  

     

Warrants (950,618 equivalent units)

          1,400     1,400  
   

 

 

 

               

                  31,599     31,599  

Subtotal Affiliate Investments

                $ 333,728   $ 350,519  

94


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Non-Control/Non-Affiliate Investments(7)

 

 

                   

                           

AccuMED, Corp.(10)
155 Boyce Drive
Mocksville, NC 27028

 

Medical Device Contract Manufacturer

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — October 29, 2020)(9)

  $ 9,750   $ 9,648   $ 9,648  

                           

Adams Publishing Group, LLC(10)
1600 West End Boulevard, Suite 100
St. Louis Park, MN 55416

 

Local Newspaper Operator

 

 

                   

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity — November 3, 2020)(9)

    9,506     9,329     9,328  

                           

Ahead, LLC(10)
150 S. Wacker Drive, Suite 2500
Chicago, IL 60606

 

IT Infrastructure Value Added Reseller

 

 

                   

     

LIBOR Plus 6.50%, Current Coupon 6.76%, Secured Debt (Maturity — November 2, 2020)

    15,000     14,562     14,625  

                           

Allflex Holdings III Inc.(11)
2805 East 14th Street
Dallas, TX 75261

 

Manufacturer of Livestock Identification Products

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — July 19, 2021)(9)

    10,150     10,080     10,008  

                           

AM General LLC(11)
105 N. Niles Ave.
South Bend, IN 46634

 

Specialty Vehicle Manufacturer

 

 

                   

     

LIBOR Plus 9.00% (Floor 1.25%), Current Coupon 10.25%, Secured Debt (Maturity — March 22, 2018)(9)

    2,256     2,221     1,867  

                           

AM3 Pinnacle Corporation(10)
900 Commerce Dr., Ste. 200
Oak Brook, IL 60523

 

Provider of Comprehensive Internet, TV and Voice Services for Multi-Dwelling Unit Properties

 

 

                   

     

Common Stock (60,240 shares)

          2,000      

                           

American Seafoods Group, LLC(11)
Market Place Tower, 2025 First Avenue
Suite 900
Seattle, WA 98121

 

Catcher-Processor of Alaskan Pollock

 

 

                   

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — August 19, 2021)(9)

    9,975     9,963     9,892  

                           

95


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

AMF Bowling Centers, Inc.(11)
222 W 44th Street
New York, NY 10036

 

Bowling Alley Operator

 

 

                   

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — September 18, 2021)(9)

    7,907     7,802     7,835  

                           

Anchor Hocking, LLC(11)
519 N. Pierce Avenue
Lancaster, OH 43130

 

Household Products Manufacturer

 

 

                   

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — June 4, 2018)(9)

    2,306     2,306     2,179  

     

Member Units (440,620 units)

          4,928     3,250  
   

 

 

 

               

                  7,234     5,429  

                           

AP Gaming I, LLC(10)
6680 Amelia Earhart Court
Las Vegas, NV 89119

 

Developer, Manufacturer, and Operator of Gaming Machines

 

 

                   

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — December 20, 2020)(9)

    11,314     11,108     10,946  

                           

Apex Linen Service, Inc.
6375 Arville Street
Las Vegas, NV 89118

 

Industrial Launderers

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — October 30, 2022)(9)

    1,600     1,600     1,600  

     

13% Secured Debt (Maturity — October 30, 2022)

    12,000     11,926     11,926  
   

 

 

 

               

                  13,526     13,526  

                           

Applied Products, Inc.(10)
6035 Baker Road
Minnetonka, MN 55345

 

Adhesives Distributor

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — September 30, 2019)(9)

    5,813     5,759     5,683  

                           

Arcus Hunting LLC.(10)
10157 Industrial Drive Northeast
Covington, GA 30014

 

Manufacturer of Bowhunting and Archery Products and Accessories

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — November 13, 2019)(9)

    9,540     9,429     9,429  

                           

96


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Artel, LLC(11)
1983 Preston White Drive
Reston, VA 20191

 

Provider of Secure Satellite Network and IT Solutions

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity — November 27, 2017)(9)

    7,854     7,585     6,716  

                           

ATS Workholding, Inc.(10)
30222 Esperanza
Rancho Santa Margarita, CA 92688

 

Manufacturer of Machine Cutting Tools and Accessories

 

 

                   

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — March 10, 2019)(9)

    6,492     6,452     6,230  

                           

ATX Networks Corp.(11)(13)
1-501 Clements Road West
Ajax, ON L1S 7H4

 

Provider of Radio Frequency Management Equipment

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — June 14, 2021)(9)

    14,925     14,647     14,701  

                           

Barfly Ventures, LLC(10)
1 Ionia Avenue SW, Suite 200
Grand Rapids, MI 49503

 

Casual Restaurant Group

 

 

                   

     

12% Secured Debt (Maturity — August 31, 2020)

    4,121     4,042     4,042  

     

Warrants (1 equivalent share)

          473     473  
   

 

 

 

               

                  4,515     4,515  

                           

Berry Aviation, Inc.(10)
1807 Airport Drive
San Marcus, TX 78666

 

Airline Charter Service Operator

 

 

                   

     

12.00% Current / 1.75% PIK Secured Debt (Maturity — January 30, 2020)

    5,627     5,578     5,578  

     

Common Stock (553 shares)

          400     400  
   

 

 

 

               

                  5,978     5,978  

                           

Bioventus LLC(10)
4721 Emperor Boulevard, Suite 100
Durham, NC 27703

 

Production of Orthopedic Healing Products

 

 

                   

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.00%, Secured Debt (Maturity — April 10, 2020)(9)

    5,000     4,917     4,925  

                           

Blackbrush Oil and Gas LP(11)
18615 Tuscany Stone #300
San Antonio, TX 78258

 

Oil & Gas Exploration

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — July 30, 2021)(9)

    4,000     3,975     3,230  

                           

97


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Blackhawk Specialty Tools LLC(11)
11936 Brittmoore Park Drive
Houston, TX 77041

 

Oilfield Equipment & Services

 

 

                   

     

LIBOR Plus 5.25% (Floor 1.25%), Current Coupon 6.50%, Secured Debt (Maturity — August 1, 2019)(9)

    5,892     5,866     5,450  

                           

Blue Bird Body Company(11)
402 Blue Bird Blvd
Fort Valley, GA 31030

 

School Bus Manufacturer

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — June 26, 2020)(9)

    4,702     4,646     4,669  

                           

Bluestem Brands, Inc.(11)(13)
6509 Flying Cloud Dr.
Eden Prairie, MN 55344

 

Multi-Channel Retailer of General Merchandise

 

 

                   

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — November 6, 2020)(9)

    13,632     13,358     12,780  

                           

Brainworks Software, LLC(10)
100 South Main Street
Sayville, NY 11782

 

Advertising Sales and Newspaper Circulation Software

 

 

                   

     

Prime Plus 7.25% (Floor 3.25%), Current Coupon 10.75%, Secured Debt (Maturity — July 22, 2019)(9)

    626     620     620  

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — July 22, 2019)(9)

    6,185     6,126     6,012  
   

 

 

 

               

                  6,746     6,632  

                           

Brightwood Capital Fund III, LP(12)(13)
1540 Broadway, 23rd Floor
New York, NY 10036

 

Investment Partnership

 

 

                   

     

LP Interests (Fully diluted 1.6%)(8)

          11,250     11,125  

                           

Brundage-Bone Concrete Pumping, Inc.(11)
6461 Downing St
Denver, CO 80229

 

Construction Services Provider

 

 

                   

     

10.375% Secured Debt (Maturity — September 1, 2021)

    2,500     2,500     2,438  

                           

Calloway Laboratories, Inc.(10)
34 Commerce Way
Woburn, MA 01801

 

Health Care Testing Facilities

 

 

                   

     

17% PIK Secured Debt (Maturity — September 30, 2016)(14)

    7,324     7,275      

     

Warrants (125,000 equivalent shares)

          17      
   

 

 

 

               

                  7,292      

                           

98


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Cengage Learning Acquisitions, Inc.(11)
20 Channel Center Street
Boston, MA 02210

 

Provider of Educational Print and Digital Services

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — March 31, 2020)(9)

    9,720     9,672     9,502  

                           

Cenveo Corporation(11)
200 First Stamford Place
Stamford, CT 06902

 

Provider of Commercial Printing, Envelopes, Labels, and Printed Office Products

 

 

                   

     

6% Secured Debt (Maturity — August 1, 2019)

    5,230     4,544     3,687  

                           

CGSC of Delaware Holdings Corp.(11)(13)
52 Leadenhall Street
London, UK EC31 WEB

 

Insurance Brokerage Firm

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity — October 16, 2020)(9)

    2,000     1,979     1,900  

                           

Charlotte Russe, Inc.(11)
575 Florida Street
San Francisco, CA 94010

 

Fast-Fashion Retailer to Young Women

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.75%, Secured Debt (Maturity — May 22, 2019)(9)

    14,346     14,065     10,031  

                           

Clarius ASIG, LLC(10)
311 N Robertson Blvd
Beverly Hills, CA 90211

 

Prints & Advertising Film Financing

 

 

                   

     

15% PIK Secured Debt (Maturity — September 14, 2014)(17)

    620     620     620  

                           

Clarius BIGS, LLC(10)
311 N Robertson Blvd
Beverly Hills, CA 90211

 

Prints & Advertising Film Financing

 

 

                   

     

15% PIK Secured Debt (Maturity — January 5, 2015)(14)(17)

    3,386     3,386     563  

                           

Compact Power Equipment, Inc.
P. O. Box 40
Fort Mill, SC 29716

 

Equipment / Tool Rental

 

 

                   

     

12% Secured Debt (Maturity — October 1, 2017)

    4,100     4,090     4,100  

     

Series A Preferred Stock (4,298,435 shares)

          1,079     2,930  
   

 

 

 

               

                  5,169     7,030  

                           

99


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Compuware Corporation(11)
One Campus Martius
Detroit, MI 48226

 

Provider of Software and Supporting Services

 

 

                   

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity — December 15, 2019)(9)

    14,751     14,395     13,998  

                           

Covenant Surgical Partners, Inc.(11)
401 Commerce Street, STE 600
Nashville, TN 37219

 

Ambulatory Surgical Centers

 

 

                   

     

8.75% Secured Debt (Maturity — August 1, 2019)

    800     800     780  

                           

CRGT Inc.(11)
11921 Freedom Drive, Suite 1000
Reston, VA 20190

 

Provider of Custom Software Development

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — December 19, 2020)(9)

    10,168     10,009     10,118  

                           

CST Industries(11)
9701 Renner, Suite 150
Lenexa, KS 66219

 

Storage Tank Manufacturer

 

 

                   

     

LIBOR Plus 6.25% (Floor 1.50%), Current Coupon 7.75%, Secured Debt (Maturity — May 22, 2017)(9)

    8,227     8,197     8,145  

                           

Darr Equipment LP(10)
350 Bank Street
Southlake, TX 76092

 

Heavy Equipment Dealer

 

 

                   

     

11.75% Current / 2% PIK Secured Debt (Maturity — April 15, 2020)

    20,706     20,178     19,688  

     

Warrants (915,734 equivalent units)

          474     410  
   

 

 

 

               

                  20,652     20,098  

                           

Digital River, Inc.(11)
10380 Bren Road West
Minnetonka, MN 55343

 

Provider of Outsourced e-Commerce Solutions and Services

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — February 12, 2021)(9)

    8,667     8,588     8,580  

                           

Digity Media LLC(11)
701 Northpoint Parkway, Ste. 500
West Palm Beach, FL 33407

 

Radio Station Operator

 

 

                   

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity — February 8, 2019)(9)

    6,588     6,539     6,506  

                           

Drilling Info Holdings, Inc.
2600 Via Fortuna, Fifth Floor
Austin, TX 78746

 

Information Services for the Oil and Gas Industry

 

 

                   

     

Common Stock (3,788,865 shares)

          1,335     9,920  

                           

100


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

ECP-PF Holdings Group, Inc.(10)
400 Boston Post Rd
Orange, CT 06477

 

Fitness Club Operator

 

 

                   

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — November 26, 2019)(9)

    5,625     5,579     5,492  

                           

EIG Fund Investments(12)(13)
Three Allen Center 333 Clay Street
Suite 3500
Houston, TX 77002

 

Investment Partnership

 

 

                   

     

LP Interests (EIG Global Private Debt fund-A, L.P.) (Fully diluted 0.5%)

          718     718  

                           

EnCap Energy Fund Investments(12)(13)
1100 Louisiana Street, Suite 4900
Houston, TX 77002

 

Investment Partnership

 

 

                   

     

LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

          3,762     2,765  

     

LP Interests (EnCap Energy Capital Fund VIII Co- Investors, L.P.) (Fully diluted 0.4%)

          2,194     1,056  

     

LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

          3,075     3,826  

     

LP Interests (Encap Energy Capital Fund X, L.P.) (Fully diluted 0.1%)

          692     692  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 0.8%)(8)

          7,350     10,738  

     

LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.2%)

          464     892  
   

 

 

 

               

                  17,537     19,969  

                           

Energy and Exploration Partners, LLC(11)
100 Throckmorton St, Suite 1700
Fort Worth, TX 76102

 

Oil & Gas Exploration & Production

 

 

                   

     

8.75% Secured Debt (Maturity — January 23, 2016)(14)

    221     221     221  

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity — January 22, 2019)(9)(14)

    9,390     9,048     2,371  
   

 

 

 

               

                  9,269     2,592  

                           

Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)(13)
107 Northeastern Blvd.
Nashua, NH 03062

 

Technology-based Performance Support Solutions

 

 

                   

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — April 28, 2022)(9)

    7,000     6,838     4,673  

                           

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Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Extreme Reach, Inc.(11)
75 2nd Avenue, Suite 720
Needham, MA 02494

 

Integrated TV and Video Advertising Platform

 

 

                   

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity — February 7, 2020)(9)

    8,875     8,866     8,731  

                           

Flavors Holdings Inc.(11)
300 Jefferson St.
Camden, NJ 08104

 

Global Provider of Flavoring and Sweetening Products and Solutions

 

 

                   

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity — April 3, 2020)(9)

    11,333     11,004     10,086  

                           

Fram Group Holdings, Inc.(11)
39 Old Ridgebury Rd
Danbury, CT 06610

 

Manufacturer of Automotive Maintenance Products

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.50%), Current Coupon 7.00%, Secured Debt (Maturity — July 29, 2017)(9)

    9,652     9,547     7,275  

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity — January 29, 2018)(9)

    700     699     350  
   

 

 

 

               

                  10,246     7,625  

GI KBS Merger Sub LLC(11)
3605 Ocean Ranch Blvd.
Oceanside, CA 92056

 

Outsourced Janitorial Services to Retail/Grocery Customers

 

 

                   

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — October 29, 2021)(9)

    3,960     3,901     3,742  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity — April 29, 2022)(9)

    800     786     792  
   

 

 

 

               

                  4,687     4,534  

                           

Grace Hill, LLC(10)
3633 Wheeler Road, Suite 230
Augusta, GA 30909

 

Online Training Tools for the Multi-Family Housing Industry

 

 

                   

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — August 15, 2019)(9)

    9,450     9,361     9,450  

                           

Great Circle Family Foods, LLC(10)
4760 E. Los Coyotes Diagonal
Long Beach, CA 90815

 

Quick Service Restaurant Franchise

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — October 28, 2019)(9)

    7,849     7,783     7,783  

                           

102


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Grupo Hima San Pablo, Inc.(11)
P.O. Box 4980
Caguas, Puerto Rico 00726

 

Tertiary Care Hospitals

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity — January 31, 2018)(9)

    4,863     4,816     4,668  

     

13.75% Secured Debt (Maturity — July 31, 2018)

    2,000     1,942     1,860  
   

 

 

 

               

                  6,758     6,528  

                           

GST Autoleather, Inc.(11)
20 Oak Hollow Dr Suite 300
Southfield, MI 48033

 

Automotive Leather Manufacturer

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — July 10, 2020)(9)

    9,875     9,797     9,529  

                           

Guitar Center, Inc.(11)
5795 Lindero Canyon Road
Westlake Village, CA 91362

 

Musical Instruments Retailer

 

 

                   

     

6.5% Secured Debt (Maturity — April 15, 2019)

    11,000     10,442     9,240  

                           

Halcon Resources Corporation(11)
1000 Louisiana St
Houston, TX 77002

 

Oil & Gas Exploration & Production

 

 

                   

     

9.75% Unsecured Debt (Maturity — July 15, 2020)

    6,925     6,382     2,008  

                           

Hojeij Branded Foods, LLC(10)
1750 The Exchange, Suite 200
Atlanta, GA 30339

 

Multi-Airport, Multi- Concept Restaurant Operator

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — July 27, 2021)(9)

    5,344     5,294     5,294  

                           

Horizon Global Corporation(11)
39400 Woodward Ave, Suite 100

Bloomfield Hills, TX 48304

 

Auto Parts Manufacturer

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — June 30, 2021)(9)

    9,750     9,568     9,677  

                           

Hostway Corporation(11)
100 N Riverside, Suite 800
Chicago, IL 60606

 

Managed Services and Hosting Provider

 

 

                   

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity — December 13, 2019)(9)

    11,179     11,105     11,067  

                           

103


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Hunter Defense Technologies, Inc.(11)
30500 Aurora Road, Suite 100
Solon, OH 44139

 

Provider of Military and Commercial Shelters and Systems

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — August 5, 2019)(9)

    6,414     6,366     6,350  

                           

ICON Health & Fitness, Inc.(11)
1500 South 1000 West
Logan, UT 84321

 

Producer of Fitness Products

 

 

                   

     

11.875% Secured Debt (Maturity — October 15, 2016)

    6,956     6,907     6,608  

                           

iEnergizer Limited(11)(13)
Mont Crevelt House, Bulwer Avenue St
Sampson, Guernsey GY2 4LH

 

Provider of Business Outsourcing Solutions

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — May 1, 2019)(9)

    8,110     8,030     7,502  

                           

Indivior Finance LLC(11)(13)
10710 Midlothian Turnpike, Suite 430
Richmond, VA 23235

 

Specialty Pharmaceutical Company Treating Opioid Dependence

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — December 19, 2019)(9)

    7,125     6,759     6,697  

Industrial Container Services, LLC(10)
1540 South Greenwood Avenue
Montebello, CA 90640

 

Steel Drum Reconditioner

 

 

                   

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity — December 31, 2018)(9)

    5,000     5,000     5,000  

                           

Infinity Acquisition Finance Corp.(11)
1359 Broadway, 2nd Floor
New York, NY 10018

 

Application Software for Capital Markets

 

 

                   

     

7.25% Unsecured Debt (Maturity — August 1, 2022)

    4,000     4,000     3,440  

                           

Inn of the Mountain Gods Resort and Casino(11)
287 Carrizo Canyon Road
Mescalero, NM 88340

 

Hotel & Casino Owner & Operator

 

 

                   

     

9.25% Secured Debt (Maturity — November 30, 2020)

    3,851     3,708     3,562  

                           

104


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Insurance Technologies, LLC(10)
Two South Cascade Avenue, Suite 200
Colorado Springs, CO 80903

 

Illustration and Sales-automation Platforms

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — December 1, 2019)(9)

    4,804     4,759     4,759  

                           

Intertain Group Limited(11)(13)
24 Duncan Street, 2nd Floor
Toronto, ON MSV 2B8

 

Business-to-Consumer Online Gaming Operator

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — April 8, 2022)(9)

    9,938     9,782     9,883  

                           

iPayment, Inc.(11)
126 East 56th Street
New York, NY 10022

 

Provider of Merchant Acquisition

 

 

                   

     

LIBOR Plus 5.25% (Floor 1.50%), Current Coupon 6.75%, Secured Debt (Maturity — May 8, 2017)(9)

    15,026     14,986     14,446  

                           

iQor US Inc.(11)
335 Madison Avenue, 27th Floor
New York, NY 10017

 

Business Process Outsourcing Services Provider

 

 

                   

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — April 1, 2021)(9)

    9,887     9,718     7,942  

                           

irth Solutions, LLC
5009 Horizons Drive
Columbus, OH 43220

 

Provider of Damage Prevention Information Technology Services

 

 

                   

     

Member Units (27,893 units)

          1,441     1,441  

                           

Jackmont Hospitality, Inc.(10)
1760 Peachtree Street, Suite 200
Atlanta, GA 30309

 

Franchisee of Casual Dining Restaurants

 

 

                   

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25% / 2.50% PIK, Current Coupon Plus PIK 7.75%, Secured Debt (Maturity — May 26, 2021)(9)

    4,357     4,337     4,188  

                           

Joerns Healthcare, LLC(11)
2430 Whitehall Park Drive, Suite 100
Charlotte, NC 28273

 

Manufacturer and Distributor of Health Care Equipment & Supplies

 

 

                   

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — May 9, 2020)(9)

    14,805     14,711     14,703  

                           

105


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

JSS Holdings, Inc.(11)
180 North Stetson, 29th Floor
Chicago, IL 60601

 

Aircraft Maintenance Program Provider

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — August 31, 2021)(9)

    14,566     14,230     13,765  

                           

Kendra Scott, LLC(11)
1400 South Congress Avenue, Suite A-170
Austin, TX 78704

 

Jewelry Retail Stores

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — July 17, 2020)(9)

    5,875     5,821     5,831  

                           

Keypoint Government Solutions, Inc.(11)
115 East 57th Street
New York, NY 10022

 

Provider of Pre-Employment Screening Services

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity — November 13, 2017)(9)

    6,303     6,268     6,271  

                           

LaMi Products, LLC(10)
860 Welsh Road
Huntingdon Valley, PA 19006

 

General Merchandise Distribution

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — September 16, 2020)(9)

    4,729     4,699     4,699  

Lansing Trade Group LLC(11)
10975 Benson Dr, Suite 400
Overland Park, KS 66210

 

Commodity Merchandiser

 

 

                   

     

9.25% Unsecured Debt (Maturity — February 15, 2019)

    6,000     6,000     5,625  

                           

Larchmont Resources, LLC(11)
301 NW 63rd Street
Oklahoma City, OK 73116

 

Oil & Gas Exploration & Production

 

 

                   

     

LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 9.75%, Secured Debt (Maturity — August 7, 2019)(9)

    7,807     7,508     5,543  

                           

Leadrock Properties, LLC
3601 Galaznik Rd
Angleton, TX 77515

 

Real Estate Investment

 

 

                   

     

10% Secured Debt (Maturity — May 4, 2026)

    1,440     1,416     1,416  

                           

Legendary Pictures Funding, LLC(10)
2900 West Alameda Ave., Floor 15
Burbank, CA 91505

 

Producer of TV, Film, and Comic Content

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — April 22, 2020)(9)

    7,500     7,372     7,425  

                           

106


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

LKCM Headwater Investments I, L.P.(12)(13)
301 Commerce Street, Suite 1600
Fort Worth, TX 76102

 

Investment Partnership

 

 

                   

     

LP Interests (Fully diluted 2.3%)

          2,500     4,875  

                           

Looking Glass Investments, LLC(12)(13)
316 E Silver Spring Drive, Suite 206
Milwaukee, WI 53217

 

Specialty Consumer Finance

 

 

                   

     

9% Unsecured Debt (Maturity — June 30, 2020)

    188     188     188  

     

Member Units (2.5 units)

          125     125  

     

Member Units (LGI Predictive Analytics LLC) (190,712 units)(8)

          188     188  
   

 

 

 

               

                  501     501  

                           

MediMedia USA, Inc.(11)
780 Township Line Road
Yardley, PA 19067
Luxembourg

 

Provider of Healthcare Media and Marketing

 

 

                   

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity — November 20, 2018)(9)

    7,772     7,714     7,422  

                           

Messenger, LLC(10)
318 East 7th Street
Auburn, IN 46706

 

Supplier of Specialty Stationery and Related Products to the Funeral Industry

 

 

                   

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity — September 9, 2020)(9)

    15,583     15,483     15,583  

                           

Milk Specialties Company(11)
7500 Flying Cloud Drive, Suite 500
Eden Prairie, MN 55344

 

Processor of Nutrition Products

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity — November 9, 2018)(9)

    792     789     792  

                           

Minute Key, Inc.
4760 Walnut Street, Suite 105
Boulder, CO 80301

 

Operator of Automated Key Duplication Kiosks

 

 

                   

     

10% Current / 2% PIK Secured Debt (Maturity — September 19, 2019)

    14,186     13,817     13,817  

     

Warrants (1,437,409 equivalent units)

          280     280  
   

 

 

 

               

                  14,097     14,097  

                           

Miramax Film NY, LLC(11)
1601 Cloverfield Blvd., Suite 2000
Santa Monica, CA 90404

 

Motion Picture Producer and Distributor

 

 

                   

     

Member Units (500,000 units)(8)

          864     864  

                           

107


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Mood Media Corporation(11)(13)
1703 W 5th St., Ste. 600
Austin, TX 78703

 

Provider of Electronic Equipment

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — May 1, 2019)(9)

    14,957     14,827     14,266  

                           

New Media Holdings II LLC(11)(13)
1345 Avenue of the Americas
New York, NY10105

 

Local Newspaper Operator

 

 

                   

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — June 4, 2020)(9)

    9,788     9,635     9,703  

North American Lifting Holdings, Inc.(11)
925 South Loop West
Houston, TX 77054

 

Crane Service Provider

 

 

                   

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity — November 27, 2020)(9)

    997     835     733  

                           

North Atlantic Trading Company, Inc.(11)
5201 Interchange Way
Louisville, KY 40229

 

Marketer/Distributor of Tobacco Products

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity — January 13, 2020)(9)

    9,676     9,607     9,603  

                           

Novitex Intermediate, LLC(11)
1 Elmcroft Road
Stamford, CT 06926

 

Provider of Document Management Services

 

 

                   

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity — July 7, 2020)(9)

    8,692     8,532     8,192  

                           

Ospemifene Royalty Sub LLC (QuatRx)(10)
777 East Eisenhower Parkway, Suite 100
Ann Arbor, MI 48108

 

Estrogen-Deficiency Drug Manufacturer and Distributor

 

 

                   

     

11.5% Secured Debt (Maturity — November 15, 2026)

    5,071     5,071     3,780  

                           

108


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Panolam Industries International, Inc.(11)
20 Progress Drive
Shelton, CT 06484

 

Decorative Laminate Manufacturer

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — August 23, 2017)(9)

    9,472     9,429     9,424  

                           

Paris Presents Incorporated(11)
3800 Swanson Ct.
Gurnee, IL 60031

 

Branded Cosmetic and Bath Accessories

 

 

                   

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — December 31, 2021)(9)

    2,000     1,965     1,960  

                           

Parq Holdings Limited Partnership(11)(13)
595 Burrard Street, Suite 700
Vancouver, British Columbia V7X1S8

 

Hotel & Casino Operator

 

 

                   

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — December 17, 2020)(9)

    7,500     7,369     7,200  

                           

Permian Holdings, Inc.(11)
2701 W. Interstate 20
Odessa, TX 76760

 

Storage Tank Manufacturer

 

 

                   

     

10.5% Secured Debt (Maturity — January 15, 2018)

    2,755     2,738     1,047  

                           

Pernix Therapeutics Holdings, Inc.(10)
10 North Park Place, Suite 201
Morristown, NJ 07960

 

Pharmaceutical Royalty

 

 

                   

     

12% Secured Debt (Maturity — August 1, 2020)

    3,818     3,818     3,777  

                           

Pike Corporation(11)
100 Pike Way
Mount Airy, NC 27030

 

Construction and Maintenance Services for Electric Transmission and Distribution Infrastructure

 

 

                   

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity — June 22, 2022)(9)

    15,000     14,663     14,712  

                           

Point.360(10)
2777 North Ontario Street
Burbank, CA 91504

 

Fully Integrated Provider of Digital Media Services

 

 

                   

     

Warrants (65,463 equivalent shares)

          69     9  

     

Common Stock (163,658 shares)

          273     144  
   

 

 

 

               

                  342     153  

                           

109


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Prowler Acquisition Corp.(11)
1010 Lamar, Suite 1320
Houston, TX 77002

 

Specialty Distributor to the Energy Sector

 

 

                   

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity — January 28, 2020)(9)

    4,411     3,734     3,749  

                           

PT Network, LLC(10)
1550 Madruga Avenue, Suite 514
Coral Gables, FL 33146

 

Provider of Outpatient Physical Therapy and Sports Medicine Services

 

 

                   

     

LIBOR Plus 7.75% (Floor 1.50%), Current Coupon 9.25%, Secured Debt (Maturity — November 1, 2018)(9)

    12,047     11,954     11,771  

QBS Parent, Inc.(11)
811 Main Street, Suite 2000
Houston, TX 77002

 

Provider of Software and Services to the Oil & Gas Industry

 

 

                   

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity — August 7, 2021)(9)

    11,389     11,303     11,332  

                           

Raley's(11)
500 West Capitol Avenue
West Sacramento, CA 95605

 

Family-owned supermarket chain in California

 

 

                   

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — May 18, 2022)(9)

    5,094     4,999     5,069  

                           

RCHP, Inc.(11)
103 Continental Place, Ste. 200
Brentwood, TN 37027

 

Regional Non-Urban Hospital Owner/Operator

 

 

                   

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — April 23, 2019)(9)

    5,448     5,426     5,448  

     

LIBOR Plus 10.25% (Floor 1.00%), Current Coupon 11.25%, Secured Debt (Maturity — October 23, 2019)(9)

    4,000     3,954     3,953  
   

 

 

 

               

                  9,380     9,401  

                           

Renaissance Learning, Inc.(11)
2911 Peach Street, PO Box 8036
Wisconsin Rapids, WI 54495

 

Technology-based K-12 Learning Solutions

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — April 11, 2022)(9)

    3,000     2,975     2,835  

                           

110


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

RGL Reservoir Operations Inc.(11)(13)
734 7th Avenue SW Suite 1600
Calgary, Alberta T2P 3P8

 

Oil & Gas Equipment and Services

 

 

                   

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — August 13, 2021)(9)

    3,950     3,851     1,534  

                           

RLJ Entertainment, Inc.(10)
8515 Georgia Avenue, Suite 650
Silversprings, MD 20910

 

Movie and TV Programming Licensee and Distributor

 

 

                   

     

LIBOR Plus 8.75% (Floor 0.25%), Current Coupon 9.16%, Secured Debt (Maturity — September 11, 2019)(9)

    9,354     9,353     9,203  

                           

RM Bidder, LLC(10)
1040 N. Las Palmas Ave, Building 40
Los Angeles, CA 90038

 

Acquisition Vehicle

 

 

                   

     

Warrants (327,532 equivalent unis)

          425     363  

     

Member Units (2,779 units)

          46     45  
   

 

 

 

               

                  471     408  

                           

SAExploration, Inc.(10)(13)
3333 8th Street SE, 3rd Floor
Calgary, AB, T2G 3A4

 

Geophysical Services Provider

 

 

                   

     

Common Stock (6,472 shares)

          65     27  

                           

Sage Automotive Interiors, Inc(11)
3 Research Dr, Suite 300
Greenville, SC 29607

 

Automotive Textiles Manufacturer

 

 

                   

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity — October 8, 2021)(9)

    3,000     2,974     2,970  

                           

Salient Partners L.P.(11)
4265 San Felipe, 8th Floor
Houston, TX 77027

 

Provider of Asset Management Services

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — June 9, 2021)(9)

    7,388     7,251     7,240  

                           

Sotera Defense Solutions, Inc.(11)
2121 Cooperative Way, Suite 400
Henderson, VA 20171

 

Defense Industry Intelligence Services

 

 

                   

     

LIBOR Plus 7.50% (Floor 1.50%), Current Coupon 9.00%, Secured Debt (Maturity — April 21, 2017)(9)

    10,119     9,886     9,360  

                           

111


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Stardust Finance Holdings, Inc.(11)
300 East John Carpenter Freeway
Irving, TX 75062

 

Manufacturer of Diversified Building Products

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — March 13, 2022)(9)

    12,406     12,239     12,065  

                           

Subsea Global Solutions, LLC(10)
2994 North Miami Avenue
Miami, FL 33127

 

Underwater Maintenance and Repair Services

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity — March 17, 2020)(9)

    4,887     4,836     4,762  

                           

Synagro Infrastructure Company, Inc(11)
435 Williams Court, Suite 100
Baltimore, MD 21220

 

Waste Management Services

 

 

                   

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity — August 22, 2020)(9)

    4,714     4,647     4,124  

                           

Targus Group International(11)
1211 North Miller Street
Anaheim, CA 92806

 

Distributor of Protective Cases for Mobile Devices

 

 

                   

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00% / 1.00% PIK, Current Coupon Plus PIK 12.00%, Secured Debt (Maturity — May 24, 2016)(9)(14)

    4,258     4,263     3,119  

                           

TeleGuam Holdings, LLC(11)
624 North Marine Corps Drive
Tamuning, Guam

 

Cable and Telecom Services Provider

 

 

                   

     

LIBOR Plus 4.00% (Floor 1.25%), Current Coupon 5.25%, Secured Debt (Maturity — December 10, 2018)(9)

    7,975     7,961     7,935  

     

LIBOR Plus 7.50% (Floor 1.25%), Current Coupon 8.75%, Secured Debt (Maturity — June 10, 2019)(9)

    2,500     2,484     2,487  
   

 

 

 

               

                  10,445     10,422  

                           

Templar Energy LLC(11)
4727 Gaillardia Parkway
Oklahoma City, OK 73142

 

Oil & Gas Exploration & Production

 

 

                   

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — November 25, 2020)(9)

    4,000     3,962     485  

                           

The Tennis Channel, Inc.(10)
2850 Ocean Park Blvd., Ste. 150
Santa Monica, CA 90405

 

Television-Based Sports Broadcasting

 

 

                   

     

Warrants (114,316 equivalent shares)

          235     301  

                           

112


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

The Topps Company, Inc.(11)
1 Whitehall St.
New York, NY 10004

 

Trading Cards & Confectionary

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — October 2, 2018)(9)

    1,960     1,948     1,923  

                           

TOMS Shoes, LLC(11)
5404 Jandy Place
Los Angeles, CA 90066

 

Global Designer, Distributor, and Retailer of Casual Footwear

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — October 30, 2020)(9)

    4,963     4,545     3,387  

                           

Travel Leaders Group, LLC(11)
119 West 40th Street, 14th Floor
New York, NY 10018

 

Travel Agency Network Provider

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — December 7, 2020)(9)

    8,700     8,638     8,613  

                           

US Joiner Holding Company(11)
5690 Three Noched Rd, Suite 200
Crozet, VA 22932

 

Marine Interior Design and Installation

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — April 16, 2020)(9)

    7,369     7,341     7,295  

                           

Valley Healthcare Group, LLC
2330 W Broadway, Suite 112
Mesa, AZ 85022

 

Provider of Durable Medical Equipment

 

 

                   

     

LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.00%, Secured Debt (Maturity — December 29, 2020)(9)

    10,400     10,297     10,297  

                           

Vantage Oncology, LLC(11)
1500 Rosecrans Avenue, Suite 400
Manhattan Beach, CA 90266

 

Outpatient Radiation Oncology Treatment Centers

 

 

                   

     

9.5% Secured Debt (Maturity — June 15, 2017)

    12,050     11,938     10,182  

                           

113


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Virtex Enterprises, LP(10)
12234A N Interstate Highway 35
Austin, TX 78753

 

Specialty, Full-Service Provider of Complex Electronic Manufacturing Services

 

 

                   

     

12% Secured Debt (Maturity — December 27, 2018)

    1,667     1,516     1,516  

     

Preferred Class A Units (14 units; 5% cumulative)(8)

          333     512  

     

Warrants (11 equivalent units)

          186     135  
   

 

 

 

               

                  2,035     2,163  

                           

Vision Solutions, Inc.(11)
15300 Barranca Parkway
Irvine, CA 92618

 

Provider of Information Availability Software

 

 

                   

     

LIBOR Plus 8.00% (Floor 1.50%), Current Coupon 9.50%, Secured Debt (Maturity — July 23, 2017)(9)

    5,000     4,987     4,750  

                           

Western Dental Services, Inc.(11)
530 S Main St #600
Orange, CA 92868

 

Dental Care Services

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — November 1, 2018)(9)

    4,904     4,901     4,303  

                           

Wilton Brands, LLC(11)
2240 W. 75th St.
Woodridge, IL 60517

 

Specialty Housewares Retailer

 

 

                   

     

LIBOR Plus 7.25% (Floor 1.25%), Current Coupon 8.50%, Secured Debt (Maturity — August 30, 2018)(9)

    1,540     1,524     1,475  

                           

Worley Claims Services, LLC(10)
303 Timber Creek
Hammond, LA 70403

 

Insurance Adjustment Management and Services Provider

 

 

                   

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity — October 31, 2020)(9)

    6,435     6,381     6,210  

                           

YP Holdings LLC(11)
2247 Northlake Parkway
Tucker, GA 30084

 

Online and Offline Advertising Operator

 

 

                   

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity — June 4, 2018)(9)

    2,455     2,435     2,382  

                           

114


Table of Contents

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Zilliant Incorporated
3815 S. Capital of Texas Hwy #300
Austin, TX 78704

 

Price Optimization and Margin Management Solutions

 

 

                   

     

Preferred Stock (186,777 shares)

          154     260  

     

Warrants (952,500 equivalent shares)

          1,071     1,190  
   

 

 

 

               

                  1,225     1,450  
   

 

 

 

               

                           

Subtotal Non-Control/Non-Affiliate Investments

                $ 945,187   $ 894,466  
   

 

 

 

               

Total Portfolio Investments, December 31, 2015

                $ 1,666,642   $ 1,799,996  
   

 

 

 

               

(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note B to our consolidated financial statements included elsewhere herein for a description of Lower Middle Market portfolio investments. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(2)
Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)
See Note C to our consolidated financial statements included elsewhere herein for a summary of geographic location of portfolio companies.

(4)
Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

(5)
Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

(7)
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)
Income producing through dividends or distributions.

(9)
Index based floating interest rate is subject to contractual minimum interest rate. Variable rate loans bear interest at a rate that may be determined by reference to either LIBOR (which can include one-, two-, three- or six-month LIBOR) or Prime, at the borrower's option, which rates reset periodically based on the terms of the loan agreement.

(10)
Private Loan portfolio investment. See Note B to our consolidated financial statements included elsewhere herein for a description of Private Loan portfolio investments.

(11)
Middle Market portfolio investment. See Note B to our consolidated financial statements included elsewhere herein for a description of Middle Market portfolio investments.

(12)
Other Portfolio investment. See Note B to our consolidated financial statements included elsewhere herein for a description of Other Portfolio investments.

(13)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)
Non-accrual and non-income producing investment.

(15)
[Omitted].

(16)
External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(17)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

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MANAGEMENT

        Our business and affairs are managed under the direction of our Board of Directors. Our Board of Directors appoints our officers, who serve at the discretion of the Board of Directors. The responsibilities of the Board of Directors include, among other things, the oversight of our investment activities, the quarterly valuation of our assets, oversight of our financing arrangements and corporate governance activities. The Board of Directors has an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, and may establish additional committees from time to time as necessary.

Board of Directors and Executive Officers

        Our Board of Directors consists of eight members, seven of whom are classified under applicable NYSE listing standards as "independent" directors and under Section 2(a)(19) of the 1940 Act as "non-interested" persons. Pursuant to our articles of incorporation, each member of our Board of Directors serves a one year term, with each current director serving until the 2016 Annual Meeting of Stockholders and until his respective successor is duly qualified and elected. Our articles of incorporation give our Board of Directors sole authority to appoint directors to fill vacancies that are created either through an increase in the number of directors or due to the resignation, removal or death of any director.

        Information regarding our current Board of Directors is set forth below as of March 4, 2016. We have divided the directors into two groups—independent directors and interested directors. Interested directors are "interested persons" of MSCC as defined in Section 2(a)(19) of the 1940 Act. The address for each director is c/o Main Street Capital Corporation, 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056.

Name
  Age   Director
Since
  Expiration
of Term
 

Michael Appling Jr. 

    49     2007     2016  

Joseph E. Canon

    73     2007     2016  

Arthur L. French

    75     2007     2016  

J. Kevin Griffin

    44     2011     2016  

John E. Jackson

    57     2013     2016  

Brian E. Lane

    58     2015     2016  

Stephen B. Solcher

    55     2015     2016  

Name
  Age   Director
Since
  Expiration
of Term
 

Vincent D. Foster

    59     2007     2016  

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        Our executive officers serve at the discretion of our Board of Directors. The following persons serve as our executive officers or significant employees in the following capacities (information as of March 4, 2016):

Name
  Age   Position(s) Held

Vincent D. Foster*†

    59   Chairman of the Board and Chief Executive Officer

Dwayne L. Hyzak*

    43   President, Chief Operating Officer and Senior Managing Director

Curtis L. Hartman*†

    43   Vice Chairman, Chief Credit Officer and Senior Managing Director

David L. Magdol*

    45   Vice Chairman, Chief Investment Officer and Senior Managing Director

Rodger A. Stout†

    64   Executive Vice President

Jason B. Beauvais

    40   Senior Vice President, General Counsel, Chief Compliance Officer and Secretary

Brent D. Smith

    40   Chief Financial Officer and Treasurer

Nicholas T. Meserve

    36   Managing Director

Travis L. Haley

    35   Managing Director

Shannon D. Martin

    46   Vice President, Chief Accounting Officer and Assistant Treasurer

Katherine S. Silva

    36   Vice President and Assistant Treasurer

*
Member of our Investment Committee and our Executive Committee. The Investment Committee is responsible for all aspects of our lower middle market investment process, including approval of such investments. The Executive Committee consults with and advises our Chief Executive Officer on significant firm-wide operational and strategic priorities.

Member of our Credit Committee. The Credit Committee is responsible for all aspects of our investment process with respect to our middle market portfolio investments, including approval of such investments.

        The address for each executive officer and significant employee is c/o Main Street Capital Corporation, 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056.

Biographical Information

        Michael Appling, Jr. is the Chief Executive Officer of TNT Crane & Rigging Inc., a privately held full service crane and rigging operator. From July 2002 through August 2007, he was the Executive Vice President and Chief Financial Officer of XServ, Inc., a large private equity funded, international industrial services and rental company. Mr. Appling also held the position of CEO and President for United Scaffolding, Inc., an XServ, Inc. operating subsidiary. In February 2007, XServ, Inc. was sold to The Brock Group, a private industrial services company headquartered in Texas. From March 2000 to June 2002, Mr. Appling served as the Chief Financial Officer of CheMatch.com, an online commodities trading forum. ChemConnect, Inc., a venture backed independent trading exchange, acquired CheMatch.com in January 2002. From June 1999 to March 2000, Mr. Appling was Vice President and Chief Financial Officer of American Eco Corporation, a publicly traded, international fabrication, construction and maintenance provider to the energy, pulp and paper and power industries. Mr. Appling worked for ITEQ, Inc., a publicly traded, international fabrication and services company, from September 1997 to May 1999, first as a Director of Corporate Development and then as Vice President, Finance and Accounting. From July 1991 to September 1997, Mr. Appling worked at Arthur Andersen, where he practiced as a certified public accountant. We believe Mr. Appling is qualified to serve on our Board of Directors because of his extensive finance and accounting experience, as well as his executive leadership and management experience as a chief executive officer.

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        Joseph E. Canon, since 1982, has been the Executive Vice President and Executive Director, and a member of the Board of Directors, of Dodge Jones Foundation, a private charitable foundation located in Abilene, Texas. Since 2008, he has also been the Executive Vice President and Executive Director, and a member of the Board of Directors, of Kickapoo Springs Foundation and The Legett Foundation, two private family foundations located in Abilene, Texas. Mr. Canon has also been involved during this time as an executive officer and director of several private companies and partnerships with emphasis on energy, financial and other alternative investments. From 1974 to 1982, he served as Executive Vice President and Trust Officer of First National Bank of Abilene. Mr. Canon served until April 2014 on the Board of Directors of First Financial Bankshares, Inc. (NASDAQ: FFIN), a bank and financial holding company headquartered in Abilene, Texas. Mr. Canon also served until April 2014 on the Board of Directors for several bank and trust/asset management subsidiaries of First Financial Bankshares, Inc. He has also served as an executive officer and member of the Board of Directors of various other organizations including the Abilene Convention and Visitors Bureau, Abilene Chamber of Commerce, Conference of Southwest Foundations, City of Abilene Tax Increment District, West Central Texas Municipal Water District and the John G. and Marie Stella Kenedy Memorial Foundation. We believe Mr. Canon's qualifications to serve on our Board of Directors include his many years of managing and investing assets on behalf of public and private entities, his considerable experience in trust banking activities and practices, and his experience on other public boards of directors.

        Arthur L. French has served in a variety of executive management and board of director roles over the course of his business career. He began his private investment activities in 2000 and served as a director of Fab Tech Industries, a steel fabricator, from November 2000 until August 2009, as a director of Houston Plating and Coatings Company, an industrial coatings company, from 2002 until 2007, as a director of Rawson LP, an industrial distribution and maintenance services company, from May 2003 until June 2009, and as non-executive chairman of Rawson Holdings, LLC from March 2009 until December 2010. From September 2003 through March 2007, Mr. French was a member of the Advisory Board of Main Street Capital Partners, LLC and a limited partner of Main Street Mezzanine Fund, LP (both of which are now subsidiaries of Main Street). Mr. French currently serves as an advisor to LKCM Capital Group, LLC, the alternative investment vehicle for Luther King Capital Management headquartered in Ft. Worth, Texas ("LKCM"). In addition, he serves as an independent director of Relevant Solutions Inc. (previously LKCM Distribution Holdings LP), an LKCM portfolio company which provides industrial instrumentation and controls, air compressor products and systems, heat transfer and filter systems and related maintenance services to chemical, petrochemical, oil and gas and power generation customers in Texas, Oklahoma and Louisiana as well as other key markets in the central and western United States. From 1996-1999, Mr. French was Chairman and Chief Executive Officer of Metals USA Inc. (NYSE), where he managed the process of founders acquisition, assembled the management team and took the company through a successful IPO in July 1997. From 1989-1996, he served as Executive Vice President and Director of Keystone International, Inc. (NYSE), a manufacturer of flow controls equipment. After serving as a helicopter pilot in the United States Army, Captain, Corps of Engineers from 1963-1966, Mr. French began his career as a Sales Engineer for Fisher Controls International, Inc., in 1966. During his 23-year career at Fisher Controls, from 1966-1989, Mr. French held various titles, and ended his career at Fisher Controls as President, Chief Operating Officer and Director. We believe Mr. French is qualified to serve on our Board of Directors because of his executive management and leadership roles within numerous public and private companies and his experience in investing in private companies.

        J. Kevin Griffin is the Senior Vice President of Financial Planning & Analysis at Novant Health, a not-for-profit integrated system of 14 hospitals and a medical group consisting of approximately 1,300 physicians in 355 clinic locations, as well as numerous outpatient surgery centers, medical plazas, rehabilitation programs, diagnostic imaging centers, and community health outreach programs. Mr. Griffin's responsibilities at Novant primarily include debt capital market and M&A transactions,

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along with various other strategic analysis projects. From 2007 to October 2012, Mr. Griffin was a Managing Director of Fennebresque & Co., LLC, a boutique investment banking firm located in Charlotte, North Carolina. From 2003 through 2007, he was a Partner at McColl Partners, LLC, where he originated and executed middle market M&A transactions. Prior to McColl Partners, Mr. Griffin worked in the M&A and corporate finance divisions of Lazard Ltd, JPMorgan, and Bank of America in New York, Chicago, and Charlotte. Mr. Griffin's investment banking experience consists primarily of executing and originating mergers and acquisitions and corporate finance transactions. We believe Mr. Griffin is qualified to serve on our Board of Directors because of his extensive finance and valuation experience, his knowledge of the healthcare industry, and his extensive background in working with middle market companies in an M&A and advisory capacity.

        John E. Jackson is the President and Chief Executive Officer of Spartan Energy Partners, LP, a gas gathering, treating and processing company. He has also been a director of Seitel, Inc., a privately owned provider of onshore seismic data to the oil and gas industry in North America, since August 2007, and CONE Midstream Partners, LP (NYSE: CNNX), a master limited partnership that owns and operates natural gas gathering and other midstream energy assets in the Marcellus Shale in Pennsylvania and West Virginia, since January 2015. Mr. Jackson was Chairman, Chief Executive Officer and President of Price Gregory Services, Inc., a pipeline-related infrastructure service provider in North America, from February 2008 until its sale in October of 2009. He served as a director of Hanover Compressor Company ("Hanover"), now known as Exterran Corporation (NYSE: EXTN) and Archrock, Inc. (NYSE: AROC), from July 2004 until May 2010. Mr. Jackson also served as Hanover's President and Chief Executive Officer from October 2004 to August 2007 and as Chief Financial Officer from January 2002 to October 2004. He also serves on the board of several non-profit organizations. We believe Mr. Jackson's qualifications to serve on our Board of Directors include his extensive background in executive and director roles of public and private companies.

        Brian E. Lane has served as Chief Executive Officer and President of Comfort Systems USA, Inc. (NYSE: FIX), a leading provider of commercial, industrial and institutional heating, ventilation and air conditioning ("HVAC") services, since December 2011 and as a director of Comfort Systems since November 2010. Mr. Lane served as Comfort Systems' President and Chief Operating Officer from March 2010 until December 2011. Mr. Lane joined Comfort Systems in October 2003 and served as Vice President and then Senior Vice President for Region One until he was named Executive Vice President and Chief Operating Officer in January 2009. Prior to joining Comfort Systems, Mr. Lane spent fifteen years at Halliburton Company (NYSE: HAL), a global service and equipment company devoted to energy, industrial, and government customers. During his tenure at Halliburton, he held various positions in business development, strategy and project initiatives, and he departed as the Regional Director of Europe and Africa. Mr. Lane's additional experience included serving as a Regional Director of Capstone Turbine Corporation (NASDAQ: CPST), a distributed power manufacturer. He also was a Vice President of Kvaerner, an international engineering and construction company, where he focused on the chemical industry. Mr. Lane is also a member of the Board of Directors of Griffen Dewatering Corporation, a privately held company. Mr. Lane earned a Bachelor of Science in Chemistry from the University of Notre Dame and his MBA from Boston College. We believe Mr. Lane is qualified to serve on our Board of Directors because of his background in executive and director roles of public and private companies and his extensive knowledge of the construction and industrial services industries.

        Stephen B. Solcher has served as the Senior Vice President of Finance and Business Operations and Chief Financial Officer of BMC Software, Inc., a privately held company that is a global leader in software solutions, since 2005. Previously, Mr. Solcher served as BMC's Treasurer and Vice President of Finance. He joined BMC in 1991 as Assistant Treasurer and became Treasurer the following year. During Mr. Solcher's tenure, BMC grew from nearly $130 million in annual revenue to $2.2 billion in annual revenue in 2013, its last year operating as a public company. In addition to leading many M&A

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transactions as Chief Financial Officer, Mr. Solcher was instrumental in BMC's transition from being a publicly traded company to becoming a private held company in 2013. Prior to joining BMC, he was employed by Arthur Andersen as a certified public accountant. Mr. Solcher also serves on the development board of the Mays Business School at Texas A&M University and has served on the board of numerous nonprofit organizations. He was recognized by Institutional Investor magazine as part of the "All American Executive Team" in 2010 and 2012 and by Houston Business Journal as 2012 Best CFO—Large Public Company. We believe Mr. Solcher's qualifications to serve on our Board of Directors include his thorough knowledge of the information technology and software industries and his accounting, finance and M&A experience as a chief financial officer of a large public and private company qualifying him to be an audit committee financial expert.

        Vincent D. Foster has served as Chairman of Main Street's Board of Directors and Main Street's Chief Executive Officer since 2007 and also served as Main Street's President from 2012 until 2015. He has also been a member of our investment committee since its formation in 2007, a member of our credit committee since its formation in 2011 and a member of our executive committee since its formation in November 2015. Mr. Foster also currently serves as a founding director of Quanta Services, Inc. (NYSE: PWR), which provides specialty contracting services to the power, natural gas and telecommunications industries, and a director of Team, Inc. (NYSE: TISI), which provides specialty contracting services to the petrochemical, refining, electric power and other heavy industries. He also served as a director of U.S. Concrete, Inc. (NASDAQ-CM: USCR) from 1999 until 2010, Carriage Services, Inc. (NYSE: CSV) from 1999 to 2011 and HMS Income Fund, Inc., a non-publicly traded business development company of which MSC Adviser I, LLC, a wholly owned subsidiary of Main Street, acts as the investment sub-adviser, from 2012 until 2013. In addition, Mr. Foster served as a founding director of the Texas TriCities Chapter of the National Association of Corporate Directors from 2004 to 2011. Mr. Foster, a certified public accountant, had a 19 year career with Arthur Andersen, where he was a partner from 1988-1997. Mr. Foster was the director of Andersen's Corporate Finance and Mergers and Acquisitions practice for the Southwest United States and specialized in working with companies involved in consolidating their respective industries. From 1997, Mr. Foster co-founded and has acted as co-managing partner or chief executive of several Main Street predecessor funds and entities, which are now subsidiaries of ours, including Main Street Mezzanine Fund, LP and its general partner, Main Street Mezzanine Management, LLC, Main Street Capital II, LP and its general partner, Main Street Capital II GP, LLC, and Main Street Capital Partners, LLC. Mr. Foster received the Ernst & Young Entrepreneur of the Year 2008 Award in the financial services category in the Houston & Gulf Coast Area. The program honors entrepreneurs who have demonstrated exceptionality in innovation, financial performance and personal commitment to their businesses and communities. We believe Mr. Foster is qualified to serve on our Board of Directors because of his intimate knowledge of our operations through his day-to-day leadership as Chief Executive Officer of Main Street, along with his comprehensive experience on other public Boards of Directors and his extensive experience in tax, accounting, mergers and acquisitions, corporate governance and finance.

        Dwayne L. Hyzak has served as President since 2015 and Chief Operating Officer and Senior Managing Director since 2014. Mr. Hyzak also serves as a member of our investment committee and our executive committee. Previously, he served as Chief Financial Officer and Senior Managing Director from 2011 and in other executive positions at Main Street since 2007. From 2002, Mr. Hyzak has also served as a Senior Managing Director and in other executive positions of several Main Street predecessor funds and entities, which are now subsidiaries of ours, including the general partner of Main Street Mezzanine Fund, LP, Main Street Mezzanine Management, LLC, the general partner of

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Main Street Capital II, LP, Main Street Capital II GP, LLC, and Main Street Capital Partners, LLC. From 2000 to 2002, Mr. Hyzak was a director of integration with Quanta Services, Inc. (NYSE: PWR), which provides specialty contracting services to the power, natural gas and telecommunications industries, where he was principally focused on the company's mergers and acquisitions and corporate finance activities. Prior to joining Quanta Services, Inc., Mr. Hyzak, a certified public accountant, was a manager with Arthur Andersen in its Transaction Advisory Services group.

        Curtis L. Hartman has served as Vice Chairman since 2015 and Chief Credit Officer and Senior Managing Director since 2011. Mr. Hartman is also the chairman of our credit committee and a member of our investment committee and our executive committee. Previously, he served as Senior Vice President and in other executive positions at Main Street since 2007. From 2000, Mr. Hartman has also served as a Senior Managing Director and in other executive positions of several Main Street predecessor funds and entities, which are now subsidiaries of ours, including the general partner of Main Street Mezzanine Fund, LP, Main Street Mezzanine Management, LLC, the general partner of Main Street Capital II, LP, Main Street Capital II GP, LLC, and Main Street Capital Partners, LLC. Mr. Hartman also serves on the Board of Directors of HMS Income Fund, Inc., a non-publicly traded business development company of which MSC Adviser I, LLC, a wholly owned subsidiary of Main Street, acts as the investment sub-adviser, since 2013. Mr. Hartman currently serves as an executive officer of the Small Business Investor Alliance (SBIA) and has been a member of SBIA's Board of Governors since 2011 where he previously chaired the BDC Committee. From 1999 to 2000, Mr. Hartman was a Director for Sterling City Capital, LLC, a private investment firm. Concurrently with joining Sterling City Capital, he joined United Glass Corporation, a Sterling City Capital portfolio company, as Director of Corporate Development. Prior to joining Sterling City Capital, Mr. Hartman, a certified public accountant, was a manager with PricewaterhouseCoopers LLP in its M&A/Transaction Services group and a senior auditor with Deloitte & Touche LLP in its Financial Assurance Group.

        David L. Magdol has served as Vice Chairman since 2015 and Chief Investment Officer and Senior Managing Director since 2011. Mr. Magdol is also the chairman of our investment committee and a member of our executive committee. Previously, he served as Senior Vice President and in other executive positions at Main Street since 2007. From 2002, Mr. Magdol has served as a Senior Managing Director and in other executive positions of several Main Street predecessor funds and entities, which are now subsidiaries of ours, including the general partner of Main Street Mezzanine Fund, LP, Main Street Mezzanine Management, LLC, the general partner of Main Street Capital II, LP, Main Street Capital II GP, LLC, and Main Street Capital Partners, LLC. Mr. Magdol joined Main Street from the investment banking group at Lazard Freres & Co. Prior to Lazard, he managed a portfolio of private equity investments for the McMullen Group, a private investment firm/family office capitalized by Dr. John J. McMullen, the former owner of the New Jersey Devils and the Houston Astros. Mr. Magdol began his career in the structured finance services group of JP Morgan Chase.

        Rodger A. Stout has served as Executive Vice President since 2012 and is also a member of our credit committee. Previously, Mr. Stout served as Chief Accounting Officer and Secretary from 2007 to 2008, as Chief Compliance Officer and Treasurer from 2007 to 2012 and as Senior Vice President—Finance and Administration from 2008 to 2012. From 2006, Mr. Stout has served as Executive Vice President and in other executive positions of several Main Street predecessor funds and entities, which are now subsidiaries of ours, including the general partner of Main Street Mezzanine Fund, LP, Main Street Mezzanine Management, LLC, the general partner of Main Street Capital II, LP, Main Street Capital II GP, LLC, and Main Street Capital Partners, LLC. From 2000 to 2006, Mr. Stout was senior vice president and chief financial officer for FabTech Industries, Inc., which was one of the largest domestic structural steel fabricating companies. From 1985 to 2000, he was a senior financial executive for Jerold B. Katz Interests. He held numerous positions over his 15 year tenure with this national scope financial services conglomerate. Those positions included director, executive vice president, senior

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financial officer and investment officer. Prior to 1985, Mr. Stout was an international tax executive in the oil and gas service industry.

        Jason B. Beauvais has served as Senior Vice President, General Counsel, Chief Compliance Officer and Secretary since 2012. Previously, Mr. Beauvais served as Vice President, General Counsel and Secretary since 2008. From 2008, Mr. Beauvais has also served as General Counsel and in other executive positions of several of our subsidiary funds and entities, including the general partner of Main Street Mezzanine Fund, LP, Main Street Mezzanine Management, LLC, the general partner of Main Street Capital II, LP, Main Street Capital II GP, LLC, and Main Street Capital Partners, LLC. From 2006 through 2008, Mr. Beauvais was an attorney with Occidental Petroleum Corporation (NYSE: OXY), an international oil and gas exploration and production company. Prior to joining Occidental Petroleum Corporation, Mr. Beauvais practiced corporate and securities law at Baker Botts L.L.P., where he primarily counseled companies in public issuances and private placements of debt and equity and handled a wide range of general corporate and securities matters as well as mergers and acquisitions.

        Brent D. Smith has served as Chief Financial Officer and Treasurer since November 2014 and previously as Senior Vice President—Finance since August 2014. Mr. Smith previously served as Executive Vice—President, Chief Financial Officer and Treasurer of Cal Dive International, Inc. from 2010 through June 2014 and in various finance and accounting roles at Cal Dive from 2005 through 2010. On March 3 2015, Cal Dive and certain of its subsidiaries, excluding its foreign subsidiaries, filed for voluntary protection under Chapter 11 of the Bankruptcy Code. Prior to joining Cal Dive, Mr. Smith was a manager with FTI Consulting (NYSE:FCN). Prior to that, Mr. Smith, a certified public accountant, was employed as a senior auditor at Arthur Andersen LLP.

        Nicholas T. Meserve has served as Managing Director on our middle market investment team since 2012. Previously, from 2004 until 2012, Mr. Meserve worked at Highland Capital Management, LP, a large alternative credit manager, and certain of its affiliates, where he managed a portfolio of senior loans and high yield bonds across a diverse set of industries. Prior to Highland, he was a Credit Analyst at JP Morgan Chase & Co.

        Travis L. Haley has served as Managing Director on our lower middle market team since 2013 and has been with the firm in Associate to Director roles since 2007. Prior to joining Main Street, Mr. Haley was a senior consultant in the Transaction Advisory Services group at Ernst & Young, performing financial due diligence for both strategic and financial buyers and sellers. Before joining the Transaction Advisory Services group, Mr. Haley served as an auditor with Ernst & Young. Mr. Haley is a certified public accountant and began his career with Nueces Marketing Partners, a private investment group.

        Shannon D. Martin has served as Vice President, Chief Accounting Officer and Assistant Treasurer since 2012. From 2006 to 2012, Mr. Martin worked as an independent consultant and performed financial advisory services for several clients, including functioning as acting Chief Accounting Officer from 2008 to 2011 for EquaTerra, Inc. From 1999 to 2006, Mr. Martin was a director of accounting integration and audit with Quanta Services, Inc. (NYSE: PWR), which provides specialty contracting services to the power, natural gas and telecommunications industries, where he focused on the development of integrated accounting, business and information system processes and the company's acquisition and integration strategies. From 1992 to 1999, Mr. Martin, a certified public accountant, worked at Arthur Andersen as a manager in the Commercial Services group.

        Katherine S. Silva, a certified public accountant, has served as Vice President since 2015, with responsibility for managing several administrative functions, and Assistant Treasurer since 2010. She also serves as special assistant to Mr. Foster. Ms. Silva has worked at Main Street since 2005 and holds a Bachelor of Arts in Journalism from the University of Georgia.

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CORPORATE GOVERNANCE

        We maintain a corporate governance section on our website which contains copies of the charters for the committees of our Board of Directors. The corporate governance section may be found at http://mainstcapital.com under "Governance" in the "Investors" section of our website. The corporate governance section contains the following documents, which are available in print to any stockholder who requests a copy in writing to Main Street Capital Corporation, Corporate Secretary's Office, 1300 Post Oak Blvd., 8th Floor, Houston, Texas 77056:

        In addition, our Code of Business Conduct and Ethics and our Corporate Governance and Stock Ownership Guidelines may be found at http://mainstcapital.com under "Governance" in the "Investors" section of our website and are available in print to any stockholder who requests a copy in writing.

Director Independence

        Our Board of Directors currently consists of eight members, seven of whom are classified under applicable listing standards of the New York Stock Exchange as "independent" directors and under Section 2(a)(19) of the 1940 Act as not "interested persons." Based on these independence standards, our Board of Directors has affirmatively determined that the following directors are independent:

        Our Board of Directors considered certain portfolio investments and other transactions in which our independent directors may have had a direct or indirect interest, including the transactions, if any, described under the heading "Certain Relationships and Related Party Transactions" in evaluating each director's independence under the 1940 Act and applicable listing standards of the New York Stock Exchange, and the Board of Directors determined that no such transaction would impact the ability of any director to exercise independent judgment or impair his independence.

Communications with the Board

        Stockholders or other interested persons may send written communications to the members of our Board of Directors, addressed to Board of Directors, c/o Main Street Capital Corporation, Corporate Secretary's Office, 1300 Post Oak Blvd., 8th Floor, Houston, Texas 77056. All communications received in this manner will be delivered to one or more members of our Board of Directors.

Board Leadership Structure

        Mr. Foster currently serves as both our Chief Executive Officer and as the Chairman of our Board of Directors. As our Chief Executive Officer, Mr. Foster is an "interested person" under Section 2(a)(19) of the 1940 Act. The Board believes that the Company's Chief Executive Officer is currently best situated to serve as Chairman given his history with the Company, his deep knowledge of the Company's business and his extensive experience in managing private debt and equity investments in lower middle market companies and debt investments in middle market companies. The Company's independent directors bring experience, oversight and expertise from outside the Company and

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industry, while the Chief Executive Officer brings company-specific and industry-specific experience and expertise. The Board believes that the combined role of Chairman and Chief Executive Officer promotes strategy development and execution while facilitating effective, timely communication between management and the Board. At the present time, the independent directors feel that the combined Chairman and Chief Executive Officer responsibility is optimum for effective corporate governance.

        Our Board of Directors designated Arthur L. French as Lead Independent Director to preside at all executive sessions of non-management directors. In the Lead Independent Director's absence, the remaining non-management directors may appoint a presiding director by majority vote. The non-management directors meet in executive session without management on a regular basis. The Lead Independent Director also has the responsibility of consulting with management on Board and committee meeting agendas, acting as a liaison between management and the non-management directors, including maintaining frequent contact with the Chairman and Chief Executive Officer and facilitating collaboration and communication between the non-management directors and management. Stockholders or other interested persons may send written communications to Arthur L. French, addressed to Lead Independent Director, c/o Main Street Capital Corporation, Corporate Secretary's Office, 1300 Post Oak Blvd., 8th Floor, Houston, Texas 77056.

        A key responsibility of the Board is to oversee the development of corporate plans and hold management accountable for the execution of major strategies. The Board believes the combined role of Chairman and Chief Executive Officer, together with the role of the Lead Independent Director, is in the best interest of our stockholders because it provides the appropriate balance between strategy development and independent oversight of management.

Board of Directors and its Committees

        Board of Directors.    Our Board of Directors met four times and acted by unanimous written consent nineteen times during 2015. All directors attended at least 75% of the meetings of the Board of Directors and of the committees on which they served during 2015, and all six directors at the time attended the 2015 Annual Meeting of Stockholders in person. Our Board of Directors expects each director to make a diligent effort to attend all Board and committee meetings, as well as each Annual Meeting of Stockholders.

        Committees.    Our Board of Directors currently has, and appoints the members of, standing Audit, Compensation and Nominating and Corporate Governance Committees. Each of those committees is comprised entirely of independent directors and has a written charter approved by our Board of Directors. The current members of the committees are identified in the following table.

 
  Board Committees
Director
  Audit   Compensation   Nominating and
Corporate
Governance

Michael Appling Jr. 

  ý       ý

Joseph E. Canon

  ý   ý   Chair

Arthur L. French

      Chair    

J. Kevin Griffin

  Chair       ý

John E. Jackson

  ý   ý    

Brian E. Lane

          ý

Stephen B. Solcher

  ý        

        Audit Committee.    During the year ended December 31, 2015, the Audit Committee met four times. The Audit Committee is responsible for selecting, engaging and discharging our independent accountants, reviewing the plans, scope and results of the audit engagement with our independent

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accountants, approving professional services provided by our independent accountants (as well as the compensation for those services), reviewing the independence of our independent accountants and reviewing the adequacy of our internal control over financial reporting. In addition, the Audit Committee is responsible for assisting our Board of Directors with its review and approval of the determination of the fair value of our investments. Our Board of Directors has determined that each of Messrs. Appling, Canon, Griffin, Jackson and Solcher is an "Audit Committee financial expert" as defined by the Securities and Exchange Commission, or the SEC. For more information on the backgrounds of these directors, see their biographical information under "Election of Directors" above.

        Compensation Committee.    During the year ended December 31, 2015, the Compensation Committee met four times and acted by unanimous written consent twice. The Compensation Committee determines the compensation and related benefits for our executive officers including the amount of salary, bonus and stock-based compensation to be included in the compensation package for each of our executive officers. In addition, the Compensation Committee assists the Board of Directors in developing and evaluating the compensation of our non-management directors and evaluating succession planning with respect to the chief executive officer and other key executive positions. The Compensation Committee has the authority to engage the services of outside advisers, experts and others as it deems necessary to assist the committee in connection with its responsibilities. The actions of the Compensation Committee are generally reviewed and ratified by the entire Board of Directors, except the employee director does not vote with respect to his compensation.

        Nominating and Corporate Governance Committee.    During the year ended December 31, 2015, the Nominating and Corporate Governance Committee met four times. The Nominating and Corporate Governance Committee is responsible for determining criteria for service on our Board of Directors, identifying, researching and recommending to the Board of Directors director nominees for election by our stockholders, selecting nominees to fill vacancies on our Board of Directors or a committee of the Board, developing and recommending to our Board of Directors any amendments to our corporate governance principles and overseeing the self-evaluation of our Board of Directors and its committees.

Compensation Committee Interlocks and Insider Participation

        Each member of the Compensation Committee is independent for purposes of the applicable listing standards of the New York Stock Exchange. During the year ended December 31, 2015, no member of the Compensation Committee was an officer, former officer or employee of ours or had a relationship disclosable under "Certain Relationships and Related Party Transactions," except as disclosed therein. No interlocking relationship, as defined by the rules adopted by the SEC, existed during the year ended December 31, 2015 between any member of the Board of Directors or the Compensation Committee and an executive officer of Main Street.

Director Nomination Process

        Our Nominating and Corporate Governance Committee has determined that a candidate for election to our Board of Directors must satisfy certain general criteria, including, among other things:

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        The Nominating and Corporate Governance Committee seeks to identify potential director candidates who will strengthen the Board of Directors and will contribute to the overall mix of general criteria identified above. In addition to the general criteria, the Nominating and Corporate Governance Committee considers specific criteria, such as particular skills, experiences (whether in business or in other areas such as public service, academia or scientific communities), areas of expertise, specific backgrounds, and other characteristics, that should be represented on the Board of Directors to enhance its effectiveness and the effectiveness of its committees. The Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity; however, the Board and the Nominating and Corporate Governance Committee believe that it is essential that the Board members represent diverse experience and viewpoints and a diverse mix of the specific criteria above. The process of identifying potential director candidates includes establishing procedures for soliciting and reviewing potential nominees from directors and for advising those who suggest nominees of the outcome of such review. The Nominating and Corporate Governance Committee also has the authority to retain and terminate any search firm used to identify director candidates.

        Any stockholder may nominate one or more persons for election as one of our directors at an annual meeting of stockholders if the stockholder complies with the notice, information and consent provisions contained in our by-laws and any other applicable law, rule or regulation regarding director nominations. When submitting a nomination to our company for consideration, a stockholder must provide certain information that would be required under applicable SEC rules, including the following minimum information for each director nominee: full name, age and address; number of any shares of our stock beneficially owned by the nominee, if any; the date such shares were acquired and the investment intent of such acquisition; whether such stockholder believes the nominee is an "interested person" of our company, as defined in 1940 Act; and all other information required to be disclosed in solicitations of proxies for election of directors in an election contest or is otherwise required, including the nominee's written consent to being named in the proxy statement as a nominee and to serving as a director if elected. See "Stockholders' Proposals" in our 2016 proxy statement and our by-laws for other requirements of stockholder proposals.

        The Nominating and Corporate Governance Committee will consider candidates identified through the processes described above, and will evaluate each of them, including incumbents, based on the same criteria. The Nominating and Corporate Governance Committee also takes into account the contributions of incumbent directors as Board members and the benefits to us arising from their experience on our Board of Directors. Although the Nominating and Corporate Governance Committee will consider candidates identified by stockholders, the Nominating and Corporate Governance Committee may determine not to recommend those candidates to our Board of Directors, and our Board of Directors may determine not to nominate any candidates recommended by the Nominating and Corporate Governance Committee. None of the director nominees named in our 2016 proxy statement were nominated by stockholders.

Board's Role in the Oversight of Risk Management

        Our Board of Directors as a whole has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant Board Committees that report on their deliberations to the full Board. The oversight responsibility of the Board and its Committees is enabled by management

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reporting processes that are designed to provide visibility to the Board about the identification, assessment and management of critical risks and management's risk mitigation strategies. Areas of focus include competitive, economic, operational, financial (accounting, credit, liquidity and tax), legal, regulatory, compliance and other risks. The Board and its Committees oversee risks associated with their respective principal areas of focus, as summarized below. Committees meet in executive session with key management personnel regularly and with representatives of outside advisors as necessary.

Board/Committee
  Primary Areas of Risk Oversight

Full Board

  Strategic, financial and execution risks and exposures associated with the annual operating plan and five-year strategic plan; major litigation and regulatory exposures and other current matters that may present material risk to our operations, plans, prospects or reputation; material acquisitions and divestitures.

Audit Committee

 

Risks and exposures associated with financial matters, particularly investment valuation, financial reporting and disclosure, tax, accounting, oversight of independent accountants, internal control over financial reporting, financial policies and credit and liquidity matters, along with information technology systems and policies including data privacy and security and business continuity and operational risks.

Compensation Committee

 

Risks and exposures associated with leadership assessment, senior management succession planning, executive and director compensation programs and arrangements, including incentive plans, and compensation related regulatory compliance.

Nominating and Corporate Governance Committee

 

Risks and exposures relating to our programs and policies relating to legal compliance, corporate governance, and director nomination, evaluation and succession planning.

COMPENSATION OF DIRECTORS

        The following table sets forth the compensation that we paid during the year ended December 31, 2015 to our directors. Directors who are also employees of Main Street or any of its subsidiaries do not receive compensation for their services as directors.

Director Compensation Table

Name
  Fees Earned
or Paid
in Cash(2)
  Stock
Awards(3)
  Total  

Arthur L. French

  $ 195,000   $ 30,004   $ 225,004  

Michael Appling Jr. 

    160,000     30,004     190,004  

Joseph E. Canon

    170,000     30,004     200,004  

J. Kevin Griffin

    175,000     30,004     205,004  

John E. Jackson

    160,000     30,004     190,004  

Brian E. Lane(1)

    75,000     29,996     104,996  

Stephen B. Solcher(1)

    80,000     29,996     109,996  

(1)
Messrs. Lane and Solcher were appointed by the Board on November 3, 2015 to fill newly created vacancies.

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(2)
The following non-employee directors elected to defer a portion of their 2015 annual cash retainers in the form of phantom stock units under the Deferred Compensation Plan for Non-Employee Directors (the "2013 Deferred Compensation Plan"):

Name
  2015 Cash
Deferred
  Phantom Stock
Units Credited
for 2015
Deferral
  Total Phantom
Stock Units at
December 31, 2015
 

Arthur L. French

  $ 100,000     3,180.66     7,474.25  

Michael Appling Jr. 

    75,000     2,385.50     6,631.06  

Joseph E. Canon

    100,000     3,180.66     8,393.15  

J. Kevin Griffin

    75,000     2,385.50     7,762.91  

John E. Jackson

    75,000     2,385.50     6,335.80  

Brian E. Lane

    35,000     1,145.66     1,163.00  

Stephen B. Solcher

    40,000     1,309.33     1,329.14  
(3)
Each of Messrs. French, Appling, Canon, Griffin and Jackson received an award of 966 restricted shares on May 5, 2015, and each of Messrs. Lane and Solcher received an award of 988 restricted shares on November 3, 2015, under the Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan (the "Non-Employee Director Plan"), which will vest 100% on May 2, 2016, the day of the Annual Meeting since the prior day is not a business day, provided that the grantee has been in continuous service as a member of the Board through such date. These amounts represent the grant date fair value of the 2015 stock awards in accordance with FASB ASC Topic 718 based on the closing price of our common stock on the date of grant. Pursuant to SEC rules, the amounts shown exclude the impact of any estimated forfeitures related to service-based vesting conditions. These amounts may not correspond to the actual value that will be recognized by our directors upon vesting. Each of Messrs. French, Appling, Canon, Griffin and Jackson had 966, and each of Messrs. Lane and Solcher had 988, unvested shares of restricted stock outstanding as of December 31, 2015. Please see the discussion of the assumptions made in the valuation of these awards in Note M to the audited consolidated financial statements included in this prospectus.

        The compensation for non-employee directors for 2015 was comprised of cash compensation paid to or earned by directors in connection with their service as a director. That cash compensation consisted of an annual retainer of $150,000, and an additional $30,000 retainer for the Lead Independent Director. Non-employee directors do not receive fees based on meetings attended absent circumstances that require an exceptionally high number of meetings within an annual period. We also reimburse our non-employee directors for all reasonable expenses incurred in connection with their service on our Board. The chairs of our Board committees and members of the Audit Committee received additional annual retainers for 2015 as follows:

        The Non-Employee Director Plan provides a means through which we may attract and retain qualified non-employee directors to enter into and remain in service on our Board of Directors. Under the Non-Employee Director Plan, at the beginning of each one-year term of service on our Board of Directors, each non-employee director receives a number of shares equivalent to $30,000 based on the closing price of a share of our common stock on the New York Stock Exchange (or other exchange on which our shares are then listed) on the date of grant. These shares are subject to forfeiture provisions that will lapse as to an entire award at the end of the one-year term.

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        In June 2013, our Board of Directors approved and adopted the 2013 Deferred Compensation Plan to allow non-employee directors at their option to defer all or a portion of the fees paid for their services as directors and have such deferred fees paid in shares of Main Street common stock following their termination as a director. In November 2015, our Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the "2015 Deferred Compensation Plan"). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the 2013 Deferred Compensation Plan. Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units.

        For the beneficial ownership of our common stock by each of our directors and the dollar range value of such ownership, please see "Control Persons and Principal Stockholders".

COMPENSATION DISCUSSION AND ANALYSIS

        The following Compensation Discussion and Analysis, or CD&A, provides information relating to the 2015 compensation of Main Street's Named Executive Officers, or NEOs, for 2015, who were:

Compensation Philosophy and Objectives

        The Main Street compensation system was developed by the Compensation Committee and approved by all independent directors. The system is designed to attract and retain key executives, motivate them to achieve the Company's business objectives and reward them for performance while aligning management's interests with those of the Company's stockholders. The structure of Main Street's incentive compensation programs is formulated to encourage and reward the following, among other things:

        The Compensation Committee has the primary authority to establish compensation for the NEOs and other key employees and administers all executive compensation arrangements and policies. Main Street's Chief Executive Officer assists the Committee by providing recommendations regarding the compensation of NEOs and other key employees, excluding himself. The Committee exercises its discretion by modifying or accepting these recommendations. The Chief Executive Officer routinely attends a portion of the Committee meetings. However, the Committee often meets in executive

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session without the Chief Executive Officer or other members of management when discussing compensation matters and on other occasions as determined by the Committee.

        The compensation packages for Main Street NEOs and other key employees are structured to reflect the Compensation Committee's commitment to corporate governance best practices and performance-oriented executive compensation. Specifically, the Compensation Committee has implemented the following practices for NEOs and other key employees:

        The Compensation Committee takes into account competitive market practices with respect to the salaries and total direct compensation of the NEOs. Members of the Committee consider market practices by reviewing public and non-public information for executives at comparable companies and funds. The Committee also has the authority to utilize compensation consultants to better understand competitive pay practices and has retained such expertise in the past.

Independent Compensation Consultant

        The Compensation Committee has from time to time engaged Deloitte Consulting LLP ("Deloitte") as an independent compensation consultant to assist the Committee and provide advice on a variety of compensation matters relating to NEO and non-executive director compensation, incentive compensation plans and compensation trends, regulatory matters and compensation planning best practices. The compensation consultant was hired by and reports directly to the Compensation Committee. Although the compensation consultant may work directly with management on behalf of the Compensation Committee, any such work is under the control and supervision of the Compensation Committee. No fees were paid or will be paid to Deloitte for compensation consulting services during fiscal 2015.

        During fiscal 2015, the Company's management also retained Deloitte and its affiliates to provide certain other services to the Company. These other services included (i) tax services and other tax-related services and (ii) portfolio valuation consulting services. The total amount paid or to be paid for such services (excluding the services as consultant to the Compensation Committee as discussed above) to Deloitte and its affiliates during fiscal 2015 was approximately $740,111. Deloitte was engaged directly by management to provide these other services and, accordingly, Deloitte's engagement for these other services was not formally approved by the Board of Directors or by the Compensation Committee. The Compensation Committee believes that, given their nature and scope, these additional services did not raise a conflict of interest and did not impair Deloitte's ability to provide independent advice to the Compensation Committee concerning executive compensation matters. In making this determination, the Compensation Committee considered, among other things, the following factors when selecting Deloitte to provide compensation consulting services: (i) the types of non-compensation services provided by Deloitte, (ii) the amount of fees for such non-compensation services, noting in particular that such fees are negligible when considered in the context of Deloitte's total revenues for the period, (iii) Deloitte's policies and procedures concerning conflicts of interest, (iv) Deloitte's representatives who advise the Compensation Committee do not provide any non-compensation related services to the Company, (v) there are no other business or personal relationships between the Company's management or members of the Compensation Committee, on the one hand, and any Deloitte representatives who provide compensation consulting services to the

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Company, on the other hand, and (vi) neither Deloitte nor any of the Deloitte representatives who provide compensation services to the Company own any common stock or other securities of the Company.

Assessment of Market Data

        In assessing the competitiveness of executive compensation levels, the Compensation Committee analyzes market data of certain companies, including internally managed business development companies, or BDCs, private equity firms and other asset management and financial services companies. This analysis focuses on key elements of compensation practices in general, and more specifically, the compensation practices at companies and funds reasonably comparable in asset size, typical investment size and type, market capitalization and general business scope as compared to the Company.

        As regards other internally managed BDCs like Main Street, the Compensation Committee considers the compensation practices and policies pertaining to executive officers as detailed in their company's respective proxies, research analysts' reports and other publicly available information. However, there are relatively few internally managed BDCs and none that are directly comparable to the Company as regards business strategies, assets under management, typical investment size and type and market capitalization. Moreover, regarding the compensation and retention of executive talent, the Company also competes with private equity funds, mezzanine debt funds, hedge funds and other types of specialized investment funds. Since these funds are generally private companies that are not required to publicly disclose their executive compensation practices and policies, the Committee relies on third party compensation surveys as well as other available information to compare compensation practices and policies.

        Items taken into account from comparable companies and funds include, but are not necessarily limited to, base compensation, bonus compensation, stock option awards, restricted stock awards, carried interest and other compensation. In addition to actual levels of cash and equity related compensation, the Compensation Committee also considers other approaches comparable companies are taking with regard to overall executive compensation practices. Such items include, but are not necessarily limited to, the use of employment agreements for certain employees, the mix of cash and equity compensation, the use of third party compensation consultants and certain corporate and executive performance measures that are established to achieve longer term total return for stockholders. Finally, in addition to analyzing comparable companies and funds, the Committee also evaluates the relative cost structure of the Company as compared to the entire BDC sector, including internally and externally managed BDCs, as well as other private funds.

Assessment of Company Performance

        The Compensation Committee believes that sustained financial performance coupled with consistent stockholders' returns as well as proportional employee compensation are essential components for Main Street's long-term business success. Main Street typically makes three to seven year investments in its portfolio companies. However, the Company's business plan involves taking on investment risks over a range of time periods. Accordingly, much emphasis is focused on maintaining the stability of net asset values as well as the continuity of earnings to pass through to stockholders in the form of recurring dividends. The quality of the earnings supporting the dividends as well as the maintenance and growth of dividends are key metrics in the Committee's assessment of financial performance.

        Main Street's primary strategy is to generate current income from debt investments and to realize capital gains from equity-related investments. This income supports the payment of dividends to stockholders. The recurring payment of dividends requires a methodical investment acquisition

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approach and active monitoring and management of the investment portfolio over time. A meaningful part of the Company's employee base is dedicated to the maintenance of asset values and expansion of this recurring income to sustain and grow dividends. The Committee believes that stability of the management team is critical to achieving successful implementation of the Company's strategies. Further, the Committee, in establishing and assessing executive salary and performance incentives, is more focused on Main Street results as compared to its business objectives rather than the performance of Main Street relative to other comparable companies or industry metrics.

Executive Compensation Components

        For 2015, the components of Main Street's direct compensation program for NEOs included:

        The Compensation Committee designs each NEO's direct compensation package to appropriately reward the NEO for his or her contribution to the Company. The judgment and experience of the Committee are weighed with individual and Company performance metrics and consultation with the Chief Executive Officer (except with respect to himself) to determine the appropriate mix of compensation for each individual. The Compensation Committee does not target a specific level of compensation relative to market practice, and only uses such data as a reference point when establishing compensation levels for NEOs. Cash compensation consisting of base salary and discretionary bonuses tied to achievement of individual performance goals that are reviewed and approved by the Committee, as well as corporate objectives, are intended to motivate NEOs to remain with the Company and work to achieve expected business objectives. Stock-based compensation is awarded based on performance expectations approved by the Committee for each NEO. The blend of short-term and long-term compensation may be adjusted from time to time to balance the Committee's views regarding the benefits of current cash compensation and appropriate retention incentives.

        Base salary is used to recognize the experience, skills, knowledge and responsibilities required of the NEOs in their roles. In connection with establishing the base salary of each NEO, the Compensation Committee and management consider a number of factors, including the seniority and experience level of the individual, the functional responsibilities of the position, the experience level of the individual, the Company's ability to replace the executive, the past base salary of the individual and the relative number of well-qualified candidates available in the area. In addition, the Committee considers publicly available information regarding the base salaries paid to similarly situated executive officers and other competitive market practices.

        The salaries of the NEOs are reviewed on an annual basis, as well as at the time of promotion or any substantial change in responsibilities. The key factors in determining increases in salary level are relative performance and competitive pressures.

        Annual cash bonuses are intended to reward individual performance on an annual basis and can therefore be variable from year to year. Cash bonus awards for the NEOs are determined by the Compensation Committee on a discretionary basis based on performance criteria, particularly the company's dividend performance as well as corporate and individual performance goals and other

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measures established by the Committee with the Chief Executive Officer's input (except with respect to his own performance criteria). Should actual performance exceed expected performance criteria, the Committee may adjust individual cash bonuses to take such superior performance into account.

        Main Street's Board of Directors and stockholders approved the 2008 Equity Incentive Plan to provide stock-based awards as long-term incentive compensation to employees, including the NEOs. The Company uses stock-based awards to (i) attract and retain key employees, (ii) motivate employees by means of performance-related incentives to achieve long-range performance goals, (iii) enable employees to participate in the Company's long-term growth in value and (iv) link employees' compensation to the long-term interests of stockholders. At the time of each award, the Compensation Committee will determine the terms of the award, including any performance period (or periods) and any performance objectives relating to vesting of the award.

        Restricted Stock.    Main Street has received exemptive relief from the SEC that permits the Company to grant restricted stock in exchange for or in recognition of services by its executive officers and employees. Pursuant to the 2008 Equity Incentive Plan, the Compensation Committee may award shares of restricted stock to plan participants in such amounts and on such terms as the Committee determines in its sole discretion, provided that such awards are consistent with the conditions set forth in the SEC's exemptive order. Each restricted stock grant will be for a fixed number of shares as set forth in an award agreement between the grantee and Main Street. Award agreements will set forth time and/or performance vesting schedules and other appropriate terms and/or restrictions with respect to awards, including rights to dividends and voting rights. Beginning in 2015, the Committee awarded restricted stock awards to employees, including NEOs, which vest in equal increments over a three year time frame based on continued service during the vesting period. The Committee's previous practice had been to award restricted stock to employees which vested over a four year time frame. The change to the vesting period was made to be more closely aligned with comparable companies.

        Options.    The Compensation Committee may also grant stock options to purchase Main Street's common stock (including incentive stock options and nonqualified stock options). The Committee expects that any options granted will represent a fixed number of shares of common stock, will have an exercise price equal to the fair market value of common stock on the date of grant, and will be exercisable, or "vested," at some later time after grant. Certain stock options may provide for vesting based on the grantee remaining employed by Main Street for a time certain and/or the grantee and/or the Company attaining specified performance criteria. To date, the Committee has not granted stock options to any NEO.

        In May 2015, our Board of Directors and stockholders approved and adopted the 2015 Equity and Incentive Plan to replace the 2008 Equity Incentive Plan. Terms of the 2015 Equity and Incentive Plan are substantially similar to the 2008 Equity Incentive Plan.

        Main Street's NEOs participate in the same benefit plans and programs as the Company's other employees, including comprehensive medical and dental insurance, vision care, business travel insurance and short term disability coverage as well as long term disability insurance.

        Main Street maintains a 401(k) plan for all full-time employees who are at least 21 years of age through which the Company makes non-discretionary matching contributions to each participant's plan account on the participant's behalf. For each participating employee, the Company's contribution is a 100% match of the employee's contributions up to a 3% contribution level and a 50% match of the employee's contributions from a 3% to a 6% contribution level, with a maximum annual regular matching contribution of $11,925 during 2015. All contributions to the plan, including those made by

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the Company, vest immediately. The Board of Directors may also, at its sole discretion, provide that the Company will make additional contributions to employee 401(k) plan accounts, which would also vest immediately.

        In November 2015, our Board of Directors approved and adopted the 2015 Deferred Compensation Plan to allow non-employee directors and certain key employees, including each of the NEOs, to defer receipt of some or all of their cash compensation, subject to certain limitations. Although not currently anticipated and subject to prior Compensation Committee approval, discretionary employer contributions are also permitted to the 2015 Deferred Compensation Plan. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. The 2015 Deferred Compensation Plan became effective on January 1, 2016.

        The Company provides no other material benefits, perquisites or retirement benefits to the NEOs.

Potential Payments Upon Change in Control or Termination of Employment

        Upon specified transactions involving a change in control (as defined in the 2008 Equity Incentive Plan), all outstanding awards under the 2008 Equity Incentive Plan may either be assumed or substituted for by the surviving entity. If the surviving entity does not assume or substitute similar awards, the awards held by the plan participants will be subject to accelerated vesting in full and, in the case of options, then terminated to the extent not exercised within a designated time period.

        Transactions involving a "change in control" under the 2008 Equity Incentive Plan include:

        In addition, our restricted stock awards provide that upon a participant's death, disability, involuntary termination without cause or voluntary termination with good reason (each as defined in the award agreement), the unvested shares of restricted stock will fully vest.

        The number of shares and value of unvested restricted stock for each NEO as of December 31, 2015 that would have vested under the acceleration scenarios described above is shown under "Compensation of Executive Officers—Outstanding Equity Awards at Fiscal Year-End." Other than the accelerated vesting of restricted stock, we would not incur any other payment obligations to our NEOs in the event of a change in control or any of the aforementioned causes of termination of employment.

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Tax Deductibility of Compensation

        Section 162(m) of the Internal Revenue Code of 1986 generally disallows a deduction to public companies to the extent of excess annual compensation over $1 million paid to certain executive officers, except for qualified performance-based compensation. Main Street's general policy, where consistent with business objectives, is to preserve the deductibility of executive officer compensation. However, the Compensation Committee may authorize amounts and forms of compensation that might not be deductible if the Committee deems such to be in the best interests of Main Street and its stockholders.

Stockholder Advisory Vote on Executive Compensation

        At our 2014 Annual Meeting of Stockholders, our stockholders provided an advisory vote with 93% of the votes cast approving our compensation philosophy, policies and procedures and the 2013 fiscal year compensation of our NEOs (the "Advisory Vote"). Subsequently, the Compensation Committee considered the results of the Advisory Vote in determining compensation policies and decisions of the Company. The Advisory Vote affected the Company's executive compensation decisions and policies by reaffirming the Company's compensation philosophies, and the Compensation Committee will continue to use these philosophies and past practice in determining future compensation decisions.

2015 Compensation Determination

        The Compensation Committee analyzed the competitiveness of the components of compensation described above on both an individual and aggregate basis. The Committee believes that the total compensation paid to the NEOs for the fiscal year ended December 31, 2015, is consistent with the overall objectives of Main Street's executive compensation program.

        The Compensation Committee annually reviews the base salary of each executive officer, including each NEO, and determines whether or not to increase it in its sole discretion. Increases to base salary can be awarded to recognize, among other things, relative performance, relative cost of living and competitive pressures.

        In 2015, the Compensation Committee approved base salary increases for each NEO in recognition each NEO's and the Company's performance for the year and also to more closely align each NEO's compensation with similar executive officers of comparable companies.

        The amount of annual base salary paid to each NEO for 2015 is presented under the caption entitled "Compensation of Executive Officers—Summary Compensation Table." The Committee believes that the salary changes and resulting base salaries were competitive in the market place and appropriate for Main Street executives as a key component of an overall compensation package.

        Cash bonuses are determined annually by the Compensation Committee and are based on individual and corporate performance objectives coupled with Committee discretion as appropriate. The 2015 performance criteria used for determining the cash bonuses for NEOs included, among other things, the following:

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        The Company paid cash bonuses to NEOs for 2015 in recognition of the Company's excellent financial results, as well as each individual NEO's accomplishments and contributions to the Company's performance. Major achievements considered by the Compensation Committee included the considerable efforts of our NEOs supporting the increase of the Small Business Investment Company leverage cap from $225 million to $350 million, increased distributable net investment income per share, increased regular monthly dividends per share, total stockholder return versus comparable companies and the market in general, increased net asset value per share, the growth of the investment portfolio, continuation of our low total operating cost structure in comparison to peer organizations, maintaining an investment grade rating from Standard & Poor's Ratings Services, low employee turnover and expansion of our third party asset management business. The Compensation Committee did not weight these objectives and used its discretion in determining the amount allocated to each executive. In summary, the performance of individual NEOs and the management team overall was at a consistent high level resulting in very commendable financial results.

        The amount of cash bonus paid to each NEO for 2015 is presented under the caption entitled "Compensation of Executive Officers—Summary Compensation Table." The Committee believes that these cash bonus awards are individually appropriate based on 2015 performance. Such bonuses comprise a key component of the Company's overall compensation program.

        The Company granted restricted shares to our NEOs in 2015 to recognize individual contributions to corporate strategic priorities and to the long-term performance of the Company. Other objectives of restricted stock awards were to assist with retention, align NEO interests with stockholders' and to provide competitive total direct compensation. Contributions to the future success of the Company include expanded roles of NEOs within the Company, recruitment and development of personnel, advancement of strategic initiatives with benefits beyond the current year, development of appropriate capital structure alternatives and enhancement of the Company's reputation with key constituents.

        The amount of restricted shares granted to each NEO in 2015 is presented under the caption entitled "Compensation of Executive Officers—Grants of Plan-Based Awards." The Committee is currently assessing the potential for long-term incentive compensation through grants of restricted shares to our NEOs for 2016, which are expected to be awarded in April 2016.

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COMPENSATION OF EXECUTIVE OFFICERS

        The following table summarizes the compensation of our Named Executive Officers, or NEOs, for the fiscal year ended December 31, 2015.

Summary Compensation Table

Name and Principal Position
  Year   Salary   Bonus(1)   Stock
Awards(2)
  All Other
Compensation(3)
  Total  

Vincent D. Foster

    2015   $ 568,750   $ 1,300,000   $ 1,556,595   $ 11,925   $ 3,437,270  

Chairman and Chief

    2014     536,250     1,100,000     1,408,761     11,700     3,056,711  

Executive Officer

    2013     490,000     1,000,000     1,232,876     11,475     2,734,351  

Dwayne L. Hyzak

   
2015
 
$

435,000
 
$

850,000
 
$

1,154,887
 
$

11,925
 
$

2,451,812
 

President, Chief Operating

    2014     377,500     675,000     1,056,563     11,700     2,120,763  

Officer and Senior

    2013     332,500     545,000     972,076     11,475     1,861,051  

Managing Director

                                     

Curtis L. Hartman

   
2015
 
$

332,500
 
$

625,000
 
$

803,416
 
$

11,925
 
$

1,772,841
 

Vice Chairman, Chief

    2014     318,750     510,000     603,755     11,700     1,444,205  

Credit Officer and Senior

    2013     296,250     365,000     777,645     11,475     1,450,370  

Managing Director

                                     

David L. Magdol

   
2015
 
$

332,500
 
$

575,000
 
$

753,179
 
$

11,925
 
$

1,672,604
 

Vice Chairman, Chief

    2014     318,750     440,000     905,648     11,700     1,676,098  

Investment Officer and

    2013     296,250     440,000     853,526     11,475     1,601,251  

Senior Managing Director

                                     

Brent D. Smith

   
2015
 
$

282,500
 
$

400,000
 
$

 
$

11,925
 
$

694,425
 

Chief Financial Officer and

    2014     96,955     150,000     434,780     4,837     686,572  

Treasurer

                                     

(1)
These amounts reflect annual cash bonuses earned by the NEOs based on individual and corporate performance as determined by the Compensation Committee.

(2)
These amounts represent the fair value of restricted stock awards in accordance with FASB ASC Topic 718 based on the closing price of our common stock on the grant date. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. These amounts do not correspond to the actual value that will be recognized by our NEOs upon the vesting of such grants. Please see the discussion of the assumptions made in the valuation of these awards in Note M to the audited consolidated financial statements included in this prospectus.

(3)
These amounts reflect employer matching contributions we made to each NEO's account in our 401(k) plan.

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Grants of Plan-Based Awards

        The following table sets forth information regarding restricted stock awards granted to our NEOs in fiscal 2015:

Name
  Grant Date   Stock
Awards;
Number of
Shares of
Stock(1)
  Grant Date
Fair Value
of Stock
Awards
 

Vincent D. Foster

  April 1, 2015     50,506   $ 1,556,595  

Dwayne L. Hyzak

  April 1, 2015     37,472     1,154,887  

Curtis L. Hartman

  April 1, 2015     26,068     803,416  

David L. Magdol

  April 1, 2015     24,438     753,179  

Brent D. Smith

  April 1, 2015          

(1)
Restricted stock grants to NEOs under the 2008 Equity Incentive Plan in 2015 vest ratably over three years from the grant date, and all underlying shares are entitled to dividends and voting rights beginning on the grant date.

Outstanding Equity Awards at Fiscal Year-End

        The following table sets forth the awards of restricted stock for which forfeiture provisions have not lapsed and remain outstanding at December 31, 2015:

 
  Stock Awards  
Name
  Number of
Shares of
Stock That Have
Not Vested(1)
  Market Value of
Shares of
Stock That Have
Not Vested(2)
 

Vincent D. Foster

    113,069 (3) $ 3,288,047  

Dwayne L. Hyzak

    84,712 (4)   2,463,425  

Curtis L. Hartman

    58,133 (5)   1,690,508  

David L. Magdol

    65,107 (6)   1,893,312  

Brent D. Smith

    8,944 (7)   260,092  

(1)
No restricted stock awards have been transferred.

(2)
The market value of shares of stock that have not vested was determined based on the closing price of our common stock on the New York Stock Exchange at December 31, 2015.

(3)
16,835 shares will vest on April 1, 2016; 28,716 shares will vest on June 20, 2016; 16,835 shares will vest on April 1, 2017; 22,659 shares will vest on June 20, 2017; 16,836 shares will vest on April 1, 2018; and 11,188 shares will vest on June 20, 2018, subject in each case to the NEO still being employed by us on the respective vesting date.

(4)
12,490 shares will vest on April 1, 2016; 21,413 shares will vest on June 20, 2016; 12,491 shares will vest on April 1, 2017; 17,436 shares will vest on June 20, 2017; 12,491 shares will vest on April 1, 2018; and 8,391 shares will vest on June 20, 2018, subject in each case to the NEO still being employed by us on the respective vesting date.

(5)
8,689 shares will vest on April 1, 2016; 15,239 shares will vest on June 20, 2016; 8,689 shares will vest on April 1, 2017; 12,031 shares will vest on June 20, 2017; 8,690 shares will vest on April 1, 2018; and 4,795 shares will vest on June 20, 2018, subject in each case to the NEO still being employed by us on the respective vesting date.

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(6)
8,146 shares will vest on April 1, 2016; 18,342 shares will vest on June 20, 2016; 8,146 shares will vest on April 1, 2017; 15,134 shares will vest on June 20, 2017; 8,146 shares will vest on April 1, 2018; and 7,193 shares will vest on June 20, 2018, subject in each case to the NEO still being employed by us on the respective vesting date.

(7)
4,472 shares will vest on June 20, 2016; and 4,472 shares will vest on June 20, 2017, subject in each case to the NEO still being employed by us on the respective vesting date.

Equity Awards Vested in Fiscal Year

        The following table sets forth information regarding shares of restricted stock for which forfeiture restrictions lapsed during the fiscal year ended December 31, 2015:

 
  Stock Awards  
Name
  Number of Shares
Acquired on
Vesting(1)
  Value
Realized on
Vesting(2)
 

Vincent D. Foster

    34,736   $ 1,104,605  

Dwayne L. Hyzak

    24,416     776,429  

Curtis L. Hartman

    18,242     580,096  

David L. Magdol

    21,346     678,803  

Brent D. Smith

    4,471     142,178  

(1)
Number of shares acquired upon vesting is before withholding of vesting shares by the Company to satisfy tax withholding obligations. Each of our NEOs elected to satisfy his tax withholding obligations by having the Company withhold a portion of his vesting shares.

(2)
Value realized upon vesting is based on the closing price of our common stock on the vesting date.

Potential Payments Upon Change in Control or Termination of Employment

        As described in "Compensation Discussion and Analysis," our restricted stock awards to employees, including NEOs, provide that upon certain transactions involving a change in control, or upon a participant's death, disability, involuntary termination without cause or voluntary termination with good reason (each as defined in the award agreement), the unvested shares of restricted stock will fully vest. The number of shares and value of unvested restricted stock for each NEO as of December 31, 2015 that would have vested under the acceleration scenarios described above is shown under the heading "—Outstanding Equity Awards at Fiscal Year-End." Other than the accelerated vesting of restricted stock, we would not incur any other payment obligations to our NEOs in the event of a change in control or any of the aforementioned causes of termination of employment.

Risk Management and Compensation Policies and Practices

        We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company. In addition, the Compensation Committee believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks.

        The Compensation Committee has reviewed the elements of executive compensation to determine whether any portion of executive compensation encouraged excessive risk taking and concluded:

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        Furthermore, as described in "Compensation Discussion and Analysis," compensation decisions include subjective considerations, which restrain the influence of formulae or objective factors on excessive risk taking.


CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

        We have procedures in place for the review, approval and monitoring of transactions involving us and certain persons related to us. As a BDC, the 1940 Act restricts us from participating in transactions with any persons affiliated with us, including our officers, directors and employees and any person controlling or under common control with us, subject to certain exceptions.

        In the ordinary course of business, we enter into transactions with portfolio companies that may be considered related party transactions. We have implemented certain policies and procedures, both written and unwritten, to ensure that we do not engage in any prohibited transactions with any persons affiliated with us. If such affiliations are found to exist, we seek Board and/or committee review and approval or exemptive relief for such transactions, as appropriate.

        In addition, our code of business conduct and ethics, which is applicable to all of our employees, officers and directors, requires that all employees, officers and directors avoid any conflict, or the appearance of a conflict, between an individual's personal interests and our interests. Our code of business conduct and ethics is available at http://mainstcapital.com under "Governance" in the "Investors" section of our website.


CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS

        The following table sets forth information with respect to the beneficial ownership of our common stock by:

        Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. There is no common stock subject to options that are currently exercisable or exercisable within 60 days of March 4, 2016. Percentage of beneficial ownership is based on 50,496,252 shares of common stock outstanding as of March 4, 2016.

        Unless otherwise indicated, to our knowledge, each stockholder listed below has sole voting and investment power with respect to the shares beneficially owned by the stockholder, and maintains an

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address c/o Main Street Capital Corporation. Our address is 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056.

 
  Shares Owned Beneficially  
Name
  Number   Percentage  

Independent Directors:

             

Michael Appling Jr. 

    102,362 (1)   *  

Joseph E. Canon

    47,351 (2)   *  

Arthur L. French

    51,448 (3)   *  

J. Kevin Griffin

    18,296 (4)   *  

John E. Jackson

    18,330 (5)   *  

Brian E. Lane

    2,188 (6)   *  

Stephen B. Solcher

    2,356 (7)   *  

Interested Directors:

             

Vincent D. Foster

    1,591,417 (8)   3.15 %

Executive Officers:

             

Dwayne L. Hyzak

    280,977     *  

Curtis L. Hartman

    219,322     *  

David L. Magdol

    278,133     *  

Rodger A. Stout

    150,714 (9)   *  

Jason B. Beauvais

    74,548     *  

Brent D. Smith

    12,797     *  

Shannon D. Martin

    23,883     *  

All Directors and Executive Officers as a Group (15 persons)

    2,874,124     5.69 %

*
Less than 1%

(1)
Includes 6,717 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(2)
Includes 8,502 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(3)
Includes 40,911 shares of common stock held by Flying F, LLC, which are beneficially owned by Mr. French, and 7,571 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(4)
Includes 7,863 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(5)
Includes 1,058 shares of common stock held by Mr. Jackson's wife and 6,418 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(6)
Includes 1,178 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

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(7)
Includes 1,346 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(8)
Includes 103,806 shares of common stock held by family trusts for benefit of Mr. Foster's children. For each of these family trusts, Mr. Foster either acts as trustee or may from time to time direct the trustee to vote or dispose of these shares. Also includes 3,778 and 3,697 shares held in custodial accounts for Mr. Foster's daughters, Amy Foster and Brittany Foster, respectively.

(9)
Includes 12,500 shares of common stock pledged as collateral for a personal real estate loan.

        The Board of Directors has established stock ownership guidelines pursuant to which independent directors and certain key employees, including each executive officer listed in the table above, are required to achieve and maintain minimum levels of stock ownership. Our Corporate Governance and Stock Ownership Guidelines may be found at http://mainstcapital.com under "Governance" in the "Investors" section of our website.

        Our insider trading policy prohibits our directors, officers and employees from holding shares of our common stock or other securities issued by us in a margin account, hedging any such securities or pledging any such securities as collateral for a loan except in limited cases with the pre-approval of our chief compliance officer.

        The following table sets forth, as of March 4, 2016, the dollar range of our equity securities that is beneficially owned by each of our directors.

 
  Dollar Range of Equity
Securities Beneficially
Owned(1)(2)(3)

Interested Directors:

   

Vincent D. Foster

  over $100,000

Independent Directors:

   

Michael Appling Jr. 

  over $100,000

Joseph E. Canon

  over $100,000

Arthur L. French

  over $100,000

J. Kevin Griffin

  over $100,000

John E. Jackson

  over $100,000

Brian E. Lane

  $50,001 - $100,000

Stephen B. Solcher

  $50,001 - $100,000

(1)
Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act.

(2)
The dollar range of equity securities beneficially owned by our directors is based on the closing price of our common stock on the New York Stock Exchange of $29.69 per share as of March 4, 2016.

(3)
The dollar ranges of equity securities beneficially owned are: none, $1-$10,000, $10,001-$50,000, $50,001-$100,000, or over $100,000.

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SALES OF COMMON STOCK BELOW NET ASSET VALUE

        Our stockholders may from time to time vote to allow us to issue common stock at a price below the net asset value (NAV) per share of our common stock. In such an approval, our stockholders may not specify a maximum discount below net asset value at which we are able to issue our common stock. In order to sell shares pursuant to such a stockholder authorization:

        We are also permitted to sell shares of common stock below NAV per share in rights offerings. Any offering of common stock below NAV per share will be designed to raise capital for investment in accordance with our investment objectives and business strategies.

        In making a determination that an offering below NAV per share is in our and our stockholders' best interests, our Board of Directors would consider a variety of factors including:

        We did not seek stockholder authorization to issue common stock at a price below net asset value per share at our 2015 Annual Meeting of Stockholders, and we are not currently seeking such approval at our 2016 Annual Meeting of Stockholders, because our common stock price per share has been trading significantly above the current net asset value per share of our common stock, but we may seek such authorization at future Annual Meetings or Special Meetings of Stockholders.

        Sales by us of our common stock at a discount from NAV pose potential risks for our existing stockholders whether or not they participate in the offering, as well as for new investors who participate in the offering.

        The following three headings and accompanying tables will explain and provide hypothetical examples on the impact of an offering at a price less than NAV per share on three different sets of investors:

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Impact on Existing Stockholders who do not Participate in the Offering

        Our existing stockholders who do not participate in an offering below NAV per share or who do not buy additional shares in the secondary market at the same or lower price we obtain in the offering (after expenses and commissions) face the greatest potential risks. These stockholders will experience an immediate decrease (often called dilution) in the NAV of the shares they hold and their NAV per share. These stockholders will also experience a disproportionately greater decrease in their participation in our earnings and assets and their voting power than the increase we will experience in our assets, potential earning power and voting interests due to the offering. These stockholders may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering and level of discount to NAV increases.

        The following table illustrates the level of NAV dilution that would be experienced by a nonparticipating stockholder in four different hypothetical offerings of different sizes and levels of discount from NAV per share. Actual sales prices and discounts may differ from the presentation below.

        The examples assume that Company XYZ has 1,000,000 common shares outstanding, $15,000,000 in total assets and $5,000,000 in total liabilities. The current NAV and NAV per share are thus $10,000,000 and $10.00. The table illustrates the dilutive effect on nonparticipating Stockholder A of (1) an offering of 50,000 shares (5% of the outstanding shares) at $9.50 per share after offering expenses and commissions (a 5% discount from NAV), (2) an offering of 100,000 shares (10% of the outstanding shares) at $9.00 per share after offering expenses and commissions (a 10% discount from NAV), (3) an offering of 250,000 shares (25% of the outstanding shares) at $8.00 per share after offering expenses and commissions (a 20% discount from NAV) and (4) an offering of 250,000 shares (25% of the outstanding shares) at $0.01 per share after offering expenses and commissions (a 100% discount from NAV). The prospectus supplement pursuant to which any discounted offering is made

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will include a chart based on the actual number of shares in such offering and the actual discount to the most recently determined NAV.

 
   
  Example 1
5% Offering at
5% Discount
  Example 2
10% Offering at
10% Discount
  Example 3
25% Offering at
20% Discount
  Example 4
25% Offering at
100% Discount
 
 
  Prior to
Sale Below
NAV
  Following
Sale
  % Change   Following
Sale
  % Change   Following
Sale
  % Change   Following
Sale
  % Change  

Offering Price

                                                       

Price per Share to Public(1)

      $ 10.00       $ 9.47       $ 8.42       $ 0.01      

Net Proceeds per Share to Issuer

      $ 9.50       $ 9.00       $ 8.00       $ 0.01      

Increase in Shares and Decrease to NAV

                                                       

Total Shares Outstanding

    1,000,000     1,050,000     5.00 %   1,100,000     10.00 %   1,250,000     25.00 %   1,250,000     25.00 %

NAV per Share

  $ 10.00   $ 9.98     (0.20 )% $ 9.91     (0.90 )% $ 9.60     (4.00 )% $ 8.00     (20.00 )%

Dilution to Nonparticipating Stockholder A

                                                       

Share Dilution

                                                       

Shares Held by Stockholder A

    10,000     10,000         10,000         10,000         10,000      

Percentage Outstanding Held by Stockholder A

    1.00 %   0.95 %   (4.76 )%   0.91 %   (9.09 )%   0.80 %   (20.00 )%   0.80 %   (20.00 )%

NAV Dilution

                                                       

Total NAV Held by Stockholder A

  $ 100,000   $ 99,800     (0.20 )% $ 99,100     (0.90 )% $ 96,000     (4.00 )% $ 80,000     (20.00 )%

Total Investment by Stockholder A (Assumed to be $10.00 per Share)

  $ 100,000   $ 100,000       $ 100,000       $ 100,000       $ 100,000      

Total Dilution to Stockholder A (Total NAV Less Total Investment)

        $ (200 )     $ (900 )     $ (4,000 )     $ (20,000 )    

NAV Dilution per Share

                                                       

NAV per Share Held by Stockholder A

        $ 9.98       $ 9.91       $ 9.60       $ 8.00      

Investment per Share Held by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale)

  $ 10.00   $ 10.00       $ 10.00       $ 10.00       $ 10.00      

NAV Dilution per Share Experienced by Stockholder A (NAV per Share Less Investment per Share)                

        $ (0.02 )     $ (0.09 )     $ (0.40 )     $ (2.00 )    

Percentage NAV Dilution Experienced by Stockholder A (NAV Dilution per Share Divided by Investment per Share)

                (0.20 )%         (0.90 )%         (4.00 )%         (20.00 )%

(1)
Assumes 5% in selling compensation and expenses paid by us.

Impact on Existing Stockholders who do Participate in the Offering

        Our existing stockholders who participate in an offering below NAV per share or who buy additional shares in the secondary market at the same or lower price as we obtain in the offering (after expenses and commissions) will experience the same types of NAV dilution as the nonparticipating stockholders, albeit at a lower level, to the extent they purchase less than the same percentage of the discounted offering as their interest in our shares immediately prior to the offering. The level of NAV dilution to such stockholders will decrease as the number of shares such stockholders purchase increases. Existing stockholders who buy more than their proportionate percentage will experience NAV dilution but will, in contrast to existing stockholders who purchase less than their proportionate share of the offering, experience an increase (often called accretion) in NAV per share over their investment per share and will also experience a disproportionately greater increase in their participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests due to the offering. The level of accretion will increase as the excess number of shares purchased by such stockholder increases. Even a stockholder who over-participates will, however, be subject to the risk that we may make additional discounted offerings in which such stockholder does not participate, in which case such a stockholder will experience NAV dilution as described above in such subsequent offerings. These stockholders may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering and the level of discount to NAV increases.

        The following chart illustrates the level of dilution and accretion in the hypothetical 25% offering at a 20% discount from the prior chart (Example 3) for a stockholder that acquires shares equal to

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(1) 50% of its proportionate share of the offering (i.e., 1,250 shares, which is 0.5% of an offering of 250,000 shares rather than its 1.0% proportionate share) and (2) 150% of such percentage (i.e., 3,750 shares, which is 1.5% of an offering of 250,000 shares rather than its 1.0% proportionate share). The prospectus supplement pursuant to which any discounted offering is made will include a chart for this example based on the actual number of shares in such offering and the actual discount from the most recently determined NAV per share.

 
   
  50% Participation   150% Participation  
 
  Prior to
Sale Below
NAV
  Following
Sale
  % Change   Following
Sale
  % Change  

Offering Price

                               

Price per Share to Public(1)

      $ 8.42       $ 8.42      

Net Proceeds per Share to Issuer

      $ 8.00       $ 8.00      

Increase in Shares and Decrease to NAV

                               

Total Shares Outstanding

    1,000,000     1,250,000     25.00 %   1,250,000     25.00 %

NAV per Share

  $ 10.00   $ 9.60     (4.00 )% $ 9.60     (4.00 )%

Dilution/Accretion to Participating Stockholder A

                               

Share Dilution/Accretion

                               

Shares Held by Stockholder A

    10,000     11,250     12.50 %   13,750     37.50 %

Percentage Outstanding Held by Stockholder A           

    1.00 %   0.90 %   (10.00 )%   1.10 %   10.00 %

NAV Dilution/Accretion

                               

Total NAV Held by Stockholder A

  $ 100,000   $ 108,000     8.00 % $ 132,000     32.00 %

Total Investment by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale)

      $ 110,525       $ 131,575      

Total Dilution/Accretion to Stockholder A (Total NAV Less Total Investment)

      $ (2,525 )     $ 425      

NAV Dilution/Accretion per Share

                               

NAV per Share Held by Stockholder A

      $ 9.60       $ 9.60      

Investment per Share Held by Stockholder A (Assumedto be $10.00 per Share on Shares Held Prior to Sale)

  $ 10.00   $ 9.82     (1.76 )% $ 9.57     (4.31 )%

NAV Dilution/Accretion per Share Experienced by Stockholder A (NAV per Share Less Investment per Share)

      $ (0.22 )     $ 0.03      

Percentage NAV Dilution/Accretion Experienced by Stockholder A (NAV Dilution/Accretion per Share Divided by Investment per Share)

            (2.28 )%       0.32 %

(1)
Assumes 5% in selling compensation and expenses paid by us.

Impact on New Investors

        Investors who are not currently stockholders, but who participate in an offering below NAV and whose investment per share is greater than the resulting NAV per share due to selling compensation and expenses paid by us will experience an immediate decrease, albeit small, in the NAV of their shares and their NAV per share compared to the price they pay for their shares (Example 1 below). On the other hand, investors who are not currently stockholders, but who participate in an offering below NAV per share and whose investment per share is also less than the resulting NAV per share will experience an immediate increase in the NAV of their shares and their NAV per share compared to the price they pay for their shares (Examples 2, 3 and 4 below). These latter investors will experience a disproportionately greater participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests. These investors will, however, be subject to the risk that we may make additional discounted offerings in which such new stockholder does not participate, in which case such new stockholder will experience dilution as described above in

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such subsequent offerings. These investors may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering and level of discount to NAV increases.

        The following chart illustrates the level of dilution or accretion for new investors that would be experienced by a new investor in the same hypothetical discounted offerings as described in the first chart above. The illustration is for a new investor who purchases the same percentage (1.00%) of the shares in the offering as Stockholder A in the prior examples held immediately prior to the offering. The prospectus supplement pursuant to which any discounted offering is made will include a chart for these examples based on the actual number of shares in such offering and the actual discount from the most recently determined NAV per share.

 
   
  Example 1
5% Offering at
5% Discount
  Example 2
10% Offering at
10% Discount
  Example 3
25% Offering at
20% Discount
  Example 4
25% Offering at
100% Discount
 
 
  Prior to
Sale Below
NAV
  Following
Sale
  % Change   Following
Sale
  % Change   Following
Sale
  % Change   Following
Sale
  % Change  

Offering Price

                                                       

Price per Share to Public(1)

      $ 10.00       $ 9.47       $ 8.42       $ 0.01      

Net Proceeds per Share to Issuer

      $ 9.50       $ 9.00       $ 8.00       $ 0.01      

Increase in Shares and Decrease to NAV

                                                       

Total Shares Outstanding

    1,000,000     1,050,000     5.00 %   1,100,000     10.00 %   1,250,000     25.00 %   1,250,000     25.00 %

NAV per Share

  $ 10.00   $ 9.98     (0.20 )% $ 9.91     (0.90 )% $ 9.60     (4.00 )% $ 8.00     (20.00 )%

Dilution/Accretion to New Investor A

                                                       

Share Dilution

                                                       

Shares Held by Investor A

        500         1,000         2,500         2,500      

Percentage Outstanding Held by Investor A

    0.00 %   0.05 %       0.09 %       0.20 %       0.20 %    

NAV Dilution

                                                       

Total NAV Held by Investor A

      $ 4,990       $ 9,910       $ 24,000       $ 20,000      

Total Investment by Investor A (At Price to Public)

      $ 5,000       $ 9,470       $ 21,050       $ 25      

Total Dilution/Accretion to Investor A (Total NAV Less Total Investment)

      $ (10 )     $ 440       $ 2,950       $ 19,975      

NAV Dilution per Share

                                                       

NAV per Share Held by Investor A

        $ 9.98       $ 9.91       $ 9.60       $ 8.00      

Investment per Share Held by Investor A

      $ 10.00       $ 9.47       $ 8.42       $ 0.01      

NAV Dilution/Accretion per Share Experienced by Investor A (NAV per Share Less Investment per Share)

      $ (0.02 )     $ 0.44       $ 1.18       $ 7.99      

Percentage NAV Dilution/Accretion Experienced by Investor A (NAV Dilution/Accretion per Share Divided by Investment per Share)

            (0.20 )%       4.65 %       14.01 %       79,900.00 %

(1)
Assumes 5% in selling compensation and expenses paid by us.


DIVIDEND REINVESTMENT PLAN

        We have adopted a dividend reinvestment plan that provides for the reinvestment of dividends on behalf of our registered stockholders who hold their shares with American Stock Transfer and Trust Company, the plan administrator and our transfer agent and registrar, or certain brokerage firms that have elected to participate in our dividend reinvestment plan, unless a stockholder has elected to receive dividends in cash. As a result, if we declare a cash dividend, our registered stockholders (or stockholders holding shares through participating brokerage firms) who have not "opted out" of our dividend reinvestment plan by the dividend record date will have their cash dividend automatically reinvested into additional shares of our common stock.

        No action will be required on the part of a registered stockholder to have their cash dividends reinvested in shares of our common stock. A registered stockholder may elect to receive an entire dividend in cash by notifying American Stock Transfer & Trust Company in writing so that such notice is received by the plan administrator no later than the record date for dividends to stockholders. The plan administrator will set up an account for shares acquired through the plan for each registered stockholder who has not elected to receive dividends in cash and hold such shares in non-certificated

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form. Upon request by a stockholder participating in the plan, received in writing not less than 10 days prior to the record date, the plan administrator will, instead of crediting shares to the participant's account, issue a certificate registered in the participant's name for the number of whole shares of our common stock and a check for any fractional share. Those stockholders whose shares are held by a broker or other financial intermediary may receive dividends in cash by notifying their broker or other financial intermediary of their election.

        The share requirements of our dividend reinvestment plan may be satisfied through the issuance of new shares of common stock or through open market purchases of common stock by the plan administrator. Newly-issued shares will be valued based upon the final closing price of our common stock on a valuation date determined for each dividend by our Board of Directors. Shares purchased in the open market to satisfy the dividend reinvestment plan requirements will be valued based upon the average price of the applicable shares purchased by the plan administrator, before any associated brokerage or other costs.

        There will be no brokerage charges or other charges for dividend reinvestment to stockholders who participate in the plan. We will pay the plan administrator's fees under the plan.

        Stockholders who receive dividends in the form of stock generally are subject to the same federal, state and local tax consequences as are stockholders who elect to receive their dividends in cash. A stockholder's basis for determining gain or loss upon the sale of stock received in a dividend from us will be equal to the total dollar amount of the dividend payable to the stockholder. Any stock received in a dividend will have a holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S. stockholder's account.

        Participants may terminate their accounts under the plan by notifying the plan administrator via its website at www.amstock.com, by filling out the transaction request form located at the bottom of their statement and sending it to the plan administrator at 59 Maiden Lane New York, New York 10038 or by calling the plan administrators at (212) 936-5100.

        We may terminate the plan upon notice in writing mailed to each participant at least 30 days prior to any record date for the payment of any dividend by us. All correspondence concerning the plan should be directed to the plan administrator by mail at 59 Maiden Lane New York, New York 10038 or by telephone at (212) 936-5100.


DESCRIPTION OF COMMON STOCK

        The following description is based on relevant portions of the Maryland General Corporation Law and on our articles of incorporation and bylaws. This summary may not contain all of the information that is important to you, and we refer you to the Maryland General Corporation Law and our articles of incorporation and bylaws for a more detailed description of the provisions summarized below.

        Under the terms of our articles of incorporation, our authorized capital stock consists of 150,000,000 shares of common stock, par value $0.01 per share. Set forth below is a chart describing the classes of our common stock outstanding as of March 4, 2016:

 
  (1)   (2)   (3)   (4)  
 
 
Title of Class
  Amount
Authorized
  Amount Held
by us or for
Our Account
  Amount Outstanding
Exclusive of Amount
Under Column 3
 

 

Common Stock

    150,000,000         50,496,252  

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        Under our articles of incorporation, our Board of Directors is authorized to classify and reclassify any unissued shares of stock into other classes or series of stock, and to cause the issuance of such shares, without obtaining stockholder approval. In addition, as permitted by the Maryland General Corporation Law, but subject to the 1940 Act, our articles of incorporation provide that the Board of Directors, without any action by our stockholders, may amend the articles of incorporation from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. Under Maryland law, our stockholders generally are not personally liable for our debts or obligations.

        All shares of our common stock have equal voting rights and rights to earnings, assets and distributions, except as described below. When shares are issued, upon payment therefor, they will be duly authorized, validly issued, fully paid and nonassessable. Distributions may be paid to the holders of our common stock if, as and when authorized by our Board of Directors and declared by us out of assets legally available therefore. Shares of our common stock have no conversion, exchange, preemptive or redemption rights. In the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time. Each share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as provided with respect to any other class or series of stock, the holders of our common stock will possess exclusive voting power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock will elect all of our directors, and holders of less than a majority of such shares will be unable to elect any director.

Limitation on Liability of Directors and Officers; Indemnification and Advance of Expenses

        Maryland law permits a Maryland corporation to include in its articles of incorporation a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our articles of incorporation contain such a provision that eliminates directors' and officers' liability to the maximum extent permitted by Maryland law, subject to the requirements of the Investment Company Act of 1940, as amended (the "1940 Act").

        Our articles of incorporation require us, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while a director or officer and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee, from and against any claim or liability to which such person may become subject or which such person may incur by reason of his or her service in any such capacity, except with respect to any matter as to which such person shall have been finally adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his or her action was in our best interest or to be liable to us or our stockholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office.

        Our bylaws obligate us, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while a director or officer and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee and who is made, or threatened to be made, a party to a proceeding by reason of his or her service in any such capacity from and against any claim or liability to which that

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person may become subject or which that person may incur by reason of his or her service in any such capacity, except with respect to any matter as to which such person shall have been finally adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his or her action was in our best interest or to be liable to us or our stockholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office. Our bylaws also require that, to the maximum extent permitted by Maryland law, we may pay certain expenses incurred by any such indemnified person in advance of the final disposition of a proceeding upon receipt of an undertaking by or on behalf of such indemnified person to repay amounts we have so paid if it is ultimately determined that indemnification of such expenses is not authorized under our bylaws.

        Maryland law requires a corporation (unless its articles of incorporation provide otherwise, which our articles of incorporation do not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or threatened to be made, a party by reason of his or her service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received, unless in either case a court orders indemnification, and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation's receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

        In addition, we have entered into Indemnity Agreements with our directors and executive officers. The Indemnity Agreements generally provide that we will, to the extent specified in the agreements and to the fullest extent permitted by the 1940 Act and Maryland law as in effect on the day the agreement is executed, indemnify and advance expenses to each indemnitee that is, or is threatened to be made, a party to or a witness in any civil, criminal or administrative proceeding. We will indemnify the indemnitee against all expenses, judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred in connection with any such proceeding unless it is established that (i) the act or omission of the indemnitee was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) the indemnitee actually received an improper personal benefit, or (iii) in the case of a criminal proceeding, the indemnitee had reasonable cause to believe his conduct was unlawful. Additionally, for so long as we are subject to the 1940 Act, no advancement of expenses will be made until (i) the indemnitee provides a security for his undertaking, (ii) we are insured against losses arising by reason of any lawful advances, or (iii) the majority of a quorum of our disinterested directors, or independent counsel in a written opinion, determine based on a review of readily available facts that there is reason to believe that the indemnitee ultimately will be found entitled to indemnification. The Indemnity Agreements also provide that if the indemnification rights provided for therein are unavailable for any reason, we will pay, in the first instance, the entire amount incurred by the indemnitee in connection with any covered proceeding and waive and relinquish any right of contribution we may have against the indemnitee. The rights provided by the Indemnity Agreements are in addition to any other rights to

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indemnification or advancement of expenses to which the indemnitee may be entitled under applicable law, our articles of incorporation, our bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment or repeal of the Indemnity Agreements will limit or restrict any right of the indemnitee in respect of any action taken or omitted by the indemnitee prior to such amendment or repeal. The Indemnity Agreements will terminate upon the later of (i) ten years after the date the indemnitee has ceased to serve as our director or officer, or (ii) one year after the final termination of any proceeding for which the indemnitee is granted rights of indemnification or advancement of expenses or which is brought by the indemnitee. The above description of the Indemnity Agreements is subject to, and is qualified in its entirety by reference to, all the provisions of the form of Indemnity Agreement.

        We have obtained primary and excess insurance policies insuring our directors and officers against certain liabilities they may incur in their capacity as directors and officers. Under such policies, the insurer, on our behalf, may also pay amounts for which we have granted indemnification to the directors or officers.

Provisions of the Maryland General Corporation Law and Our Articles of Incorporation and Bylaws

        The Maryland General Corporation Law and our articles of incorporation and bylaws contain provisions that could make it more difficult for a potential acquiror to acquire us by means of a tender offer, proxy contest or otherwise. These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our Board of Directors. We believe that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms.

        Our bylaws currently provide that directors are elected by a plurality of the votes cast in the election of directors. Pursuant to our articles of incorporation and bylaws, our Board of Directors may amend the bylaws to alter the vote required to elect directors.

        Our articles of incorporation provide that the number of directors will be set only by the Board of Directors in accordance with our bylaws. Our bylaws provide that a majority of our entire Board of Directors may at any time increase or decrease the number of directors. However, unless the bylaws are amended, the number of directors may never be less than one or more than twelve. We have elected to be subject to the provision of Subtitle 8 of Title 3 of the Maryland General Corporation Law regarding the filling of vacancies on the Board of Directors. Accordingly, at such time, except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies, subject to any applicable requirements of the 1940 Act. Our articles of incorporation provide that a director may be removed only for cause, as defined in the articles of incorporation, and then only by the affirmative vote of at least two-thirds of the votes entitled to be cast in the election of directors.

        Under the Maryland General Corporation Law, stockholder action may be taken only at an annual or special meeting of stockholders or by unanimous consent in lieu of a meeting (unless the articles of

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incorporation provide for stockholder action by less than unanimous written consent, which our articles of incorporation do not). These provisions, combined with the requirements of our bylaws regarding the calling of a stockholder-requested special meeting of stockholders discussed below, may have the effect of delaying consideration of a stockholder proposal until the next annual meeting.

        Our bylaws provide that with respect to an annual meeting of stockholders, nominations of persons for election to the Board of Directors and the proposal of business to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by the Board of Directors or (3) by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures of the bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought before the meeting. Nominations of persons for election to the Board of Directors at a special meeting may be made only (1) pursuant to our notice of the meeting, (2) by the Board of Directors or (3) provided that the Board of Directors has determined that directors will be elected at the meeting, by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the bylaws.

        The purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our Board of Directors a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed necessary or desirable by our Board of Directors, to inform stockholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our bylaws do not give our Board of Directors any power to disapprove stockholder nominations for the election of directors or proposals recommending certain action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders.

        Our bylaws provide that special meetings of stockholders may be called by our Board of Directors and certain of our officers. Additionally, our bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting, a special meeting of stockholders shall be called by our secretary upon the written request of stockholders entitled to cast not less than a majority of all of the votes entitled to be cast at such meeting.

        Under Maryland law, a Maryland corporation generally cannot dissolve, amend its articles of incorporation, merge, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business, unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, a Maryland corporation may provide in its articles of incorporation for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter. Our articles of incorporation generally provide for approval of amendments to our articles of incorporation and extraordinary transactions by the stockholders entitled to cast at least a majority of the votes entitled to be cast on the matter. Our articles of incorporation also provide that certain amendments and any proposal for our conversion, whether by merger or otherwise, from a closed-end company to an open-end company or any proposal for our liquidation or dissolution requires the approval of the stockholders entitled to cast at least 75.0% of the votes entitled to be cast on such matter. However, if

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such amendment or proposal is approved by at least 75.0% of our continuing directors (in addition to approval by our Board of Directors), such amendment or proposal may be approved by the stockholders entitled to cast a majority of the votes entitled to be cast on such a matter. The "continuing directors" are defined in our articles of incorporation as our current directors, as well as those directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of the continuing directors then on the Board of Directors.

        Our articles of incorporation and bylaws provide that the Board of Directors will have the exclusive power to make, alter, amend or repeal any provision of our bylaws.

        Except with respect to appraisal rights that may arise in connection with the Maryland Control Share Acquisition Act, or Control Share Act, discussed below, as permitted by the Maryland General Corporation Law, our articles of incorporation provide that stockholders will not be entitled to exercise appraisal rights.

        The Control Share Act provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power:

        The requisite stockholder approval must be obtained each time an acquiror crosses one of the thresholds of voting power set forth above. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A control share acquisition means the acquisition of control shares, subject to certain exceptions.

        A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

        If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may repurchase for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to repurchase control shares is subject to certain conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of stockholders at which the voting rights of the shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair

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value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

        The Control Share Act does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the articles of incorporation or bylaws of the corporation.

        We are not currently subject to the Control Share Act since our bylaws contain a provision exempting from the Control Share Act any and all acquisitions by any person of our shares of stock. There can be no assurance that such provision will not be otherwise amended or eliminated at any time in the future. However, we will amend our bylaws to be subject to the Control Share Act only if the Board of Directors determines that it would be in our best interests and if the staff of the SEC permits us to do so after we determine that our being subject to the Control Share Act does not conflict with the 1940 Act.

        Under the Maryland Business Combination Act, or the Business Combination Act, "business combinations" between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:

        A person is not an interested stockholder under this statute if the board of directors approved in advance the transaction by which such stockholder otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

        After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:

        These super-majority vote requirements do not apply if the corporation's common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

        The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors before the time that the interested stockholder becomes an interested stockholder. Our Board of Directors has adopted a resolution exempting any business combination between us and any other person from the provisions of the Business Combination Act,

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provided that the business combination is first approved by the Board of Directors, including a majority of the directors who are not interested persons as defined in the 1940 Act. This resolution, however, may be altered or repealed in whole or in part at any time. If these resolutions are repealed, or the Board of Directors does not otherwise approve a business combination, the statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

        Our bylaws provide that, if and to the extent that any provision of the Maryland General Corporation Law, or any provision of our articles of incorporation or bylaws conflicts with any provision of the 1940 Act, the applicable provision of the 1940 Act will control.


DESCRIPTION OF OUR PREFERRED STOCK

        Our articles of incorporation authorize our Board of Directors to classify and reclassify any unissued shares of stock into other classes or series of stock, including preferred stock. Prior to issuance of shares of each class or series, the Board of Directors is required by Maryland law and by our articles of incorporation to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the Board of Directors could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our securities or otherwise be in their best interest. You should note, however, that any issuance of preferred stock must comply with the requirements of the 1940 Act. The 1940 Act requires, among other things, that (1) immediately after issuance and before any dividend or other distribution is made with respect to our securities and before any purchase of securities is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50.0% of our total assets after deducting the amount of such dividend, distribution or purchase price, as the case may be, and (2) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if distributions on such preferred stock are in arrears by two years or more. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of common stock on a proposal to cease operations as a business development company. Further, the 1940 Act requires that any distributions we make on preferred stock be cumulative. We believe that the availability for issuance of preferred stock will provide us with increased flexibility in structuring future financings and acquisitions.

        For any series of preferred stock that we may issue, our Board of Directors will determine and the prospectus supplement relating to such series will describe:

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        All shares of preferred stock that we may issue will be identical and of equal rank except as to the particular terms thereof that may be fixed by our Board of Directors, and all shares of each series of preferred stock will be identical and of equal rank except as to the dates from which cumulative dividends, if any, thereon will be cumulative.


DESCRIPTION OF OUR WARRANTS

        The following is a general description of the terms of the warrants we may issue from time to time. Particular terms of any warrants we offer will be described in the prospectus supplement relating to such warrants.

        We may issue warrants to purchase shares of our common stock, preferred stock or debt securities. Such warrants may be issued independently or together with shares of common or preferred stock or a specified principal amount of debt securities and may be attached or separate from such securities. We will issue each series of warrants under a separate warrant agreement to be entered into between us and a warrant agent. The warrant agent will act solely as our agent and will not assume any obligation or relationship of agency for or with holders or beneficial owners of warrants

        A prospectus supplement will describe the particular terms of any series of warrants we may issue, including the following:

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        We and the warrant agent may amend or supplement the warrant agreement for a series of warrants without the consent of the holders of the warrants issued thereunder to effect changes that are not inconsistent with the provisions of the warrants and that do not materially and adversely affect the interests of the holders of the warrants.

        Prior to exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including, in the case of warrants to purchase debt securities, the right to receive principal, premium, if any, or interest payments, on the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture or, in the case of warrants to purchase common stock or preferred stock, the right to receive dividends, if any, or payments upon our liquidation, dissolution or winding up or to exercise any voting rights.

        Under the 1940 Act, we may generally only offer warrants provided that (1) the warrants expire by their terms within ten years; (2) the exercise or conversion price is not less than the current market value at the date of issuance; (3) our stockholders authorize the proposal to issue such warrants, and our Board of Directors approves such issuance on the basis that the issuance is in our best interests and our stockholders; and (4) if the warrants are accompanied by other securities, the warrants are not separately transferable unless no class of such warrants and the securities accompanying them has been publicly distributed.


DESCRIPTION OF OUR SUBSCRIPTION RIGHTS

        We may issue subscription rights to purchase common stock. Subscription rights may be issued independently or together with any other offered security and may or may not be transferable by the person purchasing or receiving the subscription rights. In connection with any subscription rights offering to our stockholders, we may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which such underwriters or other persons would purchase any offered securities remaining unsubscribed for after such subscription rights offering. In connection with a subscription rights offering to our stockholders, we would distribute certificates evidencing the subscription rights and a prospectus supplement to our stockholders on the record date that we set for receiving subscription rights in such subscription rights offering. Our common stockholders will indirectly bear the expenses of such subscription rights offerings, regardless of whether our common stockholders exercise any subscription rights.

        The applicable prospectus supplement would describe the following terms of subscription rights in respect of which this prospectus is being delivered:

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Exercise of Subscription Rights

        Each subscription right would entitle the holder of the subscription right to purchase for cash such amount of shares of common stock or other securities at such exercise price as shall in each case be set forth in, or be determinable as set forth in, the prospectus supplement relating to the subscription rights offered thereby or another report filed with the SEC. Subscription rights may be exercised at any time up to the close of business on the expiration date for such subscription rights set forth in the applicable prospectus supplement. After the close of business on the expiration date, all unexercised subscription rights would become void. We have not previously completed such an offering of subscription rights.

        Subscription rights may be exercised as set forth in the prospectus supplement relating to the subscription rights offered thereby. Upon receipt of payment and the subscription rights certificate properly completed and duly executed at the corporate trust office of the subscription rights agent or any other office indicated in the prospectus supplement, we will forward, as soon as practicable, the shares of common stock purchasable upon such exercise. We may determine to offer any unsubscribed offered securities directly to stockholders, persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, including pursuant to standby underwriting or other arrangements, as set forth in the applicable prospectus supplement.


DESCRIPTION OF OUR DEBT SECURITIES

        We may issue debt securities in one or more series. The specific terms of each series of debt securities will be described in the particular prospectus supplement relating to that series. The prospectus supplement may or may not modify the general terms found in this prospectus and will be filed with the SEC. For a complete description of the terms of a particular series of debt securities, you should read both this prospectus and the prospectus supplement relating to that particular series.

        As required by federal law for all bonds and notes of companies that are publicly offered, the debt securities are governed by a document called an "indenture." An indenture is a contract between us and a financial institution acting as trustee on your behalf, and is subject to and governed by the Trust Indenture Act of 1939, as amended. The trustee has two main roles. First, the trustee can enforce your rights against us if we default. There are some limitations on the extent to which the trustee acts on your behalf, described in the second paragraph under "Events of Default—Remedies if an Event of Default Occurs." Second, the trustee performs certain administrative duties for us with respect to the debt securities.

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        Because this section is a summary, it does not describe every aspect of the debt securities and the indenture. We urge you to read the indenture because it, and not this description, defines your rights as a holder of debt securities. A copy of the form of indenture is attached to the registration statement of which this prospectus is a part. We will file a supplemental indenture with the SEC in connection with any debt offering, at which time the supplemental indenture would be publicly available. See "Available Information" for information on how to obtain a copy of the indenture.

        The prospectus supplement, which will accompany this prospectus, will describe the particular series of debt securities being offered by including:

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        The debt securities may be secured or unsecured obligations. Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue debt only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% after each issuance of debt. Unless the prospectus supplement states otherwise, principal (and premium, if any) and interest, if any, will be paid by us in immediately available funds.

General

        The indenture provides that any debt securities proposed to be sold under this prospectus and the accompanying prospectus supplement ("offered debt securities") may be issued under the indenture in one or more series.

        For purposes of this prospectus, any reference to the payment of principal of or premium or interest, if any, on debt securities will include additional amounts if required by the terms of the debt securities.

        The indenture does not limit the amount of debt securities that may be issued thereunder from time to time. Debt securities issued under the indenture, when a single trustee is acting for all debt securities issued under the indenture, are called the "indenture securities". The indenture also provides that there may be more than one trustee thereunder, each with respect to one or more different series of indenture securities. See "Resignation of Trustee" below. At a time when two or more trustees are acting under the indenture, each with respect to only certain series, the term "indenture securities" means the one or more series of debt securities with respect to which each respective trustee is acting. In the event that there is more than one trustee under the indenture, the powers and trust obligations of each trustee described in this prospectus will extend only to the one or more series of indenture securities for which it is trustee. If two or more trustees are acting under the indenture, then the indenture securities for which each trustee is acting would be treated as if issued under separate indentures.

        The indenture does not contain any provisions that give you protection in the event we issue a large amount of debt or we are acquired by another entity.

        We refer you to the prospectus supplement for information with respect to any deletions from, modifications of or additions to the Events of Default or our covenants that are described below, including any addition of a covenant or other provision providing event risk protection or similar protection.

        We have the ability to issue indenture securities with terms different from those of indenture securities previously issued and, without the consent of the holders thereof, to reopen a previous issue of a series of indenture securities and issue additional indenture securities of that series unless the reopening was restricted when that series was created.

Conversion and Exchange

        If any debt securities are convertible into or exchangeable for other securities, the prospectus supplement will explain the terms and conditions of the conversion or exchange, including the conversion price or exchange ratio (or the calculation method), the conversion or exchange period (or how the period will be determined), if conversion or exchange will be mandatory or at the option of the holder or us, provisions for adjusting the conversion price or the exchange ratio and provisions affecting conversion or exchange in the event of the redemption of the underlying debt securities.

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These terms may also include provisions under which the number or amount of other securities to be received by the holders of the debt securities upon conversion or exchange would be calculated according to the market price of the other securities as of a time stated in the prospectus supplement.

Issuance of Securities in Registered Form

        We may issue the debt securities in registered form, in which case we may issue them either in book-entry form only or in "certificated" form. Debt securities issued in book-entry form will be represented by global securities. We expect that we will usually issue debt securities in book-entry only form represented by global securities.

        We will issue registered debt securities in book-entry form only, unless we specify otherwise in the applicable prospectus supplement. This means debt securities will be represented by one or more global securities registered in the name of a depositary that will hold them on behalf of financial institutions that participate in the depositary's book-entry system. These participating institutions, in turn, hold beneficial interests in the debt securities held by the depositary or its nominee. These institutions may hold these interests on behalf of themselves or customers.

        Under the indenture, only the person in whose name a debt security is registered is recognized as the holder of that debt security. Consequently, for debt securities issued in book-entry form, we will recognize only the depositary as the holder of the debt securities and we will make all payments on the debt securities to the depositary. The depositary will then pass along the payments it receives to its participants, which in turn will pass the payments along to their customers who are the beneficial owners. The depositary and its participants do so under agreements they have made with one another or with their customers; they are not obligated to do so under the terms of the debt securities.

        As a result, investors will not own debt securities directly. Instead, they will own beneficial interests in a global security, through a bank, broker or other financial institution that participates in the depositary's book-entry system or holds an interest through a participant. As long as the debt securities are represented by one or more global securities, investors will be indirect holders, and not holders, of the debt securities.

        In the future, we may issue debt securities in certificated form or terminate a global security. In these cases, investors may choose to hold their debt securities in their own names or in "street name." Debt securities held in street name are registered in the name of a bank, broker or other financial institution chosen by the investor, and the investor would hold a beneficial interest in those debt securities through the account he or she maintains at that institution.

        For debt securities held in street name, we will recognize only the intermediary banks, brokers and other financial institutions in whose names the debt securities are registered as the holders of those debt securities and we will make all payments on those debt securities to them. These institutions will pass along the payments they receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally required to do so. Investors who hold debt securities in street name will be indirect holders, and not holders, of the debt securities.

        Our obligations, as well as the obligations of the applicable trustee and those of any third parties employed by us or the applicable trustee, run only to the legal holders of the debt securities. We do

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not have obligations to investors who hold beneficial interests in global securities, in street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a debt security or has no choice because we are issuing the debt securities only in book-entry form.

        For example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that holder is required, under agreements with depositary participants or customers or by law, to pass it along to the indirect holders but does not do so. Similarly, if we want to obtain the approval of the holders for any purpose (for example, to amend an indenture or to relieve us of the consequences of a default or of our obligation to comply with a particular provision of an indenture), we would seek the approval only from the holders, and not the indirect holders, of the debt securities. Whether and how the holders contact the indirect holders is up to the holders.

        When we refer to you in this "Description of Our Debt Securities", we mean those who invest in the debt securities being offered by this prospectus, whether they are the holders or only indirect holders of those debt securities. When we refer to your debt securities, we mean the debt securities in which you hold a direct or indirect interest.

        If you hold debt securities through a bank, broker or other financial institution, either in book-entry form or in street name, we urge you to check with that institution to find out:

        As noted above, we usually will issue debt securities as registered securities in book-entry form only. A global security represents one or any other number of individual debt securities. Generally, all debt securities represented by the same global securities will have the same terms.

        Each debt security issued in book-entry form will be represented by a global security that we deposit with and register in the name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be the depositary for all debt securities issued in book-entry form.

        A global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special termination situations arise. We describe those situations below under "Special Situations when a Global Security Will Be Terminated". As a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all debt securities represented by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with another

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institution that has an account with the depositary. Thus, an investor whose security is represented by a global security will not be a holder of the debt security, but only an indirect holder of a beneficial interest in the global security.

        As an indirect holder, an investor's rights relating to a global security will be governed by the account rules of the investor's financial institution and of the depositary, as well as general laws relating to securities transfers. The depositary that holds the global security will be considered the holder of the debt securities represented by the global security.

        If debt securities are issued only in the form of a global security, an investor should be aware of the following:

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        If a global security is terminated, interests in it will be exchanged for certificates in non-book-entry form (certificated securities). After that exchange, the choice of whether to hold the certificated debt securities directly or in street name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in a global security transferred on termination to their own names, so that they will be holders. We have described the rights of legal holders and street name investors under "Issuance of Securities in Registered Form" above.

        The prospectus supplement may list situations for terminating a global security that would apply only to the particular series of debt securities covered by the prospectus supplement. If a global security is terminated, only the depositary, and not we or the applicable trustee, is responsible for deciding the names of the investors in whose names the debt securities represented by the global security will be registered and, therefore, who will be the holders of those debt securities.

Payment and Paying Agents

        We will pay interest (either in cash or by delivery of additional indenture securities, as applicable) to the person listed in the applicable trustee's records as the owner of the debt security at the close of business on a particular day in advance of each due date for interest, even if that person no longer owns the debt security on the interest due date. That day, usually about two weeks in advance of the interest due date, is called the "record date." Because we will pay all the interest for an interest period to the holders on the record date, holders buying and selling debt securities must work out between themselves the appropriate purchase price. The most common manner is to adjust the sales price of the debt securities to prorate interest fairly between buyer and seller based on their respective ownership periods within the particular interest period. This prorated interest amount is called "accrued interest."

        We will make payments on a global security in accordance with the applicable policies of the depositary as in effect from time to time. Under those policies, we will make payments directly to the depositary, or its nominee, and not to any indirect holders who own beneficial interests in the global security. An indirect holder's right to those payments will be governed by the rules and practices of the depositary and its participants, as described under "—Special Considerations for Global Securities."

        We will make payments on a certificated debt security as follows. We will pay interest that is due on an interest payment date to the holder of debt securities as shown on the trustee's records as of the close of business on the regular record date. We will make all payments of principal and premium, if any, by check at the office of the applicable trustee and/or at other offices that may be specified in the prospectus supplement or in a notice to holders against surrender of the debt security.

        Alternatively, at our option, we may pay any cash interest that becomes due on the debt security by mailing a check to the holder at his or her address shown on the trustee's records as of the close of business on the regular record date or by transfer to an account at a bank in the United States, in either case, on the due date.

        If any payment is due on a debt security on a day that is not a business day, we will make the payment on the next day that is a business day. Payments made on the next business day in this situation will be treated under the indenture as if they were made on the original due date, except as otherwise indicated in the attached prospectus supplement. Such payment will not result in a default

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under any debt security or the indenture, and no interest will accrue on the payment amount from the original due date to the next day that is a business day.

Book-entry and other indirect holders should consult their banks or brokers for information on how they will receive payments on their debt securities.

Events of Default

        You will have rights if an Event of Default occurs in respect of the debt securities of your series and is not cured, as described later in this subsection.

        The term "Event of Default" in respect of the debt securities of your series means any of the following:

        An Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series of debt securities issued under the same or any other indenture. The trustee may withhold notice to the holders of debt securities of any default, except in the payment of principal, premium, interest or sinking or purchase fund installment, if it in good faith considers the withholding of notice to be in the interest of the holders.

        If an Event of Default has occurred and has not been cured, the trustee or the holders of at least 25% in principal amount of the debt securities of the affected series may (and the trustee shall at the request of such holders) declare the entire principal amount of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity. A declaration of acceleration of maturity may be canceled by the holders of a majority in principal amount of the debt securities of the affected series if (1) we have deposited with the trustee all amounts due and owing with respect to the securities (other than principal that has become due solely by reason of such acceleration) and certain other amounts, and (2) all Events of Default have been cured or waived.

        Except in cases of default, where the trustee has some special duties, the trustee is not required to take any action under the indenture at the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability (called an "indemnity"). If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the

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relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or remedy will be treated as a waiver of that right, remedy or Event of Default.

        Before you are allowed to bypass your trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the debt securities, the following must occur:

        However, you are entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after the due date.

        Holders of a majority in principal amount of the debt securities of the affected series may waive any past defaults other than:

Book-entry and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request of the trustee and how to declare or cancel an acceleration of maturity.

        Each year, we will furnish to each trustee a written statement of certain of our officers certifying that to their knowledge we are in compliance with the indenture and the debt securities or else specifying any default.

Merger or Consolidation

        Under the terms of the indenture, we are generally permitted to consolidate or merge with another entity. We are also permitted to sell all or substantially all of our assets to another entity. However, we may not take any of these actions unless all the following conditions are met:

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Modification or Waiver

        There are three types of changes we can make to the indenture and the debt securities issued thereunder.

        First, there are changes that we cannot make to your debt securities without your specific approval. The following is a list of those types of changes:

        The second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications, establishment of the form or terms of new securities of any series as permitted by the indenture and certain other changes that would not adversely affect holders of the outstanding debt securities in any material respect. We also do not need any approval to make any change that affects only debt securities to be issued under the indenture after the change takes effect.

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        Any other change to the indenture and the debt securities would require the following approval:

        In each case, the required approval must be given by written consent.

        The holders of a majority in principal amount of a series of debt securities issued under the indenture, voting together as one class for this purpose, may waive our compliance with some of our covenants applicable to that series of debt securities. However, we cannot obtain a waiver of a payment default or of any of the matters covered by the bullet points included above under "—Changes Requiring Your Approval."

        When taking a vote, we will use the following rules to decide how much principal to attribute to a debt security:

        Debt securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for their payment or redemption or if we, any other obligor, or any affiliate of us or any obligor own such debt securities. Debt securities will also not be eligible to vote if they have been fully defeased as described later under "Defeasance—Full Defeasance."

        We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding indenture securities that are entitled to vote or take other action under the indenture. However, the record date may not be more than 30 days before the date of the first solicitation of holders to vote on or take such action. If we set a record date for a vote or other action to be taken by holders of one or more series, that vote or action may be taken only by persons who are holders of outstanding indenture securities of those series on the record date and must be taken within eleven months following the record date.

Book-entry and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the indenture or the debt securities or request a waiver.

Defeasance

        The following provisions will be applicable to each series of debt securities unless we state in the applicable prospectus supplement that the provisions of covenant defeasance and full defeasance will not be applicable to that series.

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        Under current U.S. federal tax law and the indenture, we can make the deposit described below and be released from some of the restrictive covenants in the indenture under which the particular series was issued. This is called "covenant defeasance". In that event, you would lose the protection of those restrictive covenants but would gain the protection of having money and government securities set aside in trust to repay your debt securities. If we achieved covenant defeasance and your debt securities were subordinated as described under "Indenture Provisions—Subordination" below, such subordination would not prevent the Trustee from applying due funds available to it from the deposit described in the first bullet below to the payment of amounts in respect of such debt securities. In order to achieve covenant defeasance, we must do the following:

        If we accomplish covenant defeasance, you can still look to us for repayment of the debt securities if there were a shortfall in the trust deposit or the trustee is prevented from making payment. For example, if one of the remaining Events of Default occurred (such as our bankruptcy) and the debt securities became immediately due and payable, there might be such a shortfall. However, there is no assurance that we would have sufficient funds to make payment of the shortfall.

        If there is a change in U.S. federal tax law or we obtain an IRS ruling, as described below, we can legally release ourselves from all payment and other obligations on the debt securities of a particular series (called "full defeasance") if we put in place the following other arrangements for you to be repaid:

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        If we ever did accomplish full defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the debt securities. You could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely be protected from claims of our lenders and other creditors if we ever became bankrupt or insolvent. If your debt securities were subordinated as described below under "Indenture Provisions—Subordination," such subordination would not prevent the Trustee from applying the funds available to it from the deposit referred to in the first bullet of the preceding paragraph to the payment of amounts due in respect of such debt securities.

Form, Exchange and Transfer of Certificated Registered Securities

        If registered debt securities cease to be issued in book-entry form, they will be issued:

        Holders may exchange their certificated securities for debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed and as long as the denomination is greater than the minimum denomination for such securities.

        Holders may exchange or transfer their certificated securities at the office of the trustee. We have appointed the trustee to act as our agent for registering debt securities in the names of holders transferring debt securities. We may appoint another entity to perform these functions or perform them ourselves.

        Holders will not be required to pay a service charge to transfer or exchange their certificated securities, but they may be required to pay any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if our transfer agent is satisfied with the holder's proof of legal ownership.

        If we have designated additional transfer agents for your debt security, they will be named in your prospectus supplement. We may appoint additional transfer agents or cancel the appointment of any

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particular transfer agent. We may also approve a change in the office through which any transfer agent acts.

        If any certificated securities of a particular series are redeemable and we redeem less than all the debt securities of that series, we may block the transfer or exchange of those debt securities during the period beginning 15 days before the day we mail the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers or exchanges of any certificated securities selected for redemption, except that we will continue to permit transfers and exchanges of the unredeemed portion of any debt security that will be partially redeemed.

        If a registered debt security is issued in book-entry form, only the depositary will be entitled to transfer and exchange the debt security as described in this subsection, since it will be the sole holder of the debt security.

Resignation of Trustee

        Each trustee may resign or be removed with respect to one or more series of indenture securities provided that a successor trustee is appointed to act with respect to these series and has accepted such appointment. In the event that two or more persons are acting as trustee with respect to different series of indenture securities under the indenture, each of the trustees will be a trustee of a trust separate and apart from the trust administered by any other trustee.

Indenture Provisions—Subordination

        Upon any distribution of our assets upon our dissolution, winding up, liquidation or reorganization, the payment of the principal of (and premium, if any, on) and interest, if any, on any indenture securities denominated as subordinated debt securities is to be subordinated to the extent provided in the indenture in right of payment to the prior payment in full of all Designated Senior Indebtedness (as defined below), but our obligation to you to make payment of the principal of (and premium, if any, on) and interest, if any, on such subordinated debt securities will not otherwise be affected. In addition, no payment on account of principal (or premium, if any), sinking fund or interest, if any, may be made on such subordinated debt securities at any time unless full payment of all amounts due in respect of the principal (and premium, if any), sinking fund and interest on Designated Senior Indebtedness has been made or duly provided for in money or money's worth.

        In the event that, notwithstanding the foregoing, any payment by us is received by the trustee in respect of subordinated debt securities or by the holders of any of such subordinated debt securities, upon our dissolution, winding up, liquidation or reorganization before all Designated Senior Indebtedness is paid in full, the payment or distribution must be paid over to the holders of the Designated Senior Indebtedness or on their behalf for application to the payment of all the Designated Senior Indebtedness remaining unpaid until all the Designated Senior Indebtedness has been paid in full, after giving effect to any concurrent payment or distribution to the holders of the Designated Senior Indebtedness. Subject to the payment in full of all Designated Senior Indebtedness upon this distribution by us, the holders of such subordinated debt securities will be subrogated to the rights of the holders of the Designated Senior Indebtedness to the extent of payments made to the holders of the Designated Senior Indebtedness out of the distributive share of such subordinated debt securities.

        By reason of this subordination, in the event of a distribution of our assets upon our insolvency, certain of our senior creditors may recover more, ratably, than holders of any subordinated debt securities or the holders of any indenture securities that are not Designated Senior Indebtedness. The indenture provides that these subordination provisions will not apply to money and securities held in trust under the defeasance provisions of the indenture.

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        Designated Senior Indebtedness is defined in the indenture as the principal of (and premium, if any, on) and unpaid interest on:

        If this prospectus is being delivered in connection with the offering of a series of indenture securities denominated as subordinated debt securities, the accompanying prospectus supplement will set forth the approximate amount of our Designated Senior Indebtedness and of our other indebtedness outstanding as of a recent date.

Secured Indebtedness

        Certain of our indebtedness, including certain series of indenture securities, may be secured. The prospectus supplement for each series of indenture securities will describe the terms of any security interest for such series and will indicate the approximate amount of our secured indebtedness as of a recent date. In the event of a distribution of our assets upon our insolvency, the holders of unsecured indenture securities may recover less, ratably, than holders of any of our secured indebtedness.

The Trustee under the Indenture

        The Bank of New York Mellon Trust Company, N.A. will serve as the trustee under the indenture.

Certain Considerations Relating to Foreign Currencies

        Debt securities denominated or payable in foreign currencies may entail significant risks. These risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies involved and will be more fully described in the applicable prospectus supplement.


DESCRIPTION OF OUR UNITS

        The following is a general description of the terms of the units we may issue from time to time. Particular terms of any units we offer will be described in the prospectus supplement relating to such units. For a complete description of the terms of particular units, you should read both this prospectus and the prospectus supplement relating to those particular units.

        We may issue units comprised of one or more of the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security.

        A prospectus supplement will describe the particular terms of any series of units we may issue, including the following:

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

        The following discussion is a general summary of the material U.S. federal income tax considerations applicable to us and to an investment in our shares. This summary does not purport to be a complete description of the U.S. federal income tax considerations applicable to such an investment. For example, we have not described tax consequences that may be relevant to certain types of holders subject to special treatment under U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies, dealers in securities, pension plans and trusts, and financial institutions. This summary assumes that investors hold our common stock as capital assets (within the meaning of the Code). The discussion is based upon the Code, Treasury regulations, and administrative and judicial interpretations, each as of the date of this prospectus and all of which are subject to change, possibly retroactively, which could affect the continuing validity of this discussion. We have not sought and will not seek any ruling from the Internal Revenue Service ("IRS") regarding this offering. This summary does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. It does not discuss the special treatment under U.S. federal income tax laws that could result if we invested in tax-exempt securities or certain other investment assets.

        If we issue preferred stock that may be convertible into or exercisable or exchangeable for securities or other property or preferred stock with other terms that may have different U.S. federal income tax consequences than those described in this summary, the U.S. federal income tax consequences of such preferred stock will be described in the relevant prospectus supplement. This summary does not discuss the consequences of an investment in our subscription rights, debt securities or warrants representing rights to purchase shares of our preferred stock, common stock or debt securities or as units in combination with such securities. The U.S. federal income tax consequences of such an investment will be discussed in the relevant prospectus supplement.

        A "U.S. stockholder" generally is a beneficial owner of shares of our common stock who is for U.S. federal income tax purposes:

        A "Non-U.S. stockholder" generally is a beneficial owner of shares of our common stock that is not a U.S. stockholder.

        If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A prospective stockholder that is a partner of a partnership holding shares of our common stock should consult his, her or its tax advisers with respect to the purchase, ownership and disposition of shares of our common stock.

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        Tax matters are very complicated and the tax consequences to an investor of an investment in our shares will depend on the facts of his, her or its particular situation. We encourage investors to consult their own tax advisers regarding the specific consequences of such an investment, including tax reporting requirements, the applicability of federal, state, local and foreign tax laws, eligibility for the benefits of any applicable tax treaty and the effect of any possible changes in the tax laws.

Taxation as a Regulated Investment Company

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code (the "Code"). MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not 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, in order to obtain 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 net ordinary taxable income plus the excess of realized net short-term capital gains over realized net long-term capital losses, and 90% of our tax exempt income (the "Annual Distribution Requirement").

        For any taxable year in which we qualify as a RIC and satisfy the Annual Distribution Requirement, we will not be subject to U.S. federal income tax on the portion of our income or capital gains 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 taxable income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending December 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years on which we paid no U.S. federal income tax (the "Excise Tax Avoidance Requirement"). Dividends declared and paid by us in a year will generally differ from taxable income for that year as such dividends may include the distribution of current year taxable income, exclude amounts carried over into the following year, and include the distribution of prior year taxable income carried over into and distributed in the current year. For amounts we carry over into the following year, we will be required to pay the 4% U.S. federal excise tax based on 98% of our annual taxable income and 98.2% of our capital gain net income in excess of distributions for the year.

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

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        In order to comply with the 90% Income Test, we formed the Taxable Subsidiaries as wholly owned taxable subsidiaries, for the primary purpose of permitting us to own equity interests in portfolio companies which are "pass through" entities for tax purposes. Absent the taxable status of the Taxable Subsidiaries, a portion of the gross income from such portfolio companies would flow directly to us for purposes of the 90% Income Test. To the extent such income did not consist of income derived from securities, such as dividends and interest, it could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant U.S. federal income taxes. The Taxable Subsidiaries are consolidated with Main Street for generally accepted accounting principles in the United States of America ("U.S. GAAP") purposes and are included in our consolidated financial statements, and the portfolio investments held by the Taxable Subsidiaries are included in our consolidated financial statements. The Taxable Subsidiaries are not consolidated with Main Street for income tax purposes and may generate income tax expense, or benefit, as a result of their ownership of the portfolio investments. The income tax expense, or benefit, if any, and any related tax assets and liabilities, are reflected in our consolidated financial statements.

        In order to comply with the 90% Income Test, the External Investment Manager and MSCP have elected to be taxable entities. Absent the taxable status of the External Investment Manager and MSCP, the gross income from the External Investment Manager and MSCP would flow directly to us for purposes of the 90% Income Test. Since such income would likely not consist of income derived from securities, such as dividends and interest, it could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant U.S. federal income taxes. The External Investment Manager is accounted for as a portfolio investment for U.S. GAAP purposes. Beginning April 1, 2013, MSCP is consolidated with Main Street for U.S. GAAP purposes and included in our consolidated financial statements and any income tax expense, or benefit, and any related tax assets and liabilities of MSCP are reflected in our consolidated financial statements. The External Investment Manager and MSCP are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, as a result of their operating activities.

        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 issued with warrants) and debt securities invested in at a discount to par, 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, cumulative dividends or amounts that are received 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 distribution requirements. However, under the 1940 Act, we are not permitted to make distributions to our stockholders in certain circumstances while our debt obligations and other senior securities are outstanding unless certain "asset coverage" tests are met. See "Regulation—Regulation as a Business Development Company—Senior Securities." 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

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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.

        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 by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service has issued private rulings indicating that this rule will apply even where 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. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as (i) ordinary income (including any qualified dividend income that, in the case of a noncorporate stockholder, may be eligible for the same reduced maximum tax rate applicable to long-term capital gains to the extent such distribution is properly reported by us as qualified dividend income and such stockholder satisfies certain minimum holding period requirements with respect to our stock) or (ii) long-term capital gain (to the extent such distribution is properly reported 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 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.

        The remainder of this discussion assumes that we qualify as a RIC and have satisfied the Annual Distribution Requirement.

Taxation of U.S. Stockholders

        Distributions by us generally are taxable to U.S. stockholders as ordinary income or capital gains. Distributions of our "investment company taxable income" (which is, generally, our net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses) will be taxable as ordinary income to U.S. stockholders to the extent of our current or accumulated earnings and profits, whether paid in cash or reinvested in additional common stock. To the extent such distributions paid by us to non-corporate stockholders (including individuals) are attributable to dividends from U.S. corporations and certain qualified foreign corporations, such distributions ("Qualifying Dividends") may be eligible for a maximum tax rate of 20.0% (plus the 3.8% Medicare surtax discussed below, if applicable). In this regard, it is anticipated that distributions paid by us will generally not be attributable to dividends and, therefore, generally will not qualify for the 20.0% (plus the 3.8% Medicare surtax, if applicable) maximum rate applicable to Qualifying Dividends. Distributions of our net capital gains (which is generally our realized net long-term capital gains in excess of realized net short-term capital losses) properly designated by us as "capital gain dividends" will be taxable to a U.S. stockholder as long-term capital gains that are currently taxable at a maximum rate of 20.0% (plus the 3.8% Medicare surtax, if applicable) in the case of individuals, trusts or estates, regardless of the U.S. stockholder's holding period for his, her or its common stock and regardless of whether paid in cash or reinvested in additional common stock. Distributions in excess of our earnings and profits first will reduce a U.S. stockholder's adjusted tax basis in such stockholder's common stock and, after the adjusted basis is reduced to zero, will constitute capital gains to such U.S. stockholder.

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        We may retain some or all of our realized net long-term capital gains in excess of realized net short-term capital losses, but to designate the retained net capital gain as a "deemed distribution." In that case, among other consequences, we will pay tax on the retained amount, each U.S. stockholder will be required to include his, her or its share of the deemed distribution in income as if it had been actually distributed to the U.S. stockholder, and the U.S. stockholder will be entitled to claim a credit equal to his, her or its allocable share of the tax paid thereon by us. Because we expect to pay tax on any retained capital gains at our regular corporate tax rate, and because that rate is in excess of the maximum rate currently payable by individuals on long-term capital gains, the amount of tax that individual U.S. stockholders will be treated as having paid will exceed the tax they owe on the capital gain distribution and such excess generally may be refunded or claimed as a credit against the U.S. stockholder's other U.S. federal income tax obligations. The amount of the deemed distribution net of such tax will be added to the U.S. stockholder's cost basis for his, her or its common stock. In order to utilize the deemed distribution approach, we must provide written notice to our stockholders prior to the expiration of 60 days after the close of the relevant taxable year. We cannot treat any of our investment company taxable income as a "deemed distribution."

        In any fiscal year, we may elect to make distributions to our stockholders in excess of our taxable earnings for that fiscal year. As a result, a portion of those distributions may be deemed a return of capital to our stockholders.

        For purposes of determining (1) whether the Annual Distribution Requirement is satisfied for any year and (2) the amount of capital gain dividends paid for that year, we may, under certain circumstances, elect to treat a dividend that is paid during the following taxable year as if it had been paid during the taxable year in question. If we make such an election, the U.S. stockholder will still be treated as receiving the dividend in the taxable year in which the distribution is made. However, any dividend declared by us in October, November or December of any calendar year, payable to stockholders of record on a specified date in such month and actually paid during January of the following year, will be treated as if it had been received by our U.S. stockholders on December 31 of the year in which the dividend was declared.

        If an investor purchases shares of our common stock shortly before the record date of a distribution, the price of the shares will include the value of the distribution and the investor will be subject to tax on the distribution even though economically it may represent a return of his, her or its investment.

        A stockholder generally will recognize taxable gain or loss if the stockholder sells or otherwise disposes of his, her or its shares of our common stock. The amount of gain or loss will be measured by the difference between such stockholder's adjusted tax basis in the common stock sold and the amount of the proceeds received in exchange. Any gain arising from such sale or disposition generally will be treated as long-term capital gain or loss if the stockholder has held his, her or its shares for more than one year. Otherwise, it will be classified as short-term capital gain or loss. However, any capital loss arising from the sale or disposition of shares of our common stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares. In addition, all or a portion of any loss recognized upon a disposition of shares of our common stock may be disallowed if other shares of our common stock are purchased (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition.

        In general, individual U.S. stockholders currently are subject to a maximum U.S. federal income tax rate of 20.0% on their net capital gain (i.e., the excess of realized net long-term capital gains over realized net short-term capital losses), including any long-term capital gain derived from an investment in our shares. Such rate is lower than the maximum rate on ordinary income currently payable by individuals. In addition, individuals with income in excess of $200,000 ($250,000 in the case of married

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individuals filing jointly) and certain estates and trusts are subject to an additional 3.8% Medicare surtax on their "net investment income," which generally includes net income from interest, dividends, annuities, royalties, and rents, and net capital gains (other than certain amounts earned from trades or businesses). Corporate U.S. stockholders currently are subject to U.S. federal income tax on net capital gain at the maximum 35.0% rate also applied to ordinary income. Non-corporate stockholders with net capital losses for a year (i.e., capital losses in excess of capital gains) generally may deduct up to $3,000 of such losses against their ordinary income each year; any net capital losses of a non-corporate stockholder in excess of $3,000 generally may be carried forward and used in subsequent years as provided in the Code. Corporate stockholders generally may not deduct any net capital losses for a year, but may carryback such losses for three years or carry forward such losses for five years.

        We, or the applicable withholding agent, will send to each of our U.S. stockholders, as promptly as possible after the end of each calendar year, a notice detailing, on a per share and per distribution basis, the amounts includible in such U.S. stockholder's taxable income for such year as ordinary income and as long-term capital gain. In addition, the U.S. federal tax status of each year's distributions generally will be reported to the Internal Revenue Service (including the amount of dividends, if any, eligible for the 20.0% maximum rate). Dividends paid by us generally will not be eligible for the dividends-received deduction or the preferential tax rate applicable to Qualifying Dividends because our income generally will not consist of dividends. Distributions may also be subject to additional state, local and foreign taxes depending on a U.S. stockholder's particular situation.

        As a RIC, we will be subject to the alternative minimum tax ("AMT"), but any items that are treated differently for AMT purposes must be apportioned between us and our stockholders and this may affect the stockholders' AMT liabilities. Although regulations explaining the precise method of apportionment have not yet been issued by the Internal Revenue Service, we intend in general to apportion these items in the same proportion that dividends paid to each stockholder bear to our taxable income (determined without regard to the dividends paid deduction), unless we determine that a different method for a particular item is warranted under the circumstances.

        We may be required to withhold U.S. federal income tax ("backup withholding") from all taxable distributions to any U.S. stockholder that is not otherwise exempt (1) who fails to furnish us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding or (2) with respect to whom the IRS notifies us that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect. An individual's taxpayer identification number is his or her social security number. Any amount withheld under backup withholding is allowed as a credit against the U.S. stockholder's U.S. federal income tax liability, provided that proper information is provided to the IRS.

Taxation of Non-U.S. Stockholders

        Whether an investment in the shares is appropriate for a Non-U.S. stockholder will depend upon that person's particular circumstances. An investment in the shares by a Non-U.S. stockholder may have adverse tax consequences. Non-U.S. stockholders should consult their tax advisers before investing in our common stock.

        Distributions of our "investment company taxable income" to Non-U.S. stockholders (including interest income and realized net short-term capital gains in excess of realized long-term capital losses, which generally would be free of withholding if paid to Non-U.S. stockholders directly) will be subject to withholding of U.S. federal tax at a 30.0% rate (or lower rate provided by an applicable treaty) to the extent of our current and accumulated earnings and profits unless an applicable exception applies. If the distributions are effectively connected with a U.S. trade or business of the Non-U.S. stockholder, and, if an income tax treaty applies, attributable to a permanent establishment in the United States, we will not be required to withhold U.S. federal tax if the Non-U.S. stockholder complies with applicable

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certification and disclosure requirements, although the distributions will be subject to U.S. federal income tax at the rates applicable to U.S. persons. (Special certification requirements apply to a Non-U.S. stockholder that is a foreign partnership or a foreign trust, and such entities are urged to consult their own tax advisers.)

        We generally are not required to withhold any amounts with respect to certain distributions of (i) U.S. source interest income, and (ii) net short term capital gains in excess of net long term capital losses, in each case to the extent we properly reported such distributions and certain other requirements were satisfied. We anticipate that a portion of our distributions will be eligible for this exemption from withholding; however, we cannot determine what portion of our distributions (if any) will be eligible for this exception until after the end of our taxable year. No certainty can be provided that any of our distributions will be reported as eligible for this exception.

        Actual or deemed distributions of our net capital gains to a Non-U.S. stockholder, and gains realized by a Non-U.S. stockholder upon the sale of our common stock, will not be subject to U.S. federal withholding tax and generally will not be subject to U.S. federal income tax unless the distributions or gains, as the case may be, are effectively connected with a U.S. trade or business of the Non-U.S. stockholder and, if an income tax treaty applies, are attributable to a permanent establishment maintained by the Non-U.S. stockholder in the United States.

        If we distribute our net capital gains in the form of deemed rather than actual distributions, a Non-U.S. stockholder will be entitled to a U.S. federal income tax credit or tax refund equal to the stockholder's allocable share of the tax we pay on the capital gains deemed to have been distributed. In order to obtain the refund, the Non-U.S. stockholder must obtain a U.S. taxpayer identification number and file a U.S. federal income tax return even if the Non-U.S. stockholder would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. federal income tax return. For a corporate Non-U.S. stockholder, distributions (both actual and deemed), and gains realized upon the sale of our common stock that are effectively connected to a U.S. trade or business may, under certain circumstances, be subject to an additional "branch profits tax" at a 30.0% rate (or at a lower rate if provided for by an applicable treaty). Accordingly, investment in the shares may not be appropriate for a Non-U.S. stockholder.

        A Non-U.S. stockholder who is a non-resident alien individual, and who is otherwise subject to withholding of U.S. federal tax, may be subject to information reporting and backup withholding of U.S. federal income tax on dividends unless the Non-U.S. stockholder provides us or the dividend paying agent with an IRS Form W-8BEN or IRS Form W-8BEN-E (or an acceptable substitute form) or otherwise meets documentary evidence requirements for establishing that it is a Non-U.S. stockholder or otherwise establishes an exemption from backup withholding.

        The Foreign Account Tax Compliance Act generally imposes a 30% withholding tax on payments of certain types of income to foreign financial institutions that fail to enter into an agreement with the United States Treasury to report certain required information with respect to accounts held by U.S. persons (or held by foreign entities that have U.S. persons as substantial owners). The types of income subject to the tax include U.S. source interest and dividends and the gross proceeds from the sale of any property that could produce U.S.-source interest or dividends paid after December 31, 2016. The information required to be reported includes the identity and taxpayer identification number of each account holder that is a U.S. person and transaction activity within the holder's account. In addition, subject to certain exceptions, this legislation also imposes a 30% withholding on payments to foreign entities that are not financial institutions unless the foreign entity certifies that it does not have a greater than 10% U.S. owner or provides the withholding agent with identifying information on each greater than 10% U.S. owner. Depending on the status of a Non-U.S. stockholder and the status of the intermediaries through which they hold their units, Non-U.S. stockholders could be subject to this 30% withholding tax with respect to distributions on their units and proceeds from the sale of their units.

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Under certain circumstances, a Non-U.S. stockholder might be eligible for refunds or credits of such taxes.

        Non-U.S. persons should consult their own tax advisers with respect to the U.S. federal income tax and withholding tax, and state, local and foreign tax consequences of an investment in the shares.

Failure to Qualify as a RIC

        If we fail to satisfy the 90% Income Test or the Diversification Tests for any taxable year, we may nevertheless continue to qualify as a RIC for such year if certain relief provisions are applicable (which may, among other things, require us to pay certain corporate-level U.S. federal taxes or to dispose of certain assets).

        If we were unable to qualify for treatment as a RIC and the foregoing relief provisions are not applicable, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders, nor would they be required to be made. If we were subject to tax on all of our taxable income at regular corporate rates, then distributions we make after being subject to such tax would be taxable to our stockholders and, provided certain holding period and other requirements were met, could qualify for treatment as "qualified dividend income" eligible for the maximum 20% rate (plus a 3.8% Medicare surtax, if applicable) applicable to qualified dividends to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate distributions would be eligible for the dividends-received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder's tax basis, and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the nonqualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent 10 years, unless we made a special election to pay corporate-level U.S. federal income tax on such built-in gain at the time of our requalification as a RIC.


REGULATION

Regulation as a Business Development Company

        We have elected to be regulated as a BDC under the 1940 Act. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates, principal underwriters and affiliates of those affiliates or underwriters. The 1940 Act requires that a majority of the members of the board of directors of a BDC 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.

        The 1940 Act defines "a majority of the outstanding voting securities" as the lesser of (i) 67% or more of the voting securities present at a meeting if the holders of more than 50% of our outstanding voting securities are present or represented by proxy or (ii) more than 50% of our outstanding voting securities.

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        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 any of the following:

        In addition, a BDC must have been organized and have its principal place of business in the United States and must be operated for the purpose of making investments in the types of securities described in (1), (2) or (3) above.

        An eligible portfolio company is defined in the 1940 Act as any issuer which:

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        As noted above, a BDC must be operated for the purpose of making investments in the type of securities described in (1), (2) or (3) above under the heading entitled "—Qualifying Assets." In addition, BDCs must generally offer to make available to such issuer of the securities (other than small and solvent companies described above) significant managerial assistance; except that, where we purchase such 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, among other things, any arrangement whereby the BDC, through its directors, officers or employees, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.

        Pending investment in "qualifying assets," as described above, our investments may consist of cash, cash equivalents, U.S. government securities and high quality debt securities maturing in one year or less from time of investment therein, so that 70% of our assets are qualifying assets.

        We are permitted, under specified conditions, to issue multiple classes of debt 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% of all debt and/or senior stock immediately after each such issuance. In addition, while any senior securities remain outstanding (other than senior securities representing indebtedness issued in consideration of a privately arranged loan which is not intended to be publicly distributed), 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," including, without limitation, "—Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us."

        We have previously received an exemptive order from the SEC to exclude debt securities issued by MSMF and any other wholly owned subsidiaries of ours which operate as SBICs from the asset coverage requirements of the 1940 Act as applicable to Main Street. The exemptive order provides for the exclusion of all debt securities issued by the Funds, including the $225.0 million of currently outstanding debt, related to their participation in the SBIC program. This exemptive order provides us with expanded capacity and flexibility in obtaining future sources of capital for our investment and operational objectives.

        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, warrants, options or rights to acquire 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). We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2015 annual meeting of stockholders, and we are not currently

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seeking such approval at our 2016 Annual Meeting of Stockholders, because our common stock price per share had been trading significantly above the current net asset value per share of our common stock, and we do not currently expect to seek such approval at our 2016 annual meeting of stockholders for the same reason. Our stockholders have previously approved a proposal that authorizes us to issue securities to subscribe to, convert to, or purchase shares of our common stock in one or more offerings. We may also make rights offerings to our stockholders at prices per share less than the net asset value per share, subject to applicable requirements of the 1940 Act. See "Risk Factors—Risks Relating to Our Business and Structure—Stockholders may incur dilution if 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 or issue securities to subscribe to, convert to or purchase shares of our common stock."

        We have 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 the 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 the code's requirements. You may read and copy the code of ethics at the SEC's Public Reference Room located at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the code of ethics is available on the EDGAR Database on the SEC's Web site at http://www.sec.gov.

        We vote proxies relating to our portfolio securities in a manner in which we believe is consistent with the best interest of our stockholders. We review on a case-by-case basis each proposal submitted to a stockholder vote to determine its impact on the portfolio securities held by us. Although we generally vote against proposals that we expect would have a negative impact on our portfolio securities, we may vote for such a proposal if there exists compelling long-term reasons to do so.

        Our proxy voting decisions are made by the investment team which is responsible for monitoring each of our investments. To ensure that our vote is not the product of a conflict of interest, we require that: (i) anyone involved in the decision-making process to disclose to our chief compliance officer any potential conflict of which he or she is aware and any contact that he or she has had with any interested party regarding a proxy vote and (ii) employees involved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties.

        Stockholders may obtain information, without charge, regarding how we voted proxies with respect to our portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, 1300 Post Oak Boulevard, 8th floor, Houston, Texas 77056.

        We are also 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.

        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.

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        We are required to adopt and implement written policies and procedures reasonably designed to prevent violation of the federal securities laws, review these policies and procedures annually for their adequacy and the effectiveness of their implementation, and to designate a chief compliance officer to be responsible for administering the policies and procedures.

        We may be periodically examined by the SEC for compliance with the 1940 Act.

Small Business Investment Company Regulations

        Each of the Funds is licensed by the SBA to operate as a SBIC under Section 301(c) of the Small Business Investment Act of 1958. MSMF obtained its SBIC license in 2002. MSC II obtained its license in 2006.

        SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBIC regulations, SBICs may make loans to eligible small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services. Each of the Funds has typically invested in secured debt, acquired warrants and/or made equity investments in qualifying small businesses.

        The Funds are subject to regulation and oversight by the SBA, including requirements with respect to reporting financial information, such as the extent of capital impairment if applicable, on a regular basis and annual examinations conducted by the SBA. The SBA, as a creditor, will have a superior claim to the Funds' assets over our stockholders in the event the Funds are liquidated or the SBA exercises its remedies under the SBA-guaranteed debentures issued by the Funds upon an event of default.

        We have received exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures of the Funds from our 200% asset coverage test under the 1940 Act. As such, our ratio of total consolidated assets to outstanding indebtedness may be less than 200%. This provides us with increased investment flexibility but also increases our risks related to leverage.

        Under present SBIC regulations, eligible small businesses generally include businesses that (together with their affiliates) have a tangible net worth not exceeding $19.5 million and have average annual net income after U.S. federal income taxes not exceeding $6.5 million (average net income to be computed without benefit of any carryover loss) for the two most recent fiscal years. In addition, an SBIC must devote 25% of its investment activity to "smaller" enterprises as defined by the SBA. A smaller enterprise generally includes businesses that have a tangible net worth not exceeding $6 million and have average annual net income after U.S. federal income taxes not exceeding $2 million (average net income to be computed without benefit of any net carryover loss) for the two most recent fiscal years. SBIC regulations also provide alternative size standard criteria to determine eligibility for designation as an eligible small business or smaller enterprise, which criteria depend on the primary industry in which the business is engaged and are based on such factors as the number of employees and gross revenue. However, once an SBIC has invested in a company, it generally may continue to make follow on investments in the company, regardless of the size of the portfolio company at the time of the follow on investment, up to the time of the portfolio company's initial public offering.

        The SBA prohibits an SBIC from providing funds to small businesses for certain purposes, such as relending and investment outside the United States, to businesses engaged in certain prohibited industries, and to certain "passive" (non-operating) companies. In addition, without prior SBA approval, an SBIC may not invest an amount equal to more than approximately 30% of the SBIC's regulatory capital, as defined by the SBA, in any one portfolio company and its affiliates.

        The SBA places certain limitations on the financing terms of investments by SBICs in portfolio companies (such as limiting the permissible interest rate on debt securities held by an SBIC in a portfolio company). Included in such limitations are SBA regulations which allow an SBIC to exercise

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control over a small business for a period of seven years from the date on which the SBIC initially acquires its control position. This control period may be extended for an additional period of time with the SBA's prior written approval.

        The SBA restricts the ability of an SBIC to lend money to any of its officers, directors and employees or to invest in affiliates thereof. 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 equity of a licensed SBIC. A "change of control" is any event which 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.

        The SBIC licenses allow the Funds to incur leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment and certain approvals by the SBA and customary procedures. SBA-guaranteed debentures carry long-term fixed rates that are generally lower than rates on comparable bank and other debt. Under applicable regulations, an SBIC may generally have outstanding debentures guaranteed by the SBA in amounts up to twice the amount of the privately-raised funds of the SBIC(s). Debentures guaranteed by the SBA have a maturity of ten years, require semi-annual payments of interest, do not require any principal payments prior to maturity, and are not subject to prepayment penalties. As of December 31, 2015, we, through the Funds, had $225.0 million of outstanding SBA-guaranteed debentures, which had an annual weighted-average interest rate of approximately 4.2%.

        SBICs must invest idle funds that are not being used to make loans in investments permitted under SBIC regulations in the following limited types of securities: (i) direct obligations of, or obligations guaranteed as to principal and interest by, the United States government, which mature within 15 months from the date of the investment; (ii) repurchase agreements with federally insured institutions with a maturity of seven days or less (and the securities underlying the repurchase obligations must be direct obligations of or guaranteed by the federal government); (iii) certificates of deposit with a maturity of one year or less, issued by a federally insured institution; (iv) a deposit account in a federally insured institution that is subject to a withdrawal restriction of one year or less; (v) a checking account in a federally insured institution; or (vi) a reasonable petty cash fund.

        SBICs are periodically examined and audited by the SBA's staff to determine their compliance with SBIC regulations and are periodically required to file certain financial information and other documents with the SBA.

        Neither the SBA nor the U.S. government or any of its agencies or officers has approved any ownership interest to be issued by us or any obligation that we or any of our subsidiaries may incur.

Securities Exchange Act of 1934 and Sarbanes-Oxley Act Compliance

        We are subject to the reporting and disclosure requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), including the filing of quarterly, annual and current reports, proxy statements and other required items. In addition, we are subject to the Sarbanes-Oxley Act of 2002, which imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. For example:

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The New York Stock Exchange Corporate Governance Regulations

        The New York Stock Exchange ("NYSE") has adopted corporate governance regulations that listed companies must comply with. We believe we are in compliance with such corporate governance listing standards. We intend to monitor our compliance with all future listing standards and to take all necessary actions to ensure that we stay in compliance.

Investment Adviser Regulations

        The External Investment Manager, which is wholly owned by us, is subject to regulation under the Advisers Act. The Advisers Act establishes, among other things, recordkeeping and reporting requirements, disclosure requirements, limitations on transactions between the adviser's account and an advisory client's account, limitations on transactions between the accounts of advisory clients, and general anti-fraud prohibitions. The External Investment Manager may be examined by the SEC from time to time for compliance with the Advisers Act.


PLAN OF DISTRIBUTION

        We may offer, from time to time, up to $1,500,000,000 of our common stock, preferred stock, units, subscription rights, debt securities, or warrants representing rights to purchase shares of our securities, preferred stock or debt securities. We may sell the securities through underwriters or dealers, "at the market" to or through a market maker or into an existing market or otherwise, directly to one or more purchasers through or without agents or through a combination of any such methods of sale. Any underwriter or agent involved in the offer and sale of the securities will be named in the applicable prospectus supplement. A prospectus supplement or supplements will also describe the terms of the offering of the securities, including: the purchase price of the securities and the proceeds we will receive from the sale; any over-allotment options under which underwriters may purchase additional securities from us; any agency fees or underwriting discounts and other items constituting agents' or underwriters' compensation; the public offering price; any discounts or concessions allowed or re-allowed or paid to dealers; and any securities exchange or market on which the securities may be listed.

        The distribution of our securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at prevailing market prices at the time of sale, at prices related to such prevailing market prices, or at negotiated prices, provided, however, that the offering price per share of our common stock less any underwriting commissions or discounts must equal or exceed the net asset value per share of our common stock except (i) with the requisite approval of our stockholders or (ii) under such other circumstances as the SEC may permit. See "Risk Factors—Risks Relating to Our Business and Structure—Stockholders may incur dilution if 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 or issue securities to subscribe to, convert to or purchase shares of our common

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stock" for a discussion of proposals approved by our stockholders that permit us to issue shares of our common stock below net asset value.

        In connection with the sale of our securities, underwriters or agents may receive compensation from us or from purchasers of our securities, for whom they may act as agents, in the form of discounts, concessions or commissions. Underwriters may sell our securities to or through dealers and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of our securities may be deemed to be underwriters under the Securities Act, and any discounts and commissions they receive from us and any profit realized by them on the resale of our securities may be deemed to be underwriting discounts and commissions under the Securities Act. Any such underwriter or agent will be identified and any such compensation received from us will be described in the applicable prospectus supplement.

        We may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock. The third parties in such sale transactions will be underwriters and, if not identified in this prospectus, will be identified in the applicable prospectus supplement (or a post-effective amendment).

        Unless otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no trading market, other than our common stock, which is traded on the New York Stock Exchange. We may elect to list any other class or series of securities on any exchanges, but we are not obligated to do so. We cannot guarantee the liquidity of the trading markets for any securities.

        Under agreements into which we may enter, underwriters, dealers and agents who participate in the distribution of our securities may be entitled to indemnification by us against certain liabilities, including liabilities under the Securities Act. Underwriters, dealers and agents may engage in transactions with, or perform services for, us in the ordinary course of business.

        If so indicated in the applicable prospectus supplement, we will authorize underwriters or other persons acting as our agents to solicit offers by certain institutions to purchase our securities from us pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions must be approved by us. The obligations of any purchaser under any such contract will be subject to the condition that the purchase of our securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such contracts. Such contracts will be subject only to those conditions set forth in the prospectus supplement, and the prospectus supplement will set forth the commission payable for solicitation of such contracts.

        In order to comply with the securities laws of certain states, if applicable, our securities offered hereby will be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states, our securities may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

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        The maximum amount of any compensation to be received by any member of the Financial Industry Regulatory Authority, Inc. will not be greater than 10% for the sale of any securities being registered.


CUSTODIAN, TRANSFER AND DISTRIBUTION PAYING AGENT AND REGISTRAR

        Our securities are held under custody agreements by Amegy Bank National Association, whose address is 1221 McKinney Street Level P-1 Houston, Texas 77010, and Branch Banking and Trust Company, whose address is 5130 Parkway Plaza Boulevard, Charlotte, North Carolina 28217. American Stock Transfer & Trust Company acts as our transfer agent, distribution paying agent and registrar. The principal business address of our transfer agent is 59 Maiden Lane New York, New York 10038, telephone number: (212) 936-5100.


BROKERAGE ALLOCATION AND OTHER PRACTICES

        Since we generally acquire and dispose of our investments in privately negotiated transactions, we infrequently use brokers in the normal course of our business. Our investment team is primarily responsible for the execution of the publicly traded securities portion of our portfolio transactions and the allocation of brokerage commissions. We do not expect to execute transactions through any particular broker or dealer, but will seek to obtain the best net results for us, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities of the firm and the firm's risk and skill in positioning blocks of securities. While we will generally seek reasonably competitive trade execution costs, we will not necessarily pay the lowest spread or commission available. Subject to applicable legal requirements, we may select a broker based partly upon brokerage or research services provided to us. In return for such services, we may pay a higher commission than other brokers would charge if we determine in good faith that such commission is reasonable in relation to the services provided.

        We also pay brokerage commissions incurred in connection with open-market purchases of our publicly traded securities from time to time, including pursuant to our dividend reinvestment plan.

        We did not pay significant brokerage commissions during the three years ended December 31, 2015 in connection with the acquisition and/or disposal of our investments.


LEGAL MATTERS

        Certain legal matters in connection with the securities offered hereby will be passed upon for us by Sutherland Asbill & Brennan LLP, Washington D.C. Certain legal matters will be passed upon for underwriters, if any, by the counsel named in the prospectus supplement, if any.


INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        The audited consolidated financial statements, financial highlights, Schedule 12-14 and the schedule of Senior Securities of Main Street Capital Corporation, included in this prospectus and elsewhere in the registration statement have been so included in reliance upon the reports of Grant Thornton LLP, independent registered public accountants, as stated in their reports appearing herein. Grant Thornton LLP's principal business address is Grant Thornton Tower, 171 North Clark, Suite 200, Chicago, Illinois, 60601.


AVAILABLE INFORMATION

        We have filed with the SEC a universal shelf registration statement on Form N-2, together with all amendments and related exhibits, under the Securities Act, with respect to the securities offered by this

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prospectus or any prospectus supplement. The registration statement contains additional information about us and our securities being offered by this prospectus or any prospectus supplement.

        We file with or submit to the SEC annual, quarterly and current reports, proxy statements and other information meeting the informational requirements of the Securities Exchange Act of 1934. You may inspect and copy these reports, proxy statements and other information, as well as the registration statement and related exhibits and schedules, at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information filed electronically by us with the SEC, which are available on the SEC's website at www.sec.gov. Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.


PRIVACY NOTICE

        We are committed to protecting your privacy. This privacy notice explains the privacy policies of Main Street and its affiliated companies. This notice supersedes any other privacy notice you may have received from Main Street.

        We will safeguard, according to strict standards of security and confidentiality, all information we receive about you. The only information we collect from you is your name, address, and number of shares you hold. This information is used only so that we can send you annual reports and other information about us, and send you proxy statements or other information required by law.

        We do not share this information with any non-affiliated third party except as described below.

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INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

    F-2  

Consolidated Balance Sheets as of December 31, 2015 and 2014

    F-3  

Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014, and 2013

    F-4  

Consolidated Statements of Changes in Net Assets for the Years Ended December 31, 2015, 2014, and 2013

    F-5  

Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014, and 2013

    F-6  

Consolidated Schedules of Investments as of December 31, 2015 and 2014

    F-7  

Notes to Consolidated Financial Statements

    F-56  

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Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders' of
Main Street Capital Corporation

        We have audited the accompanying consolidated balance sheets of Main Street Capital Corporation (a Maryland corporation) and subsidiaries (the "Company"), including the consolidated schedule of investments, as of December 31, 2015 and 2014 and the related consolidated statements of operations, changes in net assets and cash flows for each of three years in the period ended December 31, 2015 and the financial highlights (see Note I) for each of the five years in the period ended December 31, 2015. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included verification by confirmation of securities as of December 31, 2015 and 2014, by correspondence with the portfolio companies and custodians, or by other appropriate auditing procedures where replies where not received. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Main Street Capital Corporation and subsidiaries as of December 31, 2015 and 2014 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, and the financial highlights for each of the five years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2015, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 26, 2016 (not separately included herein), expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ GRANT THORNTON LLP

Dallas, Texas
February 26, 2016

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MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

(dollars in thousands, except shares and per share amounts)

 
  December 31,
2015
  December 31,
2014
 

ASSETS

 

Portfolio investments at fair value:

   
 
   
 
 

Control investments (cost: $387,727 and $342,847 as of December 31, 2015 and 2014, respectively)

  $ 555,011   $ 469,846  

Affiliate investments (cost: $333,728 and $266,243 as of December 31, 2015 and 2014, respectively)

    350,519     278,675  

Non-Control/Non-Affiliate investments (cost: $945,187 and $832,312 as of December 31, 2015 and 2014, respectively)

    894,466     814,809  

Total portfolio investments (cost: $1,666,642 and $1,441,402 as of December 31, 2015 and 2014, respectively)

    1,799,996     1,563,330  

Marketable securities and idle funds investments (cost: $5,407 and $10,604 as of December 31, 2015 and 2014, respectively)

    3,693     9,067  

Total investments (cost: $1,672,049 and $1,452,006 as of December 31, 2015 and 2014, respectively)

    1,803,689     1,572,397  

Cash and cash equivalents

   
20,331
   
60,432
 

Interest receivable and other assets

    27,737     23,273  

Receivable for securities sold

    9,901     23,133  

Deferred financing costs (net of accumulated amortization of $8,965 and $6,462 as of December 31, 2015 and 2014, respectively)

    13,267     14,550  

Deferred tax asset, net

    4,003      

Total assets

  $ 1,878,928   $ 1,693,785  

LIABILITIES

 

Credit facility

 
$

291,000
 
$

218,000
 

SBIC debentures (par: $225,000 as of December 31, 2015 and 2014, par of $75,200 is recorded at a fair value of $73,860 and $72,981 as of December 31, 2015 and 2014, respectively)

    223,660     222,781  

4.50% Notes

    175,000     175,000  

6.125% Notes

    90,738     90,823  

Dividend payable

    9,074     7,663  

Interest payable

    3,959     4,848  

Accounts payable and other liabilities

    12,292     10,701  

Payable for securities purchased

    2,311     14,773  

Deferred tax liability, net

        9,214  

Total liabilities

    808,034     753,803  

Commitments and contingencies (Note N)

   
 
   
 
 

NET ASSETS

   
 
   
 
 

Common stock, $0.01 par value per share (150,000,000 shares authorized; 50,413,744 and 45,079,150 shares issued and outstanding as of December 31, 2015 and 2014, respectively)

   
504
   
451
 

Additional paid-in capital

    1,011,467     853,606  

Accumulated net investment income, net of cumulative dividends of $417,347 and $293,789 as of December 31, 2015 and 2014, respectively

    7,181     23,665  

Accumulated net realized gain from investments (accumulated net realized gain from investments of $19,005 before cumulative dividends of $68,658 as of December 31, 2015 and accumulated net realized gain from investments of $40,321 before cumulative dividends of $60,777 as of December 31, 2014)

    (49,653 )   (20,456 )

Net unrealized appreciation, net of income taxes

    101,395     82,716  

Total net assets

    1,070,894     939,982  

Total liabilities and net assets

  $ 1,878,928   $ 1,693,785  

NET ASSET VALUE PER SHARE

  $ 21.24   $ 20.85  

   

The accompanying notes are an integral part of these financial statements

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

(dollars in thousands, except shares and per share amounts)

 
  Twelve Months Ended December 31,  
 
  2015   2014   2013  

INVESTMENT INCOME:

                   

Interest, fee and dividend income:

                   

Control investments

  $ 49,832   $ 40,122   $ 34,502  

Affiliate investments

    27,200     26,151     23,573  

Non-Control/Non-Affiliate investments

    86,571     73,666     57,083  

Interest, fee and dividend income

    163,603     139,939     115,158  

Interest, fee and dividend income from marketable securities and idle funds investments

    986     824     1,339  

Total investment income

    164,589     140,763     116,497  

EXPENSES:

                   

Interest

    (32,115 )   (23,589 )   (20,238 )

Compensation

    (14,852 )   (12,337 )   (8,560 )

General and administrative

    (8,621 )   (7,134 )   (4,877 )

Share-based compensation

    (6,262 )   (4,215 )   (4,210 )

Expenses charged to the External Investment Manager

    4,335     2,048      

Expenses reimbursed to MSCP

            (3,189 )

Total expenses

    (57,515 )   (45,227 )   (41,074 )

NET INVESTMENT INCOME

    107,074     95,536     75,423  

NET REALIZED GAIN (LOSS):

   
 
   
 
   
 
 

Control investments

    (582 )   (10 )   8,669  

Affiliate investments

    5,827     12,019     981  

Non-Control/Non-Affiliate investments

    (25,147 )   11,257     (2,705 )

Marketable securities and idle funds investments

    (1,414 )   (60 )   332  

SBIC debentures

            (4,775 )

Total net realized gain (loss)

    (21,316 )   23,206     2,502  

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):

                   

Portfolio investments

    11,048     (824 )   16,155  

Marketable securities and idle funds investments

    (177 )   48     (1,652 )

SBIC debentures

    (879 )   (10,931 )   4,392  

Total net change in unrealized appreciation (depreciation)

    9,992     (11,707 )   18,895  

INCOME TAXES:

                   

Federal and state income, excise and other taxes

    (2,964 )   (3,013 )   (3,556 )

Deferred taxes

    11,651     (3,274 )   3,591  

Income tax benefit (provision)

    8,687     (6,287 )   35  

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 104,437   $ 100,748   $ 96,855  

NET INVESTMENT INCOME PER SHARE — BASIC AND DILUTED

  $ 2.18   $ 2.20   $ 2.06  

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE — BASIC AND DILUTED

  $ 2.13   $ 2.31   $ 2.65  

DIVIDENDS PAID PER SHARE:

                   

Regular monthly dividends

  $ 2.100   $ 1.995   $ 1.860  

Supplemental dividends

    0.550     0.550   $ 0.800  

Total dividends

  $ 2.650   $ 2.545   $ 2.660  

WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC AND DILUTED

    49,071,492     43,522,397     36,617,850  

   

The accompanying notes are an integral part of these financial statements

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Changes in Net Assets

(dollars in thousands, except shares)

 
  Common Stock    
   
  Accumulated
Net Realized
Gain From
Investments,
Net of Dividends
  Net Unrealized
Appreciation from
Investments,
Net of Income
Taxes
   
 
 
   
  Accumulated
Net Investment
Income, Net
of Dividends
   
 
 
  Number of
Shares
  Par
Value
  Additional
Paid-In
Capital
  Total Net
Asset Value
 

Balances at December 31, 2012

    34,589,484   $ 346   $ 544,136   $ 35,869   $ (19,155 ) $ 81,780   $ 642,976  

Public offering of common stock, net of offering costs

    4,600,000     46     131,407                 131,453  

Share-based compensation

            4,210                 4,210  

Purchase of vested stock for employee payroll tax withholding

    (62,025 )   (1 )   (1,764 )               (1,765 )

Dividend reinvestment

    433,218     4     13,622                 13,626  

Issuance of restricted stock, net of forfeited shares

    273,802     3     (3 )                

Consolidation of Internal Investment Manager

            2,037                 2,037  

Issuances of common stock

    18,125         578                 578  

Other

            758                 758  

Dividends to stockholders

                (83,739 )   (14,456 )       (98,195 )

Net increase resulting from operations

                70,648     7,277     18,930     96,855  

Balances at December 31, 2013

    39,852,604   $ 398   $ 694,981   $ 22,778   $ (26,334 ) $ 100,710   $ 792,533  

Balances at December 31, 2013

    39,852,604   $ 398   $ 694,981   $ 22,778   $ (26,334 ) $ 100,710   $ 792,533  

Public offering of common stock, net of offering costs

    4,600,000     46     139,651                 139,697  

Share-based compensation

            4,215                 4,215  

Purchase of vested stock for employee payroll tax withholding

    (46,955 )       (1,495 )               (1,495 )

Dividend reinvestment

    468,417     5     14,951                 14,956  

Amortization of directors' deferred compensation

            297                 297  

Issuance of restricted stock, net of forfeited shares

    205,084     2     (2 )                

Tax benefit related to vesting of restricted shares

            1,008                 1,008  

Dividends to stockholders

                (94,649 )   (17,328 )       (111,977 )

Net increase (loss) resulting from operations

                95,536     23,206     (17,994 )   100,748  

Balances at December 31, 2014

    45,079,150   $ 451   $ 853,606   $ 23,665   $ (20,456 ) $ 82,716   $ 939,982  

Balances at December 31, 2014

    45,079,150   $ 451   $ 853,606   $ 23,665   $ (20,456 ) $ 82,716   $ 939,982  

Public offering of common stock, net of offering costs

    4,510,568     46     132,003                 132,049  

Share-based compensation

            6,262                 6,262  

Purchase of vested stock for employee payroll tax withholding

    (54,840 )   (1 )   (1,739 )               (1,740 )

Dividend reinvestment

    636,079     6     19,348                 19,354  

Amortization of directors' deferred compensation

            423                 423  

Issuance of restricted stock, net of forfeited shares

    242,787     2     (2 )                

Other

            1,566                 1,566  

Dividends to stockholders

                (123,558 )   (7,881 )       (131,439 )

Net increase (loss) resulting from operations

                107,074     (21,316 )   18,679     104,437  

Balances at December 31, 2015

    50,413,744   $ 504   $ 1,011,467   $ 7,181   $ (49,653 ) $ 101,395   $ 1,070,894  

   

The accompanying notes are an integral part of these financial statements

F-5


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(dollars in thousands)

 
  Twelve Months Ended December 31,  
 
  2015   2014   2013  

CASH FLOWS FROM OPERATING ACTIVITIES

                   

Net increase in net assets resulting from operations

  $ 104,437   $ 100,748   $ 96,855  

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:

                   

Investments in portfolio companies

    (838,441 )   (831,192 )   (767,457 )

Proceeds from sales and repayments of debt investments in portfolio companies

    570,454     512,084     446,042  

Proceeds from sales and return of capital of equity investments in portfolio companies

    34,780     42,585     18,991  

Investments in marketable securities and idle funds investments           

    (5,767 )   (22,691 )   (54,011 )

Proceeds from sales and repayments of marketable securities and idle funds investments

    9,529     26,958     51,662  

Net change in net unrealized appreciation

    (9,992 )   11,707     (18,895 )

Net realized (gain) loss

    21,316     (23,206 )   (2,502 )

Accretion of unearned income

    (8,940 )   (10,491 )   (10,881 )

Payment-in-kind interest

    (3,624 )   (4,685 )   (5,041 )

Cumulative dividends

    (1,607 )   (1,815 )   (1,377 )

Share-based compensation expense

    6,262     4,215     4,210  

Amortization of deferred financing costs

    2,553     1,740     1,519  

Deferred tax (benefit) provision

    (11,651 )   3,274     (3,591 )

Changes in other assets and liabilities:

                   

Interest receivable and other assets

    (3,220 )   (6,686 )   87  

Interest payable

    (889 )   2,292     (1,006 )

Accounts payable and other liabilities

    1,639     1,817     1,177  

Deferred fees and other

    1,769     2,428     3,512  

Net cash used in operating activities

    (131,392 )   (190,918 )   (240,706 )

CASH FLOWS FROM FINANCING ACTIVITIES

   
 
   
 
   
 
 

Proceeds from public offering of common stock, net of offering costs

    132,049     139,697     131,453  

Proceeds from public offering of 6.125% Notes

            92,000  

Repurchases of 6.125% Notes

    (85 )   (59 )   (1,108 )

Proceeds from public offering of 4.50% Notes

        175,000      

Dividends paid

    (110,673 )   (95,935 )   (83,180 )

Proceeds from issuance of SBIC debentures

        24,800     39,000  

Repayments of SBIC debentures

            (63,800 )

Proceeds from credit facility

    534,000     491,000     460,000  

Repayments on credit facility

    (461,000 )   (510,000 )   (355,000 )

Payment of deferred loan costs and SBIC debenture fees

    (1,260 )   (6,359 )   (6,288 )

Other

    (1,740 )   (1,495 )   (1,187 )

Net cash provided by financing activities

    91,291     216,649     211,890  

Net increase (decrease) in cash and cash equivalents

    (40,101 )   25,731     (28,816 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

    60,432     34,701     63,517  

CASH AND CASH EQUIVALENTS AT END OF PERIOD

  $ 20,331   $ 60,432   $ 34,701  

Supplemental cash flow disclosures:

                   

Interest paid

  $ 30,450   $ 19,559   $ 19,760  

Taxes paid

  $ 2,687   $ 4,152   $ 2,431  

Non-cash financing activities:

                   

Shares issued pursuant to the DRIP

  $ 19,354   $ 14,956   $ 13,627  

   

The accompanying notes are an integral part of these financial statements

F-6


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Control Investments(5)

 

 

 

 

                   

                           

Access Media Holdings, LLC(10)

 

Private Cable Operator

                       

     

5.00% Current / 5.00% PIK Secured Debt (Maturity — July 22, 2020)

  $ 21,554   $ 21,554   $ 20,380  

     

Preferred Member Units (4,500,000 units; 12% cumulative)

          4,394     2,000  

     

Member Units (45 units)

          1      

                  25,949     22,380  

                           

AmeriTech College, LLC

 

For-Profit Nursing and Healthcare College

                       

     

10% Secured Debt (Maturity — May 15, 2016)

    514     514     514  

     

10% Secured Debt (Maturity — November 30, 2019)

    489     489     489  

     

10% Secured Debt (Maturity — January 31, 2020)

    3,025     3,025     3,025  

     

Preferred Member Units (294 units; 5%)(8)

          2,291     2,291  

                  6,319     6,319  

                           

ASC Interests, LLC

 

Recreational and Educational Shooting Facility

                       

     

11% Secured Debt (Maturity — July 31, 2018)

    2,500     2,470     2,500  

     

Member Units (1,500 units)(8)

          1,500     2,230  

                  3,970     4,730  

                           

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

                       

     

12% Secured Debt (Maturity — December 28, 2017)

    11,596     11,521     11,596  

     

Common Stock (57,508 shares)

          6,350     9,140  

                  17,871     20,736  

                           

Café Brazil, LLC

 

Casual Restaurant Group

                       

     

Member Units (1,233 units)(8)

          1,742     7,330  

                           

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

                       

     

Member Units (416 units)(8)

          1,300     42,120  

                           

CMS Minerals LLC

 

Oil & Gas Exploration & Production

                       

     

Preferred Member Units (458 units)(8)

          2,967     6,914  

                           

Datacom, LLC

 

Technology and Telecommunications Provider

                       

     

10.5% Secured Debt (Maturity — May 31, 2019)

    11,205     11,122     10,970  

     

Class A Preferred Member Units (15% cumulative)(8)

          1,181     1,181  

     

Class B Preferred Member Units (6,453 units)

          6,030     5,079  

                  18,333     17,230  

                           

F-7


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Garreco, LLC

 

Manufacturer and Supplier of Dental Products

                       

     

14% Secured Debt (Maturity — January 12, 2018)

    5,800     5,739     5,739  

     

Member Units (1,200 units)

          1,200     1,270  

                  6,939     7,009  

                           

GRT Rubber Technologies LLC

 

Manufacturer of Engineered Rubber Products

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — December 19, 2019)(9)

    16,122     15,988     15,988  

     

Member Units (5,879 units)

          13,065     15,580  

                  29,053     31,568  

                           

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

                       

     

9% PIK Secured Debt (Ashland Capital IX, LLC) (Maturity — June 30, 2017)

    777     777     777  

     

Member Units (438 units)(8)

          2,980     13,770  

                  3,757     14,547  

                           

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

                       

     

9% Secured Debt (Maturity — January 8, 2016)

    5,010     5,010     5,010  

     

Preferred Stock (8% cumulative)(8)

          1,361     1,361  

     

Common Stock (107,456 shares)

          718     2,600  

                  7,089     8,971  

                           

Hawthorne Customs and Dispatch Services, LLC

 

Facilitator of Import Logistics, Brokerage, and Warehousing

                       

     

Member Units (500 units)(8)

          589     460  

     

Member Units (Wallisville Real Estate, LLC) (588,210 units)(8)

          1,215     2,220  

                  1,804     2,680  

                           

HW Temps LLC

 

Temporary Staffing Solutions

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity July 2, 2020)(9)

    9,976     9,884     9,884  

     

Preferred Member Units (3,200 units)(8)

          3,942     3,942  

                  13,826     13,826  

                           

Hydratec, Inc.

 

Designer and Installer of Micro-Irrigation Systems

                       

     

Common Stock (7,095 shares)(8)

          7,095     14,950  

                           

F-8


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

IDX Broker, LLC

 

Provider of Marketing and CRM Tools for the Real Estate Industry

                       

     

12.5% Secured Debt (Maturity — November 15, 2018)

    11,350     11,281     11,350  

     

Member Units (5,400 units)

          5,606     6,440  

                  16,887     17,790  

                           

Indianapolis Aviation Partners, LLC

 

Fixed Base Operator

                       

     

15% Secured Debt (Maturity — January 15, 2016)

    3,100     3,095     3,100  

     

Warrants (1,046 equivalent units)

          1,129     2,540  

                  4,224     5,640  

                           

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

                       

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 10.25%, Secured Debt (Maturity — November 14, 2016)(9)

    4,055     4,028     4,055  

     

Member Units (627 units)(8)

          811     4,750  

                  4,839     8,805  

                           

Lamb's Venture, LLC

 

Aftermarket Automotive Services Chain

                       

     

11% Secured Debt (Maturity — May 31, 2018)

    7,962     7,961     7,962  

     

Preferred Equity (non-voting)

          328     328  

     

Member Units (742 units)

          5,273     4,690  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity — October 1, 2025)

    919     919     919  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

          625     1,240  

                  15,106     15,139  

                           

Lighting Unlimited, LLC

 

Commercial and Residential Lighting Products and Design Services

                       

     

8% Secured Debt (Maturity — August 22, 2016)

    1,514     1,514     1,514  

     

Preferred Equity (non-voting)

          434     430  

     

Warrants (71 equivalent units)

          54     40  

     

Member Units (700 units)(8)

          100     350  

                  2,102     2,334  

                           

Marine Shelters Holdings, LLC (LoneStar Marine Shelters)

 

Fabricator of Marine and Industrial Shelters

                       

     

12% PIK Secured Debt (Maturity — December 28, 2017)

    9,053     8,967     8,870  

     

Preferred Member Units (3,810 units)

          5,352     4,881  

                  14,319     13,751  

                           

MH Corbin Holding LLC

 

Manufacturer and distributor of traffic safety products

                       

     

10% Secured Debt (Maturity — August 31, 2020)

    14,000     13,869     13,869  

     

Preferred Member Units (4,000 shares)

          6,000     6,000  

                  19,869     19,869  

                           

F-9


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Mid-Columbia Lumber Products, LLC

 

Manufacturer of Finger-Jointed Lumber Products

                       

     

10% Secured Debt (Maturity — December 18, 2017)

    1,750     1,750     1,750  

     

12% Secured Debt (Maturity — December 18, 2017)

    3,900     3,900     3,900  

     

Member Units (2,829 units)

          1,244     2,580  

     

9.5% Secured Debt (Mid — Columbia Real Estate, LLC) (Maturity — May 13, 2025)

    881     881     881  

     

Member Units (Mid — Columbia Real Estate, LLC) (250 units)(8)

          250     550  

                  8,025     9,661  

                           

MSC Adviser I, LLC(16)

 

Third Party Investment Advisory Services

                       

     

Member Units (Fully diluted 100.0%)(8)

              27,272  

                           

Mystic Logistics Holdings, LLC

 

Logistics and Distribution Services Provider for Large Volume Mailers

                       

     

12% Secured Debt (Maturity — August 15, 2019)

    9,448     9,282     9,448  

     

Common Stock (5,873 shares)(8)

          2,720     5,970  

                  12,002     15,418  

                           

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

                       

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — January 31, 2016)(9)

    625     625     625  

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — February 1, 2016)(9)

    3,380     3,379     3,380  

     

18% Secured Debt (Maturity — February 1, 2016)

    4,924     4,923     4,924  

     

Member Units (2,955 units)(8)

          2,975     8,590  

                  11,902     17,519  

                           

NRI Clinical Research, LLC

 

Clinical Research Service Provider

                       

     

14% Secured Debt (Maturity — September 8, 2017)

    4,617     4,539     4,539  

     

Warrants (251,723 equivalent units)

          252     340  

     

Member Units (1,454,167 units)

          765     1,342  

                  5,556     6,221  

                           

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

                       

     

12% Secured Debt (Maturity — December 22, 2016)

    13,224     12,948     12,948  

     

Warrants (14,331 equivalent units)

          817     450  

     

Member Units (50,877 units)

          2,900     1,480  

                  16,665     14,878  

                           

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

                       

     

Common Stock (1,500 shares)

          1,080     13,640  

                           

F-10


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Pegasus Research Group, LLC (Televerde)

 

Provider of Telemarketing and Data Services

                       

     

Member Units (460 units)(8)

          1,290     6,840  

                           

PPL RVs, Inc.

 

Recreational Vehicle Dealer

                       

     

11.1% Secured Debt (Maturity — July 1, 2016)

    9,710     9,710     9,710  

     

Common Stock (1,962 shares)

          2,150     9,770  

                  11,860     19,480  

                           

Principle Environmental, LLC

 

Noise Abatement Service Provider

                       

     

12% Secured Debt (Maturity — April 30, 2017)

    4,060     4,039     4,060  

     

12% Current / 2% PIK Secured Debt (Maturity — April 30, 2017)

    3,310     3,309     3,310  

     

Preferred Member Units (19,631 units)(8)

          4,663     6,060  

     

Warrants (1,036 equivalent units)

          1,200     310  

                  13,211     13,740  

                           

Quality Lease Service, LLC

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

8% PIK Secured Debt (Maturity — June 8, 2020)

    6,538     6,538     6,538  

     

Member Units (1,000 units)

          568     2,638  

                  7,106     9,176  

                           

River Aggregates, LLC

 

Processor of Construction Aggregates

                       

     

Zero Coupon Secured Debt (Maturity — June 30, 2018)

    750     556     556  

     

Member Units (1,150 units)(8)

          1,150     3,830  

     

Member Units (RA Properties, LLC) (1,500 units)

          369     2,360  

                  2,075     6,746  

                           

SoftTouch Medical Holdings LLC

 

Home Provider of Pediatric Durable Medical Equipment

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — October 31, 2019)(9)

    8,075     8,010     8,010  

     

Member Units (4,450 units)(8)

          4,930     5,710  

                  12,940     13,720  

                           

Southern RV, LLC

 

Recreational Vehicle Dealer

                       

     

13% Secured Debt (Maturity — August 8, 2018)

    11,400     11,296     11,400  

     

Member Units (1,680 units)(8)

          1,680     15,100  

     

13% Secured Debt (Southern RV Real Estate, LLC) (Maturity — August 8, 2018)

    3,250     3,220     3,250  

     

Member Units (Southern RV Real Estate, LLC) (480 units)

          480     1,200  

                  16,676     30,950  

                           

F-11


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                       

     

9% Secured Debt (Maturity — October 2, 2018)

    2,924     2,921     2,921  

     

Series A Preferred Units (2,500 units; 10% Cumulative)

          2,500     690  

     

Warrants (1,424 equivalent units)

          1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100% Fully diluted)(8)

          2,300     2,230  

                  8,817     5,841  

                           

Travis Acquisition LLC

 

Manufacturer of Aluminum Trailers

                       

     

12% Secured Debt (Maturity — August 30, 2018)

    3,513     3,471     3,513  

     

Member Units (7,282 units)

          7,100     14,480  

                  10,571     17,993  

                           

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

                       

     

9% Secured Debt (Maturity — January 1, 2019)

    1,314     1,314     1,314  

     

Member Units (2,011 units)(8)

          3,843     5,460  

                  5,157     6,774  

                           

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

                       

     

13% Secured Debt (Maturity — December 23, 2016)

    3,071     3,052     3,052  

     

Series A Preferred Stock (3,000,000 shares)

          3,000     3,550  

     

Common Stock (1,126,242 shares)

          3,706     210  

                  9,758     6,812  

                           

Ziegler's NYPD, LLC

 

Casual Restaurant Group

                       

     

6.5% Secured Debt (Maturity — October 1, 2019)

    1,000     992     992  

     

12% Secured Debt (Maturity — October 1, 2019)

    500     500     500  

     

14% Secured Debt (Maturity — October 1, 2019)

    2,750     2,750     2,750  

     

Warrants (587 equivalent units)

          600     50  

     

Preferred Member Units (10,072 units)

          2,834     3,400  

                  7,676     7,692  

Subtotal Control Investments (30.8% of total investments at fair value)

  $ 387,727   $ 555,011  

F-12


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Affiliate Investments(6)

 

 

 

 

                   

                           

AFG Capital Group, LLC

 

Provider of Rent-to-Own Financing Solutions and Services

 

 

                   

     

11% Secured Debt (Maturity — November 7, 2019)

  $ 12,960   $ 12,611   $ 12,790  

     

Warrants (42 equivalent units)

          259     490  

     

Member Units (186 units)

          1,200     2,020  

                  14,070     15,300  

                           

Boss Industries, LLC

 

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

 

 

                   

     

Preferred Member Units (2,242 units)(8)

          2,246     2,586  

                           

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions Provider

 

 

                   

     

13% Secured Debt (Maturity — April 18, 2017)

    7,000     6,890     6,890  

     

Warrants (22 equivalent shares)

          200     1,300  

                  7,090     8,190  

                           

Buca C, LLC

 

Casual Restaurant Group

 

 

                   

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity — June 30, 2020)(9)

    25,530     25,299     25,299  

     

Preferred Member Units (6 units; 6% cumulative)(8)

          3,711     3,711  

                  29,010     29,010  

                           

CAI Software LLC

 

Provider of Specialized Enterprise Resource Planning Software

 

 

                   

     

12% Secured Debt (Maturity — October 10, 2019)

    4,661     4,624     4,661  

     

Member Units (65,356 units)

          654     1,000  

                  5,278     5,661  

                           

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays Provider

 

 

                   

     

Member Units (3,936 units)(8)

          100     1,010  

                           

Congruent Credit Opportunities Funds(12)(13)

 

Investment Partnership

 

 

                   

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

          6,612     2,834  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

          12,020     12,024  

                  18,632     14,858  

                           

Daseke, Inc.

 

Specialty Transportation Provider

 

 

                   

     

12% Current / 2.5% PIK Secured Debt (Maturity — July 31, 2018)

    21,253     21,003     21,253  

     

Common Stock (19,467 shares)

          5,213     22,660  

                  26,216     43,913  

                           

F-13


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Dos Rios Partners(12)(13)

 

Investment Partnership

 

 

                   

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)

          3,104     2,031  

     

LP Interests (Dos Rios Partners — A, LP) (Fully diluted 6.4%)

          986     648  

                  4,090     2,679  

                           

East Teak Fine Hardwoods, Inc.

 

Distributor of Hardwood Products

 

 

                   

     

Common Stock (6,250 shares)(8)

          480     860  

                           

East West Copolymer & Rubber, LLC

 

Manufacturer of Synthetic Rubbers

 

 

                   

     

12% Secured Debt (Maturity — October 17, 2019)

    9,600     9,463     9,463  

     

Warrants (2,510,790 equivalent units)

          50     50  

                  9,513     9,513  

                           

EIG Traverse Co-Investment, L.P.(12)(13)

 

Investment Partnership

 

 

                   

     

LP Interests (Fully diluted 6.6%)(8)

          4,755     4,755  

                           

Freeport Financial Funds(12)(13)

 

Investment Partnership

 

 

                   

     

LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.9%)(8)

          5,974     6,045  

     

LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.4%)

          2,077     2,077  

                  8,051     8,122  

                           

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Liquidation of Distressed Assets

 

 

                   

     

10% Secured Debt (Maturity — November 21, 2016)

    13,046     12,896     10,930  

     

Warrants (29,025 equivalent units)

          400      

                  13,296     10,930  

                           

Glowpoint, Inc.

 

Provider of Cloud Managed Video Collaboration Services

 

 

                   

     

8% Secured Debt (Maturity — October 18, 2018)

    400     397     397  

     

12% Secured Debt (Maturity — October 18, 2018)

    9,000     8,929     8,929  

     

Common Stock (7,711,517 shares)

          3,958     3,840  

                  13,284     13,166  

                           

Guerdon Modular Holdings, Inc.

 

Multi-Family and Commercial Modular Construction Company

 

 

                   

     

13% Secured Debt (Maturity — August 13, 2019)

    10,400     10,280     10,280  

     

Common Stock (170,577 shares)

          2,983     1,990  

                  13,263     12,270  

                           

Houston Plating and Coatings, LLC

 

Provider of Plating and Industrial Coating Services

 

 

                   

     

Member Units (248,082 units)(8)

          996     8,440  

                           

I-45 SLF LLC(12)(13)

 

Investment Partnership

 

 

                   

     

Member units (Fully diluted 20.0%; 24.4% profits interest)

          7,200     7,200  

                           

F-14


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Indianhead Pipeline Services, LLC

 

Provider of Pipeline Support Services

 

 

                   

     

12% Secured Debt (Maturity — February 6, 2017)

    6,000     5,853     5,853  

     

Preferred Member Units (33,819 units; 8% cumulative)

          2,302     2,302  

     

Warrants (31,928 equivalent units)

          459      

     

Member Units (14,732 units)

          1      

                  8,615     8,155  

                           

KBK Industries, LLC

 

Manufacturer of Specialty Oilfield and Industrial Products

 

 

                   

     

12.5% Secured Debt (Maturity — September 28, 2017)

    5,900     5,875     5,900  

     

Member Units (250 units)(8)

          341     3,680  

                  6,216     9,580  

                           

L.F. Manufacturing Holdings, LLC(10)

 

Manufacturer of Fiberglass Products

 

 

                   

     

Member Units (2,179,001 units)(8)

          2,019     1,485  

                           

MPS Denver, LLC

 

Specialty Card Printing

 

 

                   

     

Member Units (13,800 units)

          1,130     1,130  

                           

OnAsset Intelligence, Inc.

 

Provider of Transportation Monitoring / Tracking Products and Services

 

 

                   

     

12% PIK Secured Debt (Maturity — December 31, 2015)(17)

    4,006     4,006     4,006  

     

Preferred Stock (912 shares; 7% cumulative)(8)

          1,981     1,380  

     

Warrants (5,333 equivalent shares)

          1,919      

                  7,906     5,386  

                           

OPI International Ltd.(13)

 

Provider of Man Camp and Industrial Storage Services

 

 

                   

     

10% Unsecured Debt (Maturity — April 8, 2018)

    473     473     473  

     

Common Stock (20,766,317 shares)

          1,371     3,200  

                  1,844     3,673  

                           

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

 

 

                   

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)

          2,762     4,887  

                           

Radial Drilling Services Inc.

 

Oil and Gas Lateral Drilling Technology Provider

 

 

                   

     

12% Secured Debt (Maturity — November 22, 2016)(14)

    4,200     3,941     1,500  

     

Warrants (316 equivalent shares)

          758      

                  4,699     1,500  

                           

F-15


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

 

 

                   

     

12% Secured Debt (Maturity — January 8, 2018)(14)(18)

    30,785     30,281     250  

     

Preferred Member Units (250 units)

          2,500      

                  32,781     250  

                           

Samba Holdings, Inc.

 

Provider of Intelligent Driver Record Monitoring Software and Services

 

 

                   

     

12.5% Secured Debt (Maturity — November 17, 2016)

    24,662     24,553     24,662  

     

Common Stock (170,963 shares)

          2,087     30,220  

                  26,640     54,882  

                           

Tin Roof Acquisition Company

 

Casual Restaurant Group

 

 

                   

     

12% Secured Debt (Maturity — November 13, 2018)

    13,994     13,807     13,807  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)

          2,477     2,477  

                  16,284     16,284  

                           

UniTek Global Services, Inc.(11)

 

Provider of Outsourced Infrastructure Services

 

 

                   

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — January 13, 2019)(9)

    2,826     2,826     2,812  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50% / 1.00% PIK, Current Coupon Plus PIK 10.50%, Secured Debt (Maturity — January 13, 2019)(9)

    1,261     1,261     1,255  

     

15% PIK Unsecured Debt (Maturity — July 13, 2019)

    641     641     638  

     

Preferred Stock (4,935,377 shares)

          4,935     5,540  

     

Common Stock (705,054 shares)

               

                  9,663     10,245  

                           

Universal Wellhead Services Holdings, LLC(10)

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

 

 

                   

     

Class A Preferred Units (4,000,000 units; 4.5% cumulative)(8)

          4,000     3,000  

                           

Volusion, LLC

 

Provider of Online Software-as-a-Service eCommerce Solutions

 

 

                   

     

10.5% Secured Debt (Maturity — January 26, 2020)

    17,500     16,199     16,199  

     

Preferred Member Units (4,876,670 units)

          14,000     14,000  

     

Warrants (950,618 equivalent units)

          1,400     1,400  

                  31,599     31,599  

Subtotal Affiliate Investments (19.4% of total investments at fair value)

  $ 333,728   $ 350,519  

F-16


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Non-Control/Non-Affiliate Investments(7)

                   

                           

AccuMED, Corp.(10)

 

Medical Device Contract Manufacturer

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — October 29, 2020)(9)

  $ 9,750   $ 9,648   $ 9,648  

                           

Adams Publishing Group, LLC(10)

 

Local Newspaper Operator

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity — November 3, 2020)(9)

    9,506     9,329     9,328  

                           

Ahead, LLC(10)

 

IT Infrastructure Value Added Reseller

                       

     

LIBOR Plus 6.50%, Current Coupon 6.76%, Secured Debt (Maturity — November 2, 2020)

    15,000     14,562     14,625  

                           

Allflex Holdings III Inc.(11)

 

Manufacturer of Livestock Identification Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — July 19, 2021)(9)

    10,150     10,080     10,008  

                           

AM General LLC(11)

 

Specialty Vehicle Manufacturer

                       

     

LIBOR Plus 9.00% (Floor 1.25%), Current Coupon 10.25%, Secured Debt (Maturity — March 22, 2018)(9)

    2,256     2,221     1,867  

                           

AM3 Pinnacle Corporation(10)

 

Provider of Comprehensive Internet, TV and Voice Services for Multi- Dwelling Unit Properties

                       

     

Common Stock (60,240 shares)

          2,000      

                           

American Seafoods Group, LLC(11)

 

Catcher-Processor of Alaskan Pollock

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — August 19, 2021)(9)

    9,975     9,963     9,892  

                           

AMF Bowling Centers, Inc.(11)

 

Bowling Alley Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — September 18, 2021)(9)

    7,907     7,802     7,835  

                           

Anchor Hocking, LLC(11)

 

Household Products Manufacturer

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — June 4, 2018)(9)

    2,306     2,306     2,179  

     

Member Units (440,620 units)

          4,928     3,250  

                  7,234     5,429  

                           

F-17


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

AP Gaming I, LLC(10)

 

Developer, Manufacturer, and Operator of Gaming Machines

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — December 20, 2020)(9)

    11,314     11,108     10,946  

                           

Apex Linen Service, Inc.

 

Industrial Launderers

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — October 30, 2022)(9)

    1,600     1,600     1,600  

     

13% Secured Debt (Maturity — October 30, 2022)

    12,000     11,926     11,926  

                  13,526     13,526  

                           

Applied Products, Inc.(10)

 

Adhesives Distributor

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — September 30, 2019)(9)

    5,813     5,759     5,683  

                           

Arcus Hunting LLC.(10)

 

Manufacturer of Bowhunting and Archery Products and Accessories

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — November 13, 2019)(9)

    9,540     9,429     9,429  

                           

Artel, LLC(11)

 

Provider of Secure Satellite Network and IT Solutions

                       

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity — November 27, 2017)(9)

    7,854     7,585     6,716  

                           

ATS Workholding, Inc.(10)

 

Manufacturer of Machine Cutting Tools and Accessories

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — March 10, 2019)(9)

    6,492     6,452     6,230  

                           

ATX Networks Corp.(11)(13)

 

Provider of Radio Frequency Management Equipment

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — June 14, 2021)(9)

    14,925     14,647     14,701  

                           

Barfly Ventures, LLC(10)

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity — August 31, 2020)

    4,121     4,042     4,042  

     

Warrants (1 equivalent share)

          473     473  

                  4,515     4,515  

                           

Berry Aviation, Inc.(10)

 

Airline Charter Service Operator

                       

     

12.00% Current / 1.75% PIK Secured Debt (Maturity — January 30, 2020)

    5,627     5,578     5,578  

     

Common Stock (553 shares)

          400     400  

                  5,978     5,978  

                           

F-18


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Bioventus LLC(10)

 

Production of Orthopedic Healing Products

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.00%, Secured Debt (Maturity — April 10, 2020)(9)

    5,000     4,917     4,925  

                           

Blackbrush Oil and Gas LP(11)

 

Oil & Gas Exploration

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — July 30, 2021)(9)

    4,000     3,975     3,230  

                           

Blackhawk Specialty Tools LLC(11)

 

Oilfield Equipment & Services

                       

     

LIBOR Plus 5.25% (Floor 1.25%), Current Coupon 6.50%, Secured Debt (Maturity — August 1, 2019)(9)

    5,892     5,866     5,450  

                           

Blue Bird Body Company(11)

 

School Bus Manufacturer

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — June 26, 2020)(9)

    4,702     4,646     4,669  

                           

Bluestem Brands, Inc.(11)(13)

 

Multi-Channel Retailer of General Merchandise

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — November 6, 2020)(9)

    13,632     13,358     12,780  

                           

Brainworks Software, LLC(10)

 

Advertising Sales and Newspaper Circulation Software

                       

     

Prime Plus 7.25% (Floor 3.25%), Current Coupon 10.75%, Secured Debt (Maturity — July 22, 2019)(9)

    626     620     620  

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — July 22, 2019)(9)

    6,185     6,126     6,012  

                  6,746     6,632  

                           

Brightwood Capital Fund III, LP(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 1.6%)(8)

          11,250     11,125  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

 

Construction Services Provider

                       

     

10.375% Secured Debt (Maturity — September 1, 2021)

    2,500     2,500     2,438  

                           

Calloway Laboratories, Inc.(10)

 

Health Care Testing Facilities

                       

     

17% PIK Secured Debt (Maturity — September 30, 2016)(14)

    7,324     7,275      

     

Warrants (125,000 equivalent shares)

          17      

                  7,292      

                           

Cengage Learning Acquisitions, Inc.(11)

 

Provider of Educational Print and Digital Services

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — March 31, 2020)(9)

    9,720     9,672     9,502  

                           

F-19


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Cenveo Corporation(11)

 

Provider of Commercial Printing, Envelopes, Labels, and Printed Office Products

                       

     

6% Secured Debt (Maturity — August 1, 2019)

    5,230     4,544     3,687  

                           

CGSC of Delaware Holdings Corp.(11)(13)

 

Insurance Brokerage Firm

                       

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity — October 16, 2020)(9)

    2,000     1,979     1,900  

                           

Charlotte Russe, Inc(11)

 

Fast-Fashion Retailer to Young Women

                       

     

LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.75%, Secured Debt (Maturity — May 22, 2019)(9)

    14,346     14,065     10,031  

                           

Clarius ASIG, LLC(10)

 

Prints & Advertising Film Financing

                       

     

15% PIK Secured Debt (Maturity — September 14, 2014)(17)

    620     620     620  

                           

Clarius BIGS, LLC(10)

 

Prints & Advertising Film Financing

                       

     

15% PIK Secured Debt (Maturity — January 5, 2015)(14)(17)

    3,386     3,386     563  

                           

Compact Power Equipment, Inc.

 

Equipment / Tool Rental

                       

     

12% Secured Debt (Maturity — October 1, 2017)

    4,100     4,090     4,100  

     

Series A Preferred Stock (4,298,435 shares)

          1,079     2,930  

                  5,169     7,030  

                           

Compuware Corporation(11)

 

Provider of Software and Supporting Services

                       

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity — December 15, 2019)(9)

    14,751     14,395     13,998  

                           

Covenant Surgical Partners, Inc.(11)

 

Ambulatory Surgical Centers

                       

     

8.75% Secured Debt (Maturity — August 1, 2019)

    800     800     780  

                           

CRGT Inc.(11)

 

Provider of Custom Software Development

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — December 19, 2020)(9)

    10,168     10,009     10,118  

                           

CST Industries Inc.(11)

 

Storage Tank Manufacturer

                       

     

LIBOR Plus 6.25% (Floor 1.50%), Current Coupon 7.75%, Secured Debt (Maturity — May 22, 2017)(9)

    8,227     8,197     8,145  

                           

Darr Equipment LP(10)

 

Heavy Equipment Dealer

                       

     

11.75% Current / 2% PIK Secured Debt (Maturity - April 15, 2020)

    20,706     20,178     19,688  

     

Warrants (915,734 equivalent units)

          474     410  

                  20,652     20,098  

                           

F-20


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Digital River, Inc.(11)

 

Provider of Outsourced e-Commerce Solutions and Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — February 12, 2021)(9)

    8,667     8,588     8,580  

                           

Digity Media LLC(11)

 

Radio Station Operator

                       

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity — February 8, 2019)(9)

    6,588     6,539     6,506  

                           

Drilling Info Holdings, Inc.

 

Information Services for the Oil and Gas Industry

                       

     

Common Stock (3,788,865 shares)

          1,335     9,920  

                           

ECP-PF Holdings Group, Inc.(10)

 

Fitness Club Operator

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — November 26, 2019)(9)

    5,625     5,579     5,492  

                           

EIG Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EIG Global Private Debt fund-A, L.P.) (Fully diluted 0.5%)

          718     718  

                           

EnCap Energy Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

          3,762     2,765  

     

LP Interests (EnCap Energy Capital Fund VIII Co- Investors, L.P.) (Fully diluted 0.4%)

          2,194     1,056  

     

LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

          3,075     3,826  

     

LP Interests (Encap Energy Capital Fund X, L.P.) (Fully diluted 0.1%)

          692     692  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 0.8%)(8)

          7,350     10,738  

     

LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.2%)

          464     892  

                  17,537     19,969  

                           

Energy and Exploration Partners, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

8.75% Secured Debt (Maturity — January 23, 2016)(14)

    221     221     221  

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity — January 22, 2019)(9)(14)

    9,390     9,048     2,371  

                  9,269     2,592  

                           

Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)(13)

 

Technology-based Performance Support Solutions

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — April 28, 2022)(9)

    7,000     6,838     4,673  

                           

Extreme Reach, Inc.(11)

 

Integrated TV and Video Advertising Platform

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity — February 7, 2020)(9)

    8,875     8,866     8,731  

                           

F-21


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Flavors Holdings Inc.(11)

 

Global Provider of Flavoring and Sweetening Products and Solutions

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity — April 3, 2020)(9)

    11,333     11,004     10,086  

                           

Fram Group Holdings, Inc.(11)

 

Manufacturer of Automotive Maintenance Products

                       

     

LIBOR Plus 5.50% (Floor 1.50%), Current Coupon 7.00%, Secured Debt (Maturity — July 29, 2017)(9)

    9,652     9,547     7,275  

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity — January 29, 2018)(9)

    700     699     350  

                  10,246     7,625  

                           

GI KBS Merger Sub LLC(11)

 

Outsourced Janitorial Services to Retail/Grocery Customers

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — October 29, 2021)(9)

    3,960     3,901     3,742  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity — April 29, 2022)(9)

    800     786     792  

                  4,687     4,534  

                           

Grace Hill, LLC(10)

 

Online Training Tools for the Multi-Family Housing Industry

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — August 15, 2019)(9)

    9,450     9,361     9,450  

                           

Great Circle Family Foods, LLC(10)

 

Quick Service Restaurant Franchise

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — October 28, 2019)(9)

    7,849     7,783     7,783  

                           

Grupo Hima San Pablo, Inc.(11)

 

Tertiary Care Hospitals

                       

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity — January 31, 2018)(9)

    4,863     4,816     4,668  

     

13.75% Secured Debt (Maturity — July 31, 2018)

    2,000     1,942     1,860  

                  6,758     6,528  

                           

GST Autoleather, Inc.(11)

 

Automotive Leather Manufacturer

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — July 10, 2020)(9)

    9,875     9,797     9,529  

                           

Guitar Center, Inc.(11)

 

Musical Instruments Retailer

                       

     

6.5% Secured Debt (Maturity — April 15, 2019)

    11,000     10,442     9,240  

                           

Halcon Resources Corporation(11)

 

Oil & Gas Exploration & Production

                       

     

9.75% Unsecured Debt (Maturity — July 15, 2020)

    6,925     6,382     2,008  

                           

F-22


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Hojeij Branded Foods, LLC(10)

 

Multi-Airport, Multi- Concept Restaurant Operator

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — July 27, 2021)(9)

    5,344     5,294     5,294  

                           

Horizon Global Corporation(11)

 

Auto Parts Manufacturer

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — June 30, 2021)(9)

    9,750     9,568     9,677  

                           

Hostway Corporation(11)

 

Managed Services and Hosting Provider

                       

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity — December 13, 2019)(9)

    11,179     11,105     11,067  

                           

Hunter Defense Technologies, Inc.(11)

 

Provider of Military and Commercial Shelters and Systems

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — August 5, 2019)(9)

    6,414     6,366     6,350  

                           

ICON Health & Fitness, Inc.(11)

 

Producer of Fitness Products

                       

     

11.875% Secured Debt (Maturity — October 15, 2016)

    6,956     6,907     6,608  

                           

iEnergizer Limited(11)(13)

 

Provider of Business Outsourcing Solutions

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — May 1, 2019)(9)

    8,110     8,030     7,502  

                           

Indivior Finance LLC(11)(13)

 

Specialty Pharmaceutical Company Treating Opioid Dependence

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — December 19, 2019)(9)

    7,125     6,759     6,697  

                           

Industrial Container Services, LLC(10)

 

Steel Drum Reconditioner

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity — December 31, 2018)(9)

    5,000     5,000     5,000  

                           

Infinity Acquisition Finance Corp.(11)

 

Application Software for Capital Markets

                       

     

7.25% Unsecured Debt (Maturity — August 1, 2022)

    4,000     4,000     3,440  

                           

Inn of the Mountain Gods Resort and Casino(11)

 

Hotel & Casino Owner & Operator

                       

     

9.25% Secured Debt (Maturity — November 30, 2020)

    3,851     3,708     3,562  

                           

Insurance Technologies, LLC(10)

 

Illustration and Sales-automation Platforms

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — December 1, 2019)(9)

    4,804     4,759     4,759  

                           

F-23


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Intertain Group Limited(11)(13)

 

Business-to-Consumer Online Gaming Operator

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — April 8, 2022)(9)

    9,938     9,782     9,883  

                           

iPayment, Inc.(11)

 

Provider of Merchant Acquisition

                       

     

LIBOR Plus 5.25% (Floor 1.50%), Current Coupon 6.75%, Secured Debt (Maturity — May 8, 2017)(9)

    15,026     14,986     14,446  

                           

iQor US Inc.(11)

 

Business Process Outsourcing Services Provider

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — April 1, 2021)(9)

    9,887     9,718     7,942  

                           

irth Solutions, LLC

 

Provider of Damage Prevention Information Technology Services

                       

     

Member Units (27,893 units)

          1,441     1,441  

                           

Jackmont Hospitality, Inc.(10)

 

Franchisee of Casual Dining Restaurants

                       

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25% / 2.50% PIK, Current Coupon Plus PIK 7.75%, Secured Debt (Maturity — May 26, 2021)(9)

    4,357     4,337     4,188  

                           

Joerns Healthcare, LLC(11)

 

Manufacturer and Distributor of Health Care Equipment & Supplies

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — May 9, 2020)(9)

    14,805     14,711     14,703  

                           

JSS Holdings, Inc.(11)

 

Aircraft Maintenance Program Provider

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — August 31, 2021)(9)

    14,566     14,230     13,765  

                           

Kendra Scott, LLC(11)

 

Jewelry Retail Stores

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — July 17, 2020)(9)

    5,875     5,821     5,831  

                           

Keypoint Government Solutions, Inc.(11)

 

Provider of Pre-Employment Screening Services

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity — November 13, 2017)(9)

    6,303     6,268     6,271  

                           

LaMi Products, LLC(10)

 

General Merchandise Distribution

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — September 16, 2020)(9)

    4,729     4,699     4,699  

                           

F-24


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Lansing Trade Group LLC(11)

 

Commodity Merchandiser

                       

     

9.25% Unsecured Debt (Maturity — February 15, 2019)

    6,000     6,000     5,625  

                           

Larchmont Resources, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 9.75%, Secured Debt (Maturity — August 7, 2019)(9)

    7,807     7,508     5,543  

                           

Leadrock Properties, LLC

 

Real Estate Investment

                       

     

10% Secured Debt (Maturity — May 4, 2026)

    1,440     1,416     1,416  

                           

Legendary Pictures Funding, LLC(10)

 

Producer of TV, Film, and Comic Content

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — April 22, 2020)(9)

    7,500     7,372     7,425  

                           

LKCM Headwater Investments I, L.P.(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 2.3%)

          2,500     4,875  

                           

Looking Glass Investments, LLC(12)(13)

 

Specialty Consumer Finance

                       

     

9% Unsecured Debt (Maturity — June 30, 2020)

    188     188     188  

     

Member Units (2.5 units)

          125     125  

     

Member Units (LGI Predictive Analytics LLC) (190,712 units)(8)

          188     188  

                  501     501  

                           

MediMedia USA, Inc.(11)

 

Provider of Healthcare Media and Marketing

                       

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity — November 20, 2018)(9)

    7,772     7,714     7,422  

                           

Messenger, LLC(10)

 

Supplier of Specialty Stationery and Related Products to the Funeral Industry

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity — September 9, 2020)(9)

    15,583     15,483     15,583  

                           

Milk Specialties Company(11)

 

Processor of Nutrition Products

                       

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity — November 9, 2018)(9)

    792     789     792  

                           

Minute Key, Inc.

 

Operator of Automated Key Duplication Kiosks

                       

     

10% Current / 2% PIK Secured Debt (Maturity — September 19, 2019)

    14,186     13,817     13,817  

     

Warrants (1,437,409 equivalent units)

          280     280  

                  14,097     14,097  

                           

Miramax Film NY, LLC(11)

 

Motion Picture Producer and Distributor

                       

     

Member Units (500,000 units)(8)

          864     864  

                           

F-25


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Mood Media Corporation(11)(13)

 

Provider of Electronic Equipment

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — May 1, 2019)(9)

    14,957     14,827     14,266  

                           

New Media Holdings II LLC(11)(13)

 

Local Newspaper Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — June 4, 2020)(9)

    9,788     9,635     9,703  

                           

North American Lifting Holdings, Inc.(11)

 

Crane Service Provider

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity — November 27, 2020)(9)

    997     835     733  

                           

North Atlantic Trading Company, Inc.(11)

 

Marketer/Distributor of Tobacco Products

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity — January 13, 2020)(9)

    9,676     9,607     9,603  

                           

Novitex Intermediate, LLC(11)

 

Provider of Document Management Services

                       

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity — July 7, 2020)(9)

    8,692     8,532     8,192  

                           

Ospemifene Royalty Sub LLC (QuatRx)(10)

 

Estrogen-Deficiency Drug Manufacturer and Distributor

                       

     

11.5% Secured Debt (Maturity — November 15, 2026)

    5,071     5,071     3,780  

                           

Panolam Industries International, Inc.(11)

 

Decorative Laminate Manufacturer

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — August 23, 2017)(9)

    9,472     9,429     9,424  

                           

Paris Presents Incorporated(11)

 

Branded Cosmetic and Bath Accessories

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — December 31, 2021)(9)

    2,000     1,965     1,960  

                           

Parq Holdings Limited Partnership(11)(13)

 

Hotel & Casino Operator

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — December 17, 2020)(9)

    7,500     7,369     7,200  

                           

Permian Holdings, Inc.(11)

 

Storage Tank Manufacturer

                       

     

10.5% Secured Debt (Maturity — January 15, 2018)

    2,755     2,738     1,047  

                           

Pernix Therapeutics Holdings, Inc.(10)

 

Pharmaceutical Royalty

                       

     

12% Secured Debt (Maturity — August 1, 2020)

    3,818     3,818     3,777  

                           

F-26


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Pike Corporation(11)

 

Construction and Maintenance Services for Electric Transmission and Distribution Infrastructure

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity — June 22, 2022)(9)

    15,000     14,663     14,712  

                           

Point.360(10)

 

Fully Integrated Provider of Digital Media Services

                       

     

Warrants (65,463 equivalent shares)

          69     9  

     

Common Stock (163,658 shares)

          273     144  

                  342     153  

                           

Prowler Acquisition Corp.(11)

 

Specialty Distributor to the Energy Sector

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity — January 28, 2020)(9)

    4,411     3,734     3,749  

                           

PT Network, LLC(10)

 

Provider of Outpatient Physical Therapy and Sports Medicine Services

                       

     

LIBOR Plus 7.75% (Floor 1.50%), Current Coupon 9.25%, Secured Debt (Maturity — November 1, 2018)(9)

    12,047     11,954     11,771  

                           

QBS Parent, Inc.(11)

 

Provider of Software and Services to the Oil & Gas Industry

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity — August 7, 2021)(9)

    11,389     11,303     11,332  

                           

Raley's(11)

 

Family-owned supermarket chain in California

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — May 18, 2022)(9)

    5,094     4,999     5,069  

                           

RCHP, Inc.(11)

 

Regional Non-Urban Hospital Owner/Operator

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — April 23, 2019)(9)

    5,448     5,426     5,448  

     

LIBOR Plus 10.25% (Floor 1.00%), Current Coupon 11.25%, Secured Debt (Maturity — October 23, 2019)(9)

    4,000     3,954     3,953  

                  9,380     9,401  

                           

Renaissance Learning, Inc.(11)

 

Technology-based K-12 Learning Solutions

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — April 11, 2022)(9)

    3,000     2,975     2,835  

                           

F-27


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

RGL Reservoir Operations Inc.(11)(13)

 

Oil & Gas Equipment and Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — August 13, 2021)(9)

    3,950     3,851     1,534  

                           

RLJ Entertainment, Inc.(10)

 

Movie and TV Programming Licensee and Distributor

                       

     

LIBOR Plus 8.75% (Floor 0.25%), Current Coupon 9.16%, Secured Debt (Maturity — September 11, 2019)(9)

    9,354     9,353     9,203  

                           

RM Bidder, LLC(10)

 

Acquisition Vehicle

                       

     

Warrants (327,532 equivalent unis)

          425     363  

     

Member Units (2,779 units)

          46     45  

                  471     408  

                           

SAExploration, Inc.(10)(13)

 

Geophysical Services Provider

                       

     

Common Stock (6,472 shares)

          65     27  

                           

Sage Automotive Interiors, Inc(11)

 

Automotive Textiles Manufacturer

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity — October 8, 2021)(9)

    3,000     2,974     2,970  

                           

Salient Partners L.P.(11)

 

Provider of Asset Management Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — June 9, 2021)(9)

    7,388     7,251     7,240  

                           

Sotera Defense Solutions, Inc.(11)

 

Defense Industry Intelligence Services

                       

     

LIBOR Plus 7.50% (Floor 1.50%), Current Coupon 9.00%, Secured Debt (Maturity — April 21, 2017)(9)

    10,119     9,886     9,360  

                           

Stardust Finance Holdings, Inc.(11)

 

Manufacturer of Diversified Building Products

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — March 13, 2022)(9)

    12,406     12,239     12,065  

                           

Subsea Global Solutions, LLC(10)

 

Underwater Maintenance and Repair Services

                       

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity — March 17, 2020)(9)

    4,887     4,836     4,762  

                           

Synagro Infrastructure Company, Inc(11)

 

Waste Management Services

                       

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity — August 22, 2020)(9)

    4,714     4,647     4,124  

                           

F-28


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Targus Group International(11)

 

Distributor of Protective Cases for Mobile Devices

                       

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00% / 1.00% PIK, Current Coupon Plus PIK 12.00%, Secured Debt (Maturity — May 24, 2016)(9)(14)

    4,258     4,263     3,119  

                           

TeleGuam Holdings, LLC(11)

 

Cable and Telecom Services Provider

                       

     

LIBOR Plus 4.00% (Floor 1.25%), Current Coupon 5.25%, Secured Debt (Maturity — December 10, 2018)(9)

    7,975     7,961     7,935  

     

LIBOR Plus 7.50% (Floor 1.25%), Current Coupon 8.75%, Secured Debt (Maturity — June 10, 2019)(9)

    2,500     2,484     2,487  

                  10,445     10,422  

                           

Templar Energy LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — November 25, 2020)(9)

    4,000     3,962     485  

                           

The Tennis Channel, Inc.(10)

 

Television-Based Sports Broadcasting

                       

     

Warrants (114,316 equivalent shares)

          235     301  

                           

The Topps Company, Inc.(11)

 

Trading Cards & Confectionary

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — October 2, 2018)(9)

    1,960     1,948     1,923  

                           

TOMS Shoes, LLC(11)

 

Global Designer, Distributor, and Retailer of Casual Footwear

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — October 30, 2020)(9)

    4,963     4,545     3,387  

                           

Travel Leaders Group, LLC(11)

 

Travel Agency Network Provider

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — December 7, 2020)(9)

    8,700     8,638     8,613  

                           

US Joiner Holding Company(11)

 

Marine Interior Design and Installation

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — April 16, 2020)(9)

    7,369     7,341     7,295  

                           

Valley Healthcare Group, LLC

 

Provider of Durable Medical Equipment

                       

     

LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.00%, Secured Debt (Maturity — December 29, 2020)(9)

    10,400     10,297     10,297  

                           

Vantage Oncology, LLC(11)

 

Outpatient Radiation Oncology Treatment Centers

                       

     

9.5% Secured Debt (Maturity — June 15, 2017)

    12,050     11,938     10,182  

                           

F-29


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Virtex Enterprises, LP(10)

 

Specialty, Full-Service Provider of Complex Electronic Manufacturing Services

                       

     

12% Secured Debt (Maturity — December 27, 2018)

    1,667     1,516     1,516  

     

Preferred Class A Units (14 units; 5% cumulative)(8)

          333     512  

     

Warrants (11 equivalent units)

          186     135  

                  2,035     2,163  

                           

Vision Solutions, Inc.(11)

 

Provider of Information Availability Software

                       

     

LIBOR Plus 8.00% (Floor 1.50%), Current Coupon 9.50%, Secured Debt (Maturity — July 23, 2017)(9)

    5,000     4,987     4,750  

                           

Western Dental Services, Inc.(11)

 

Dental Care Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — November 1, 2018)(9)

    4,904     4,901     4,303  

                           

Wilton Brands LLC(11)

 

Specialty Housewares Retailer

                       

     

LIBOR Plus 7.25% (Floor 1.25%), Current Coupon 8.50%, Secured Debt (Maturity — August 30, 2018)(9)

    1,540     1,524     1,475  

                           

Worley Claims Services, LLC(10)

 

Insurance Adjustment Management and Services Provider

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity — October 31, 2020)(9)

    6,435     6,381     6,210  

                           

YP Holdings LLC(11)

 

Online and Offline Advertising Operator

                       

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity — June 4, 2018)(9)

    2,455     2,435     2,382  

                           

Zilliant Incorporated

 

Price Optimization and Margin Management Solutions

                       

     

Preferred Stock (186,777 shares)

          154     260  

     

Warrants (952,500 equivalent shares)

          1,071     1,190  

                  1,225     1,450  

Subtotal Non-Control/Non-Affiliate Investments (49.6% of total investments at fair value)

  $ 945,187   $ 894,466  

Total Portfolio Investments, December 31, 2015

  $ 1,666,642   $ 1,799,996  

F-30


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Marketable Securities and Idle Funds Investments

             

                           

PennantPark Investment Corporation(13)(15)

 

Business Development Company

 

 

                   

     

Common Stock (343,149 shares)(8)

        $ 3,629   $ 2,121  

                           

Other Marketable Securities and Idle Funds Investments(13)(15)

 

Investments in Marketable Securities and Diversified, Registered Bond Funds

              1,778     1,572  

Subtotal Marketable Securities and Idle Funds Investments (0.2% of total investments at fair value)

  $ 5,407   $ 3,693  

Total Investments, December 31, 2015

  $ 1,672,049   $ 1,803,689  

(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note B for a description of Lower Middle Market portfolio investments. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(2)
Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)
See Note C for a summary of geographic location of portfolio companies.

(4)
Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

(5)
Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

(7)
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)
Income producing through dividends or distributions.

(9)
Index based floating interest rate is subject to contractual minimum interest rate. Variable rate loans bear interest at a rate that may be determined by reference to either LIBOR (which can include one-, two-, three- or six-month LIBOR) or Prime, at the borrower's option, which rates reset periodically based on the terms of the loan agreement.

(10)
Private Loan portfolio investment. See Note B for a description of Private Loan portfolio investments.

(11)
Middle Market portfolio investment. See Note B for a description of Middle Market portfolio investments.

(12)
Other Portfolio investment. See Note B for a description of Other Portfolio investments.

(13)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)
Non-accrual and non-income producing investment.

(15)
Marketable securities and idle fund investments.

(16)
External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(17)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

F-31


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Control Investments(5)

 

 

 

 

                   

                           

ASC Interests, LLC

 

Recreational and Educational Shooting Facility

                       

     

11% Secured Debt (Maturity — July 31, 2018)

  $ 3,000   $ 2,954   $ 3,000  

     

Member Units (1,500 units)(8)

          1,500     1,970  

                  4,454     4,970  

                           

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

                       

     

12% Secured Debt (Maturity — December 28, 2017)

    13,570     13,446     13,570  

     

Common Stock (57,508 shares)

          6,350     11,210  

                  19,796     24,780  

                           

Café Brazil, LLC

 

Casual Restaurant Group

                       

     

Member Units (1,233 units)(8)

          1,742     6,980  

                           

California Healthcare Medical Billing, Inc.

 

Outsourced Billing and Revenue Cycle Management

                       

     

9% Secured Debt (Maturity — October 17, 2016)

    8,703     8,568     8,703  

     

Warrants (466,947 equivalent shares)

          1,193     3,480  

     

Common Stock (207,789 shares)

          1,177     1,460  

                  10,938     13,643  

                           

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

                       

     

Member Units (416 units)(8)

          1,300     27,200  

                           

Ceres Management, LLC (Lambs Tire & Automotive)

 

Aftermarket Automotive Services Chain

                       

     

14% Secured Debt (Maturity — May 31, 2018)

    3,916     3,916     3,916  

     

Class B Member Units (12% cumulative)(8)

          4,048     4,048  

     

Member Units (5,460 units)

          5,273     2,510  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity — October 1, 2025)

    968     968     968  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

          625     1,240  

                  14,830     12,682  

                           

Datacom, LLC

 

Technology and Telecommunications Provider

                       

     

10.5% Secured Debt (Maturity — May 31, 2019)

    11,205     11,103     11,103  

     

Preferred Member Units (6,453 units)

          6,030     6,030  

                  17,133     17,133  

                           

Garreco, LLC

 

Manufacturer and Supplier of Dental Products

                       

     

14% Secured Debt (Maturity — January 12, 2018)

    5,400     5,320     5,320  

     

Member Units (1,200 units)(8)

          1,200     1,360  

                  6,520     6,680  

                           

F-32


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

GRT Rubber Technologies LLC

 

Engineered Rubber Product Manufacturer

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — December 19, 2019)(9)

    16,750     16,585     16,585  

     

Member Units (5,879 units)

          13,065     13,065  

                  29,650     29,650  

                           

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

                       

     

9% PIK Secured Debt (Ashland Capital IX, LLC) (Maturity — June 30, 2017)

    744     744     744  

     

Member Units (438 units)(8)

          2,980     16,540  

                  3,724     17,284  

                           

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

                       

     

12% Secured Debt (Maturity — June 4, 2015)

    5,487     5,409     5,487  

     

Preferred Stock (8% cumulative)(8)

          1,260     1,260  

     

Common Stock (105,880 shares)

          718     1,830  

                  7,387     8,577  

                           

Hawthorne Customs and Dispatch Services, LLC

 

Facilitator of Import Logistics, Brokerage, and Warehousing

                       

     

Member Units (500 units)(8)

          589     370  

     

Member Units (Wallisville Real Estate, LLC) (588,210 units)(8)

          1,215     2,220  

                  1,804     2,590  

                           

Hydratec, Inc.

 

Designer and Installer of Micro-Irrigation Systems

                       

     

Common Stock (7,095 shares)(8)

          7,095     13,720  

                           

IDX Broker, LLC

 

Provider of Marketing and CRM Tools for the Real Estate Industry

                       

     

LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.00%, Secured Debt (Maturity — November 18, 2018)(9)

    125     125     125  

     

12.5% Secured Debt (Maturity — November 18, 2018)

    10,571     10,483     10,571  

     

Member Units (5,029 units)

          5,029     5,450  

                  15,637     16,146  

                           

Impact Telecom, Inc.

 

Telecommunications Services Provider

                       

     

LIBOR Plus 6.50% (Floor 2.00%), Current Coupon 8.50%, Secured Debt (Maturity — May 31, 2018)(9)

    1,575     1,569     1,569  

     

13% Secured Debt (Maturity — May 31, 2018)

    22,500     15,515     15,515  

     

Warrants (5,516,667 equivalent shares)

          8,000     4,160  

                  25,084     21,244  

                           

F-33


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Indianapolis Aviation Partners, LLC

 

Fixed Base Operator

                       

     

15% Secured Debt (Maturity — January 15, 2015)

    3,100     3,100     3,100  

     

Warrants (1,046 equivalent units)

          1,129     2,540  

                  4,229     5,640  

                           

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

                       

     

Prime Plus 6.75% (Floor 3.25%), Current Coupon 10.00%, Secured Debt (Maturity — November 14, 2016)(9)

    3,655     3,618     3,655  

     

Member Units (627 units)(8)

          811     3,580  

                  4,429     7,235  

                           

Lighting Unlimited, LLC

 

Commercial and Residential Lighting Products and Design Services

                       

     

8% Secured Debt (Maturity — August 22, 2015)

    1,550     1,550     1,550  

     

Preferred Equity (non-voting)

          439     439  

     

Warrants (71 equivalent units)

          54     40  

     

Member Units (700 units)(8)

          100     360  

                  2,143     2,389  

                           

Marine Shelters Holdings, LLC (LoneStar Marine Shelters)

 

Fabricator of Marine and Industrial Shelters

                       

     

12% Secured Debt (Maturity — December 28, 2017)

    10,250     10,112     10,112  

     

Preferred Member Units (2,669 units)

          3,750     3,750  

                  13,862     13,862  

                           

Mid-Columbia Lumber Products, LLC

 

Manufacturer of Finger-Jointed Lumber Products

                       

     

10% Secured Debt (Maturity — December 18, 2017)

    1,750     1,750     1,750  

     

12% Secured Debt (Maturity — December 18, 2017)

    3,900     3,900     3,900  

     

Member Units (2,829 units)(8)

          1,244     10,180  

     

9.5% Secured Debt (Mid — Columbia Real Estate, LLC) (Maturity — May 13, 2025)

    927     927     927  

     

Member Units (Mid — Columbia Real Estate, LLC) (250 units)(8)

          250     550  

                  8,071     17,307  

                           

MSC Adviser I, LLC(16)

 

Third Party Investment Advisory Services

                       

     

Member Units (Fully diluted 100.0%)(8)

              15,580  

                           

Mystic Logistics, Inc

 

Logistics and Distribution Services Provider for Large Volume Mailers

                       

     

12% Secured Debt (Maturity — August 15, 2019)

    10,000     9,790     9,790  

     

Common Stock (5,873 shares)

          2,720     2,720  

                  12,510     12,510  

                           

F-34


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

                       

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — September 1, 2015)(9)

    625     615     625  

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — February 1, 2016)(9)

    2,923     2,915     2,923  

     

18% Secured Debt (Maturity — February 1, 2016)

    4,468     4,440     4,468  

     

Member Units (2,955 units)(8)

          2,975     7,560  

                  10,945     15,576  

                           

NRI Clinical Research, LLC

 

Clinical Research Service Provider

                       

     

14% Secured Debt (Maturity — September 8, 2016)

    4,889     4,779     4,779  

     

Warrants (251,723 equivalent units)

          252     160  

     

Member Units (671,233 units)

          671     722  

                  5,702     5,661  

                           

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

                       

     

12% Secured Debt (Maturity — December 22, 2016)

    12,100     11,590     11,590  

     

Warrants (14,331 equivalent units)

          817     970  

     

Member Units (50,877 units)(8)

          2,900     3,190  

                  15,307     15,750  

                           

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

                       

     

Common Stock (1,500 shares)(8)

          1,080     13,420  

                           

Pegasus Research Group, LLC (Televerde)

 

Provider of Telemarketing and Data Services

                       

     

Member Units (460 units)(8)

          1,290     5,860  

                           

PPL RVs, Inc.

 

Recreational Vehicle Dealer

                       

     

11.1% Secured Debt (Maturity — June 10, 2015)

    7,860     7,848     7,860  

     

Common Stock (1,961 shares)

          2,150     8,160  

                  9,998     16,020  

                           

Principle Environmental, LLC

 

Noise Abatement Service Provider

                       

     

12% Secured Debt (Maturity — April 30, 2017)

    4,060     3,813     4,060  

     

12% Current / 2% PIK Secured Debt (Maturity — April 30, 2017)

    3,244     3,227     3,244  

     

Preferred Member Units (19,631 units)

          4,663     11,830  

     

Warrants (1,036 equivalent units)

          1,200     720  

                  12,903     19,854  

                           

River Aggregates, LLC

 

Processor of Construction Aggregates

                       

     

Zero Coupon Secured Debt (Maturity — June 30, 2018)

    750     468     468  

     

12% Secured Debt (Maturity — June 30, 2018)

    500     500     500  

     

Member Units (1,150 units)(8)

          1,150     2,570  

     

Member Units (RA Properties, LLC) (1,500 units)

          369     369  

                  2,487     3,907  

                           

F-35


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

SoftTouch Medical Holdings, LLC

 

Home Provider of Pediatric Durable Medical Equipment

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — October 31, 2019)(9)

    8,500     8,417     8,417  

     

Member Units (4,526 units)

          5,015     5,015  

                  13,432     13,432  

                           

Southern RV, LLC

 

Recreational Vehicle Dealer

                       

     

13% Secured Debt (Maturity — August 8, 2018)

    11,400     11,266     11,400  

     

Member Units (1,680 units)(8)

          1,680     4,920  

     

13% Secured Debt (Southern RV Real Estate, LLC) (Maturity — August 8, 2018)

    3,250     3,212     3,250  

     

Member Units (Southern RV Real Estate, LLC) (480 units)

          480     470  

                  16,638     20,040  

                           

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                       

     

9% Secured Debt (Maturity — October 8, 2018)

    2,724     2,724     2,724  

     

Series A Preferred Units (2,500 units; 10% Cumulative)

          2,500     980  

     

Warrants (1,424 equivalent units)

          1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100% Fully diluted)(8)

          2,300     2,300  

                  8,620     6,004  

                           

Travis Acquisition LLC

 

Manufacturer of Aluminum Trailers

                       

     

12% Secured Debt (Maturity — August 30, 2018)

    4,693     4,617     4,693  

     

Member Units (7,282 units)

          7,100     13,650  

                  11,717     18,343  

                           

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

                       

     

9% Secured Debt (Maturity — January 1, 2019)

    1,802     1,802     1,802  

     

Member Units (1,006 units)(8)

          1,113     3,500  

                  2,915     5,302  

                           

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

                       

     

13% Secured Debt (Maturity — December 23, 2016)

    3,204     3,169     3,154  

     

Series A Preferred Stock (3,000,000 shares)

          3,000     3,250  

     

Common Stock (1,126,242 shares)

          3,706     100  

                  9,875     6,504  

                           

Ziegler's NYPD, LLC

 

Casual Restaurant Group

                       

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — October 1, 2018)(9)

    1,500     1,491     1,491  

     

9% Current / 9% PIK Secured Debt (Maturity — October 1, 2018)

    5,509     5,509     4,880  

     

Warrants (587 equivalent units)

          600      

                  7,600     6,371  

Subtotal Control Investments (29.9% of total investments at fair value)

  $ 342,847   $ 469,846  

F-36


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Affiliate Investments(6)

 

 

 

 

                   

                           

AFG Capital Group, LLC

 

Provider of Rent-to-Own Financing Solutions and Services

 

 

                   

     

11% Secured Debt (Maturity — November 7, 2019)

  $ 6,800   $ 6,465   $ 6,465  

     

Warrants (42 equivalent units)

          259     259  

     

Member Units (186 units)

          1,200     1,200  

                  7,924     7,924  

                           

Boss Industries, LLC

 

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

 

 

                   

     

Preferred Member Units (2,242 units)

          2,000     2,000  

                           

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions Provider

 

 

                   

     

13% Secured Debt (Maturity — April 18, 2017)

    6,000     5,837     5,837  

     

Warrants (19 equivalent shares)

          200     710  

                  6,037     6,547  

                           

Brightwood Capital Fund III, LP(12)(13)

 

Investment Partnership

 

 

                   

     

LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 9.1%)(8)

          8,448     8,448  

                           

CAI Software LLC

 

Provider of Specialized Enterprise Resource Planning Software

 

 

                   

     

12% Secured Debt (Maturity — October 10, 2019)

    5,400     5,348     5,348  

     

Member Units (65,356 units)

          654     654  

                  6,002     6,002  

                           

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays Provider

 

 

                   

     

Member Units (3,936 units)(8)

          100     610  

                           

Congruent Credit Opportunities Funds(12)(13)

 

Investment Partnership

 

 

                   

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

          18,575     18,378  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

          7,734     7,734  

                  26,309     26,112  

                           

Daseke, Inc.

 

Specialty Transportation Provider

 

 

                   

     

12% Current / 2.5% PIK Secured Debt (Maturity — July 31, 2018)

    20,723     20,403     20,723  

     

Common Stock (19,467 shares)

          5,213     13,780  

                  25,616     34,503  

                           

F-37


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Dos Rios Partners(12)(13)

 

Investment Partnership

                       

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)(8)

          2,325     2,325  

     

LP Interests (Dos Rios Partners — A, LP) (Fully diluted 6.4%)(8)

          738     738  

                  3,063     3,063  

                           

East Teak Fine Hardwoods, Inc.

 

Distributor of Hardwood Products

                       

     

Common Stock (5,000 shares)(8)

          480     860  

                           

East West Copolymer & Rubber, LLC

 

Manufacturer of Synthetic Rubbers

                       

     

12% Secured Debt (Maturity — October 17, 2019)

    9,600     9,436     9,436  

     

Warrants (1,823,278 equivalent units)

          50     50  

                  9,486     9,486  

                           

Freeport Financial SBIC Fund LP(12)(13)

 

Investment Partnership

 

 

                   

     

LP Interests (Fully diluted 9.9%)(8)

          4,677     4,677  

                           

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Liquidation of Distressed Assets

 

 

                   

     

10% Secured Debt (Maturity — November 21, 2016)

    13,046     12,749     10,782  

     

Warrants (29,025 equivalent units)

          400      

                  13,149     10,782  

                           

Glowpoint, Inc.

 

Provider of Cloud Managed Video Collaboration Services

 

 

                   

     

8% Secured Debt (Maturity — October 18, 2018)

    400     396     396  

     

12% Secured Debt (Maturity — October 18, 2018)

    9,000     8,909     8,909  

     

Common Stock (7,711,517 shares)

          3,958     8,480  

                  13,263     17,785  

                           

Guerdon Modular Holdings, Inc.

 

Multi-Family and Commercial Modular Construction Company

 

 

                   

     

11% Secured Debt (Maturity — August 13, 2019)

    11,200     11,044     11,044  

     

Common Stock (213,221 shares)

          2,400     2,400  

                  13,444     13,444  

                           

Houston Plating and Coatings, LLC

 

Provider of Plating and Industrial Coating Services

 

 

                   

     

Member Units (248,082 units)(8)

          996     11,470  

                           

Indianhead Pipeline Services, LLC

 

Provider of Pipeline Support Services

 

 

                   

     

12% Secured Debt (Maturity — February 6, 2017)

    6,900     6,625     6,625  

     

Preferred Member Units (28,905 units; 8% cumulative)(8)

          1,960     1,960  

     

Warrants (38,193 equivalent units)

          459      

     

Member Units (14,732 units)

          1      

                  9,045     8,585  

                           

F-38


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

irth Solutions, LLC

 

Provider of Damage Prevention Information Technology Services

 

 

                   

     

Member Units (128 units)(8)

          624     3,960  

                           

KBK Industries, LLC

 

Specialty Manufacturer of Oilfield and Industrial Products

 

 

                   

     

12.5% Secured Debt (Maturity — September 28, 2017)

    8,250     8,198     8,250  

     

Member Units (250 units)(8)

          341     6,120  

                  8,539     14,370  

                           

L.F. Manufacturing Holdings, LLC(10)

 

Manufacturer of Fiberglass Products

                       

     

Member Units (2,000,000 units)(8)

          2,019     2,374  

                           

MPS Denver, LLC

 

Specialty Card Printing

 

 

                   

     

Member Units (13,800 units)

          1,130     1,130  

                           

OnAsset Intelligence, Inc.

 

Provider of Transportation Monitoring / Tracking Products and Services

                       

     

12% PIK Secured Debt (Maturity — March 31, 2015)

    3,553     3,553     3,553  

     

Preferred Stock (912 shares; 7% cumulative)(8)

          1,947     2,700  

     

Warrants (5,333 equivalent shares)

          1,919      

                  7,419     6,253  

                           

OPI International Ltd.(13)

 

Provider of Man Camp and Industrial Storage Services

                       

     

Common Stock (20,766,317 shares)

          1,371     4,971  

                           

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

                       

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)

          2,259     4,430  

                           

Quality Lease and Rental Holdings, LLC

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

 

 

                   

     

8% Secured Debt (Maturity — October 1, 2014)(14)(18)

    157     157     157  

     

12% Secured Debt (Maturity — January 8, 2018)(14)(18)

    36,577     36,073     11,500  

     

Preferred Member Units (Rocaciea, LLC) (250 units)

          2,500      

                  38,730     11,657  

                           

Radial Drilling Services Inc.

 

Oil and Gas Technology Provider

                       

     

12% Secured Debt (Maturity — November 22, 2016)

    4,200     3,792     3,792  

     

Warrants (316 equivalent shares)

          758      

                  4,550     3,792  

                           

F-39


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Samba Holdings, Inc.

 

Provider of Intelligent Driver Record Monitoring Software and Services

 

 

                   

     

12.5% Secured Debt (Maturity — November 17, 2016)

    26,418     26,188     26,418  

     

Common Stock (170,963 shares)

          2,087     6,030  

                  28,275     32,448  

                           

SYNEO, LLC

 

Manufacturer of Automation Machines, Specialty Cutting Tools and Punches

 

 

                   

     

12% Secured Debt (Maturity — July 13, 2016)

    2,700     2,674     2,674  

     

Member Units (1,177 units)(8)

          1,097     801  

     

10% Secured Debt (Leadrock Properties, LLC) (Maturity — May 4, 2026)

    1,440     1,415     1,415  

                  5,186     4,890  

                           

Tin Roof Acquisition Company

 

Casual Restaurant Group

 

 

                   

     

12% Secured Debt (Maturity — November 30, 2018)

    14,100     13,861     13,861  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)

          2,241     2,241  

                  16,102     16,102  

Subtotal Affiliate Investments (17.7% of total investments at fair value)

  $ 266,243   $ 278,675  

F-40


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Non-Control/Non-Affiliate Investments(7)

 

 

                   

                           

Accuvant Finance, LLC(11)

 

Cyber Security Value Added Reseller

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity — October 22, 2020)(9)

  $ 5,597   $ 5,546   $ 5,583  

                           

Allflex Holdings III Inc.(11)

 

Manufacturer of Livestock Identification Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — July 19, 2021)(9)

    6,000     5,937     5,888  

                           

AM General LLC(11)

 

Specialty Vehicle Manufacturer

                       

     

LIBOR Plus 9.00% (Floor 1.25%), Current Coupon 10.25%, Secured Debt (Maturity — March 22, 2018)(9)

    2,550     2,496     2,282  

                           

AM3 Pinnacle Corporation(10)

 

Provider of Comprehensive Internet, TV and Voice Services for Multi- Dwelling Unit Properties

                       

     

10% Secured Debt (Maturity — October 22, 2018)

    21,002     20,863     20,863  

     

Common Stock (60,240 shares)

          2,000     1,840  

                  22,863     22,703  

                           

AmeriTech College, LLC

 

For-Profit Nursing and Healthcare College

                       

     

10% Secured Debt (Maturity — November 30, 2019)

    979     979     979  

     

10% Secured Debt (Maturity — January 31, 2020)

    6,050     6,050     6,050  

                  7,029     7,029  

                           

AMF Bowling Centers, Inc.(11)

 

Bowling Alley Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — September 18, 2021)(9)

    4,988     4,915     4,913  

                           

Anchor Hocking, LLC(11)

 

Household Products Manufacturer

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75% / 1.75% PIK, Current Coupon Plus PIK 9.50%, Secured Debt (Maturity — May 21, 2020)(9)

    10,916     10,842     6,559  

                           

AP Gaming I, LLC(10)

 

Developer, Manufacturer, and Operator of Gaming Machines

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — December 20, 2020)(9)

    6,930     6,744     6,930  

                           

F-41


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Applied Products, Inc.(10)

 

Adhesives Distributor

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — September 30, 2019)(9)

    6,236     6,170     6,170  

                           

Aptean, Inc.(11)

 

Enterprise Application Software Provider

                       

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity — February 26, 2020)(9)

    7,667     7,642     7,450  

                           

Artel, LLC(11)

 

Land-Based and Commercial Satellite Provider

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — November 27, 2017)(9)

    4,594     4,549     4,548  

                           

ATS Workholding, Inc.(10)

 

Manufacturer of Machine Cutting Tools and Accessories

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — March 10, 2019)(9)

    6,558     6,506     6,506  

                           

Beers Enterprises, Inc.(10)

 

Provider of Broadcast Video Transport Services

                       

     

Prime Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — March 19, 2019)(9)

    6,263     6,210     6,210  

                           

Bioventus LLC(10)

 

Production of Orthopedic Healing Products

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.00%, Secured Debt (Maturity — April 10, 2020)(9)

    5,000     4,903     4,987  

                           

Blackbrush Oil and Gas LP(11)

 

Oil & Gas Exploration

                       

     

LIBOR Plus 6.50%, (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — July 30, 2021)(9)

    4,000     3,971     3,320  

                           

Blackhawk Specialty Tools LLC(11)

 

Oilfield Equipment & Services

                       

     

LIBOR Plus 5.25% (Floor 1.25%), Current Coupon 6.50%, Secured Debt (Maturity — August 1, 2019)(9)

    6,224     6,189     6,131  

                           

Blue Bird Body Company(11)

 

School Bus Manufacturer

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — June 26, 2020)(9)

    11,500     11,339     11,443  

                           

Bluestem Brands, Inc.(11)

 

Multi-Channel Retailer of General Merchandise

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — November 6, 2020)(9)

    7,500     7,213     7,237  

                           

F-42


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Brainworks Software, LLC(10)

 

Advertising Sales and Production and Newspaper Circulation Software

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — July 22, 2019)(9)

    6,263     6,182     6,182  

                           

Brasa Holdings Inc.(11)

 

Upscale Full Service Restaurants

                       

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity — January 20, 2020)(9)

    2,143     2,128     2,121  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

 

Construction Services Provider

                       

     

10.375% Secured Debt (Maturity — September 1, 2021)

    2,500     2,500     2,556  

                           

Calloway Laboratories, Inc.(10)

 

Health Care Testing Facilities

                       

     

12% PIK Secured Debt (Maturity — September 30, 2015)(14)

    7,225     7,176     2,878  

     

Warrants (125,000 equivalent shares)

          17      

                  7,193     2,878  

                           

Cedar Bay Generation Company LP(11)

 

Coal-Fired Cogeneration Plant

                       

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity — April 23, 2020)(9)

    2,476     2,457     2,458  

                           

Cengage Learning Acquisitions, Inc.(11)

 

Provider of Educational Print and Digital Services

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — March 31, 2020)(9)

    4,000     3,990     3,975  

                           

CGSC of Delaware Holdings Corp.(11)(13)

 

Insurance Brokerage Firm

                       

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity — October 16, 2020)(9)

    2,000     1,975     1,780  

                           

Charlotte Russe, Inc(11)

 

Fast-Fashion Retailer to Young Women

                       

     

LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.75%, Secured Debt (Maturity — May 22, 2019)(9)

    4,938     4,900     4,822  

                           

CHI Overhead Doors, Inc.(11)

 

Manufacturer of Overhead Garage Doors

                       

     

LIBOR Plus 9.50%, (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity — September 18, 2019)(9)

    2,500     2,467     2,475  

                           

F-43


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Clarius ASIG, LLC(10)

 

Prints & Advertising Film Financing

                       

     

12% PIK Secured Debt (Maturity — September 14, 2014)(17)

    2,723     2,663     2,723  

                           

Clarius BIGS, LLC(10)

 

Prints & Advertising Film Financing

                       

     

12% PIK Secured Debt (Maturity — January 5, 2015)(14)

    4,400     4,285     1,848  

                           

Compact Power Equipment, Inc.

 

Equipment / Tool Rental

                       

     

12% Secured Debt (Maturity — October 1, 2017)

    4,100     4,085     4,100  

     

Series A Preferred Stock (4,298,435 shares; 8% cumulative)(8)

          1,079     2,401  

                  5,164     6,501  

                           

Covenant Surgical Partners, Inc.(11)

 

Ambulatory Surgical Centers

                       

     

8.75% Secured Debt (Maturity — August 1, 2019)

    2,000     2,000     2,020  

                           

CRGT Inc.(11)

 

Provider of Custom Software Development

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — December 19, 2020)(9)

    10,000     9,800     9,850  

                           

CST Industries Inc.(11)

 

Storage Tank Manufacturer

                       

     

LIBOR Plus 6.25% (Floor 1.50%), Current Coupon 7.75%, Secured Debt (Maturity — May 22, 2017)(9)

    7,109     7,050     7,037  

                           

Darr Equipment LP(10)

 

Heavy Equipment Dealer

                       

     

11.75% Current / 2% PIK Secured Debt (Maturity — April 15, 2020)

    20,291     19,676     19,676  

     

Warrants (915,734 equivalent units)

          474     474  

                  20,150     20,150  

                           

Digity Media LLC(11)

 

Radio Station Operator

                       

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity — February 10, 2019)(9)

    7,406     7,335     7,387  

                           

Drilling Info, Inc.

 

Information Services for the Oil and Gas Industry

                       

     

Common Stock (3,788,865 shares)

          1,335     9,920  

                           

ECP-PF Holdings Group, Inc.(10)

 

Fitness Club Operator

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — November 26, 2019)(9)

    5,625     5,570     5,570  

                           

F-44


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

EnCap Energy Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

          3,430     3,240  

     

LP Interests (EnCap Energy Capital Fund VIII Co- Investors, L.P.) (Fully diluted 0.4%)(8)

          1,561     1,325  

     

LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

          1,654     1,477  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 1.0%)(8)

          4,586     4,567  

     

LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.8%)

          184     184  

                  11,415     10,793  

                           

Energy and Exploration Partners, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity — January 22, 2019)(9)

    9,461     9,054     6,788  

                           

e-Rewards, Inc.(11)

 

Provider of Digital Data Collection

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — October 29, 2018)(9)

    12,687     12,518     12,560  

                           

Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)

 

Technology-based Performance Support Solutions

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — April 28, 2022)(9)

    3,000     2,979     2,845  

                           

FC Operating, LLC(10)

 

Christian Specialty Retail Stores

                       

     

LIBOR Plus 10.75% (Floor 1.25%), Current Coupon 12.00%, Secured Debt (Maturity — November 14, 2017)(9)

    5,400     5,330     4,132  

                           

FishNet Security, Inc.(11)

 

Information Technology Value-Added Reseller

                       

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity — November 30, 2017)(9)

    7,840     7,791     7,840  

                           

Flavors Holdings Inc.(11)

 

Global Provider of Flavoring and Sweetening Products and Solutions

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity — April 30, 2020)(9)

    4,938     4,746     4,728  

                           

F-45


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Fram Group Holdings, Inc.(11)

 

Manufacturer of Automotive Maintenance Products

                       

     

LIBOR Plus 5.00% (Floor 1.50%), Current Coupon 6.50%, Secured Debt (Maturity — July 29, 2017)(9)

    5,935     5,928     5,907  

     

LIBOR Plus 9.00% (Floor 1.50%), Current Coupon 10.50%, Secured Debt (Maturity — January 29, 2018)(9)

    700     698     684  

                  6,626     6,591  

                           

GI KBS Merger Sub LLC(11)

 

Outsourced Janitorial Services to Retail/Grocery Customers

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity — April 29, 2022)(9)

    800     784     796  

                           

Grace Hill, LLC(10)

 

Online Training Tools for the Multi-Family Housing Industry

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — August 15, 2019)(9)

    9,546     9,436     9,436  

                           

Grupo Hima San Pablo, Inc.(11)

 

Tertiary Care Hospitals

                       

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity — January 31, 2018)(9)

    4,913     4,846     4,775  

     

13.75% Secured Debt (Maturity — July 31, 2018)

    2,000     1,925     1,920  

                  6,771     6,695  

                           

GST Autoleather, Inc.(11)

 

Automotive Leather Manufacturer

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — July 10, 2020)(9)

    9,975     9,882     9,825  

                           

Guitar Center, Inc.(11)

 

Musical Instruments Retailer

                       

     

6.5% Secured Debt (Maturity — April 15, 2019)

    7,000     6,817     6,020  

                           

Halcon Resources Corporation(11)(13)

 

Oil & Gas Exploration & Production

                       

     

9.75% Unsecured Debt (Maturity — July 15, 2020)

    6,925     6,335     5,194  

                           

Hostway Corporation(11)

 

Managed Services and Hosting Provider

                       

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity — December 13, 2019)(9)

    9,750     9,671     9,652  

     

LIBOR Plus 8.75% (Floor 1.25%), Current Coupon 10.00%, Secured Debt (Maturity — December 11, 2020)(9)

    5,000     4,917     4,950  

                  14,588     14,602  

                           

F-46


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Hunter Defense Technologies, Inc.(11)

 

Provider of Military and Commercial Shelters and Systems

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — August 5, 2019)(9)

    9,875     9,783     9,752  

                           

ICON Health & Fitness, Inc.(11)

 

Producer of Fitness Products

                       

     

11.875% Secured Debt (Maturity — October 15, 2016)

    4,385     4,323     4,122  

                           

iEnergizer Limited(11)(13)

 

Provider of Business Outsourcing Solutions

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — May 1, 2019)(9)

    10,029     9,905     9,277  

                           

Infinity Acquisition Finance Corp.(11)

 

Application Software for Capital Markets

                       

     

7.25% Unsecured Debt (Maturity — August 1, 2022)

    4,000     4,000     3,620  

                           

Inn of the Mountain Gods Resort and Casino(11)

 

Hotel & Casino Owner & Operator

                       

     

9.25% Secured Debt (Maturity — November 30, 2020)

    3,851     3,687     3,697  

                           

iQor US Inc.(11)

 

Business Process Outsourcing Services Provider

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — April 1, 2021)(9)

    9,987     9,789     9,288  

                           

Jackson Hewitt Tax Service Inc.(11)

 

Tax Preparation Service Provider

                       

     

LIBOR Plus 8.50% (Floor 1.50%), Current Coupon 10.00%, Secured Debt (Maturity — October 16, 2017)(9)

    4,509     4,396     4,509  

                           

Joerns Healthcare, LLC(11)

 

Manufacturer and Distributor of Health Care Equipment & Supplies

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — May 9, 2020)(9)

    9,950     9,853     9,838  

                           

John Deere Landscapes LLC(10)

 

Distributor of Landscaping Supplies

                       

     

LIBOR Plus 4.00% (Floor 1.00%), Current Coupon 5.00%, Secured Debt (Maturity — December 23, 2019)(9)

    8,573     8,193     8,193  

                           

F-47


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Keypoint Government Solutions, Inc.(11)

 

Provider of Pre-Employment Screening Services

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity — November 13, 2017)(9)

    4,726     4,668     4,702  

                           

Lansing Trade Group LLC(11)

 

Commodity Merchandiser

                       

     

9.25% Unsecured Debt (Maturity — February 15, 2019)

    6,000     6,000     5,610  

                           

Larchmont Resources, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity — August 7, 2019)(9)

    6,895     6,842     6,636  

                           

LKCM Distribution Holdings, L.P.

 

Distributor of Industrial Process Equipment

                       

     

12% Current / 2.5% PIK Secured Debt (Maturity — December 23, 2018)

    16,417     16,278     16,417  

                           

LKCM Headwater Investments I, L.P.(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 2.3%)(8)

          2,250     5,764  

                           

MAH Merger Corporation(11)

 

Sports-Themed Casual Dining Chain

                       

     

LIBOR Plus 4.50% (Floor 1.25%), Current Coupon 5.75%, Secured Debt (Maturity — July 19, 2019)(9)

    7,258     7,198     7,276  

                           

MediMedia USA, Inc.(11)

 

Provider of Healthcare Media and Marketing

                       

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity — November 20, 2018)(9)

    5,411     5,292     5,289  

                           

Messenger, LLC(10)

 

Supplier of Specialty Stationary and Related Products to the Funeral Industry

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — December 5, 2019)(9)

    13,639     13,518     13,518  

                           

Milk Specialties Company(11)

 

Processor of Nutrition Products

                       

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity — November 9, 2018)(9)

    7,847     7,806     7,670  

                           

Minute Key, Inc.

 

Operator of Automated Key Duplication Kiosks

                       

     

10% Current / 2% PIK Secured Debt (Maturity — September 19, 2019)

    4,023     3,985     3,985  

                           

F-48


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Miramax Film NY, LLC(11)

 

Motion Picture Producer and Distributor

                       

     

Class B Units (12% cumulative)(8)

          792     792  

                           

Modern VideoFilm, Inc.(10)

 

Post-Production Film Studio

                       

     

LIBOR Plus 3.50% (Floor 1.50%), Current Coupon 5.00% / 8.50% PIK, Current Coupon Plus PIK 13.50%, Secured Debt (Maturity — September 25, 2017)(9)(14)

    6,302     6,119     1,954  

     

Warrants (1,375 equivalent shares)

          151     1  

                  6,270     1,955  

                           

Mood Media Corporation(11)(13)

 

Provider of Electronic Equipment

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — May 1, 2019)(9)

    12,193     12,053     11,964  

                           

MP Assets Corporation(11)

 

Manufacturer of Battery Components

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity — December 19, 2019)(9)

    4,416     4,378     4,394  

                           

New Media Holdings II LLC(11)(13)

 

Local Newspaper Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — June 4, 2020)(9)

    14,925     14,649     14,776  

                           

Nice-Pak Products, Inc.(11)

 

Pre-Moistened Wipes Manufacturer

                       

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity — June 18, 2015)(9)

    12,541     12,518     12,478  

                           

North Atlantic Trading Company, Inc.(11)

 

Marketer/Distributor of Tobacco Products

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity — January 13, 2020)(9)

    7,426     7,361     7,305  

                           

Novitex Intermediate, LLC(11)

 

Provider of Document Management Services

                       

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity — July 7, 2020)(9)

    5,985     5,929     5,746  

                           

Ospemifene Royalty Sub LLC (QuatRx)(10)

 

Estrogen-Deficiency Drug Manufacturer and Distributor

                       

     

11.5% Secured Debt (Maturity — November 15, 2026)

    5,205     5,205     5,205  

                           

Panolam Industries International, Inc.(11)

 

Decorative Laminate Manufacturer

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity — August 23, 2017)(9)

    6,994     6,949     6,889  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Parq Holdings Limited Partnership(11)(13)

 

Hotel & Casino Operator

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — December 17, 2020)(9)

    6,226     6,078     6,108  

                           

Permian Holdings, Inc.(11)

 

Storage Tank Manufacturer

                       

     

10.5% Secured Debt (Maturity — January 15, 2018)

    2,755     2,728     2,066  

                           

Pernix Therapeutics Holdings, Inc.(10)(13)

 

Pharmaceutical Royalty — Anti-Migraine

                       

     

12% Secured Debt (Maturity — August 1, 2020)

    4,000     4,000     4,000  

                           

PeroxyChem LLC(11)

 

Chemical Manufacturer

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — February 28, 2020)(9)

    8,933     8,774     8,843  

                           

Philadelphia Energy Solutions Refining and Marketing LLC(11)

 

Oil & Gas Refiner

                       

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity — April 4, 2018)(9)

    2,948     2,917     2,785  

                           

Pike Corporation(11)

 

Construction and Maintenance Services for Electric Transmission and Distribution Infrastructure

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity — June 22, 2022)(9)

    15,000     14,628     14,825  

                           

Polyconcept Financial B.V.(11)

 

Promotional Products to Corporations and Consumers

                       

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity — June 28, 2019)(9)

    4,325     4,311     4,309  

                           

Primesight Limited(10)(13)

 

Outdoor Advertising Operator

                       

     

10% Secured Debt (Maturity — October 22, 2016)

    8,869     8,806     8,284  

                           

Printpack Holdings, Inc.(11)

 

Manufacturer of Flexible and Rigid Packaging

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — May 29, 2020)(9)

    5,468     5,417     5,450  

                           

PT Network, LLC(10)

 

Provider of Outpatient Physical Therapy and Sports Medicine Services

                       

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity — November 1, 2018)(9)

    11,946     11,828     11,828  

                           

F-50


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

QBS Parent, Inc.(11)

 

Provider of Software and Services to the Oil & Gas Industry

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity — August 7, 2021)(9)

    10,000     9,905     9,825  

                           

RCHP, Inc.(11)

 

Regional Non-Urban Hospital Owner/Operator

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity — October 23, 2019)(9)

    4,000     3,945     3,990  

                           

Recorded Books Inc.(11)

 

Audiobook and Digital Content Publisher

                       

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity — January 31, 2020)(9)

    12,031     11,925     11,941  

                           

Relativity Media, LLC(10)

 

Full-Scale Film and Television Production and Distribution

                       

     

10% Secured Debt (Maturity — May 30, 2015)

    5,787     5,772     5,801  

     

15% PIK Secured Debt (Maturity — May 30, 2015)

    7,410     7,347     7,558  

     

Class A Units (260,194 units)

          292     1,086  

                  13,411     14,445  

                           

Renaissance Learning, Inc.(11)

 

Technology-based K-12 Learning Solutions

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — April 11, 2022)(9)

    3,000     2,972     2,880  

                           

RGL Reservoir Operations Inc.(11)(13)

 

Oil & Gas Equipment and Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — August 13, 2021)(9)

    3,990     3,876     3,219  

                           

RLJ Entertainment, Inc.(10)

 

Movie and TV Programming Licensee and Distributor

                       

     

LIBOR Plus 8.75% (Floor 0.25%), Current Coupon 9.00%, Secured Debt (Maturity — September 11, 2019)(9)

    11,399     11,318     11,318  

                           

SAExploration, Inc.(10)(13)

 

Geophysical Services Provider

                       

     

Common Stock (6,472 shares)(8)

          65     27  

                           

Sage Automotive Interiors, Inc(11)

 

Automotive Textiles Manufacturer

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity — October 8, 2021)(9)

    3,000     2,971     2,985  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Sagittarius Restaurants LLC (d/b/a Del Taco)(11)

 

Mexican/American QSR Restaurant Chain

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity — October 1, 2018)(9)

    4,591     4,572     4,562  

                           

SCE Partners, LLC(10)

 

Hotel & Casino Operator

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity — August 14, 2019)(9)

    7,481     7,421     7,519  

                           

Sotera Defense Solutions, Inc.(11)

 

Defense Industry Intelligence Services

                       

     

LIBOR Plus 7.50% (Floor 1.50%), Current Coupon 9.00%, Secured Debt (Maturity — April 21, 2017)(9)

    10,984     10,564     10,160  

                           

Symphony Teleca Services, Inc.(11)

 

Outsourced Product Development

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity — August 7, 2019)(9)

    14,000     13,870     13,930  

                           

Synagro Infrastructure Company, Inc(11)

 

Waste Management Services

                       

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity — August 22, 2020)(9)

    6,913     6,798     6,822  

                           

Targus Group International(11)

 

Distributor of Protective Cases for Mobile Devices

                       

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00% / 1.00% PIK, Current Coupon Plus PIK 12.00%, Secured Debt (Maturity — May 24, 2016)(9)

    4,288     4,299     3,495  

                           

TeleGuam Holdings, LLC(11)

 

Cable and Telecom Services Provider

                       

     

LIBOR Plus 4.00% (Floor 1.25%), Current Coupon 5.25%, Secured Debt (Maturity — December 10, 2018)(9)

    6,830     6,813     6,796  

     

LIBOR Plus 7.50% (Floor 1.25%), Current Coupon 8.75%, Secured Debt (Maturity — June 10, 2019)(9)

    2,500     2,480     2,512  

                  9,293     9,308  

                           

Templar Energy LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — November 25, 2020)(9)

    5,000     4,945     3,615  

                           

The Tennis Channel, Inc.(10)

 

Television-Based Sports Broadcasting

                       

     

Warrants (114,316 equivalent shares)

          235     301  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

The Topps Company, Inc.(11)

 

Trading Cards & Confectionary

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — October 2, 2018)(9)

    1,980     1,964     1,930  

                           

Therakos, Inc.(11)

 

Immune System Disease Treatment

                       

     

LIBOR Plus 5.75% (Floor 1.25%), Current Coupon 7.00%, Secured Debt (Maturity — December 27, 2017)(9)

    6,278     6,178     6,255  

                           

TOMS Shoes, LLC(11)

 

Global Designer, Distributor, and Retailer of Casual Footwear

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — October 30, 2020)(9)

    5,000     4,511     4,625  

                           

Travel Leaders Group, LLC(11)

 

Travel Agency Network Provider

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — December 5, 2018)(9)

    12,445     12,305     12,445  

                           

UniTek Global Services, Inc.(11)

 

Provider of Outsourced Infrastructure Services

                       

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00% / 4.00% PIK, Current Coupon Plus PIK 15.00%, Secured Debt (Maturity — April 15, 2018)(9)(14)

    10,776     10,173     7,942  

     

5% Current / 2.25% PIK Secured Debt (Maturity — August 13, 2019)(14)

    640     640     640  

     

Warrants (267,302 equivalent shares)

          449      

                  11,262     8,582  

                           

Universal Fiber Systems, LLC(10)

 

Manufacturer of Synthetic Fibers

                       

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity — January 31, 2019)(9)

    5,094     5,084     5,082  

                           

Universal Wellhead Services Holdings, LLC(10)

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                       

     

Class A Preferred Units (4,000,000 units)

          4,000     4,000  

                           

US Joiner Holding Company(11)

 

Marine Interior Design and Installation

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — April 16, 2020)(9)

    7,444     7,410     7,332  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Vantage Oncology, LLC(11)

 

Outpatient Radiation Oncology Treatment Centers

                       

     

9.5% Secured Debt (Maturity — June 5, 2017)

    7,000     7,000     6,790  

                           

Virtex Enterprises, LP(10)

 

Specialty, Full-Service Provider of Complex Electronic Manufacturing Services

                       

     

12% Secured Debt (Maturity — December 27, 2018)

    1,667     1,479     1,479  

     

Preferred Class A Units (14 units; 5% cumulative)(8)

          344     344  

     

Warrants (11 equivalent units)

          186     186  

                  2,009     2,009  

                           

Vision Solutions, Inc.(11)

 

Provider of Information Availability Software

                       

     

LIBOR Plus 8.00% (Floor 1.50%), Current Coupon 9.50%, Secured Debt (Maturity — July 23, 2017)(9)

    5,000     4,941     4,872  

                           

Western Dental Services, Inc.(11)

 

Dental Care Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — November 1, 2018)(9)

    5,395     5,391     5,153  

                           

Wilton Brands LLC(11)

 

Specialty Housewares Retailer

                       

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity — August 30, 2018)(9)

    1,750     1,727     1,636  

                           

Worley Claims Services, LLC(10)

 

Insurance Adjustment Management and Services Provider

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity — October 31, 2020)(9)

    6,500     6,437     6,533  

                           

Zilliant Incorporated

 

Price Optimization and Margin Management Solutions

                       

     

Warrants (952,500 equivalent shares)

          1,071     1,071  

Subtotal Non-Control/Non-Affiliate Investments (51.8% of total investments at fair value)

  $ 832,312   $ 814,809  

Total Portfolio Investments, December 31, 2014

  $ 1,441,402   $ 1,563,330  

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Marketable Securities and Idle Funds Investments

             

                           

Solar Senior Capital Ltd.(13)(15)

 

Business Development Company

                       

     

Common Stock (39,000 shares)(8)

        $ 742   $ 584  

                           

Other Marketable Securities and Idle Funds Investments(13)(15)

 

Investments in Marketable Securities and Diversified, Registered Bond Funds

                       

                  9,862     8,483  

Subtotal Marketable Securities and Idle Funds Investments (0.6% of total investments at fair value)

  $ 10,604   $ 9,067  

Total Investments, December 31, 2014

  $ 1,452,006   $ 1,572,397  

(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note B for a description of Lower Middle Market portfolio investments. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(2)
Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)
See Note C for a summary of geographic location of portfolio companies.

(4)
Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

(5)
Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

(7)
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)
Income producing through dividends or distributions.

(9)
Index based floating interest rate is subject to contractual minimum interest rate. Variable rate loans bear interest at a rate that may be determined by reference to either LIBOR (which can include one-, two-, three- or six-month LIBOR) or Prime, at the borrower's option, which rates reset periodically based on the terms of the loan agreement.

(10)
Private Loan portfolio investment. See Note B for a description of Private Loan portfolio investments.

(11)
Middle Market portfolio investment. See Note B for a description of Middle Market portfolio investments.

(12)
Other Portfolio investment. See Note B for a description of Other Portfolio investments.

(13)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)
Non-accrual and non-income producing investment.

(15)
Marketable securities and idle fund investments.

(16)
External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(17)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A — ORGANIZATION AND BASIS OF PRESENTATION

1.    Organization

       Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

       MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF") and Main Street Capital II, LP ("MSC II" and, together with MSMF, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

       MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receive fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser ("RIA") under Investment Advisers Act of 1940, as amended (the "Advisers Act"). Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

       MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that it distributes to its stockholders.

       MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes. The External Investment Manager and Main Street Capital Partners, LLC, ("MSCP") are also direct wholly owned subsidiaries that have elected to be taxable entities. The Taxable Subsidiaries, MSCP and the External Investment Manager are each taxed at their normal corporate tax rates based on their taxable income.

       Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our", the "Company" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries and, beginning April 1, 2013, MSCP (as discussed further below).

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2.    Basis of Presentation

       Main Street's financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For each of the periods presented herein, Main Street's consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of Main Street's investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments, and the investment in the External Investment Manager, but excludes all "Marketable securities and idle funds investments" (see Note C — Fair Value Hierarchy for Investments and Debentures — Portfolio Composition — Portfolio Investment Composition for additional discussion of Main Street's Investment Portfolio and definitions for the terms LMM, Middle Market, Private Loan and Other Portfolio). "Marketable securities and idle funds investments" are classified as financial instruments and are reported separately on Main Street's consolidated balance sheets and consolidated schedules of investments due to the nature of such investments (see Note B.11.). Main Street's results of operations and cash flows for the years ended December 31, 2015, 2014 and 2013 and financial position as of December 31, 2015 and 2014, are presented on a consolidated basis. The effects of all intercompany transactions between Main Street and its consolidated subsidiaries have been eliminated in consolidation. Certain reclassifications have been made to prior period balances to conform to the current presentation, including reclassifying the expenses charged to the External Investment Manager.

       Under regulations pursuant to Article 6 of Regulation S-X applicable to BDCs and Accounting Standards Codification ("Codification" or "ASC") 946, Financial Services — Investment Companies ("ASC 946"), Main Street is precluded from consolidating other entities in which Main Street has equity investments, including those in which it has a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if Main Street holds a controlling interest in an operating company that provides all or substantially all of its services directly to Main Street or to its portfolio companies. Accordingly, as noted above, MSCC's consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. Beginning April 1, 2013, MSCC's consolidated financial statements also include the financial position and operating results for MSCP, as the wholly owned subsidiary provides all of its services directly or indirectly to Main Street or its portfolio companies. For all periods up to and including the period ending March 31, 2013, MSCP was accounted for as a portfolio investment. Main Street has determined that all of its portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, Main Street's Investment Portfolio is carried on the consolidated balance sheet at fair value, as discussed further in Note B, with any adjustments to fair value recognized as "Net Change in Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net Realized Gain (Loss)."

       Main Street classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) "Control Investments" are defined as investments in which Main Street owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation, (b) "Affiliate Investments" are defined as investments in which Main Street owns between 5% and 25% of the voting securities and does not have rights to maintain greater than 50% of the board representation, and (c) "Non-Control/Non-Affiliate Investments" are defined as investments that are neither Control Investments nor Affiliate Investments.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.    Valuation of the Investment Portfolio

       Main Street accounts for its Investment Portfolio at fair value. As a result, Main Street follows the provisions of the Financial Accounting Standards Board ("FASB") ASC 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires Main Street to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

       Main Street's portfolio strategy calls for it to invest primarily in illiquid debt and equity securities issued by private, LMM companies and more liquid debt securities issued by Middle Market companies that are generally larger in size than the LMM companies. Main Street categorizes some of its investments in LMM companies and Middle Market companies as Private Loan portfolio investments, which are primarily debt securities which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street's portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM portfolio investments, Middle Market portfolio investments or Private Loan portfolio investments, including investments which may be managed by third parties. Main Street's portfolio investments may be subject to restrictions on resale.

       LMM investments and Other Portfolio investments generally have no established trading market while Middle Market securities generally have established markets that are not active. Private Loan investments may include investments which have no established trading market or have established markets that are not active. Main Street determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by its Board of Directors and in accordance with the 1940 Act. Main Street's valuation policies and processes are intended to provide a consistent basis for determining the fair value of Main Street's Investment Portfolio.

       For LMM portfolio investments, Main Street generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology ("Waterfall") for its LMM equity investments and an income approach using a yield-to-maturity model ("Yield-to-Maturity") for its LMM debt investments. For Middle Market portfolio investments, Main Street primarily uses quoted prices in the valuation process. Main Street determines the appropriateness of the use of third-party broker quotes, if any, in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Middle Market and Private Loan portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio equity investments, Main Street generally calculates the fair value of the investment primarily based on the net asset value ("NAV") of the fund. All of the valuation approaches for Main Street's portfolio investments estimate the value of the investment as if Main Street were to sell, or exit, the investment as of the measurement date.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       These valuation approaches consider the value associated with Main Street's ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation purposes, "control" portfolio investments are composed of debt and equity securities in companies for which Main Street has a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company's board of directors. For valuation purposes, "non-control" portfolio investments are generally composed of debt and equity securities in companies for which Main Street does not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company's board of directors.

       Under the Waterfall valuation method, Main Street estimates the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then performs a waterfall calculation by using the enterprise value over the portfolio company's securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, private companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, Main Street analyzes various factors including the portfolio company's historical and projected financial results. The operating results of a portfolio company used in the current period valuation are generally the results from the period ended three months prior to the valuation date and may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment in its determination. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, Main Street also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, Main Street allocates the enterprise value to investments in order of the legal priority of the various components of the portfolio company's capital structure. In applying the Waterfall valuation method, Main Street assumes the loans are paid off at the principal amount in a change in control transaction and are not assumed by the buyer, which Main Street believes is consistent with its past transaction history and standard industry practices.

       Under the Yield-to-Maturity valuation method, Main Street also uses the income approach to determine the fair value of debt securities based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of the portfolio investments. Main Street's estimate of the expected repayment date of its debt securities is generally the legal maturity date of the instrument, as Main Street generally intends to hold its loans and debt securities to maturity. The Yield-to-Maturity analysis also considers changes in leverage levels, credit quality, portfolio company performance and other factors. Main Street will generally use the value determined by the Yield-to-Maturity analysis as the fair value for that security; however, because of Main Street's general intent to hold its loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the assumptions that Main Street uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, Main Street may consider other factors in determining the fair value of the debt security, including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, Main Street measures the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date and adjusts the fair value for known factors that would significantly affect that fund's NAV for individual investments held by the fund if Main Street holds the same investment or for a publicly traded investment. In addition, in determining the fair value of the investment, Main Street may consider whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of Main Street's investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an implied market return on equity required by market participants, or other uncertainties surrounding Main Street's ability to realize the full NAV of its interests in the investment fund.

       Pursuant to its internal valuation process and the requirements under the 1940 Act, Main Street performs valuation procedures on each of its portfolio investments quarterly. In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations regarding the Company's determinations of the fair value of its LMM portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street's investments in each LMM portfolio company at least once every calendar year, and for Main Street's investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders' best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street's investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with its independent financial advisory services firm in arriving at Main Street's determination of fair value on its investments in a total of 54 LMM portfolio companies for the year ended December 31, 2015, representing approximately 87% of the total LMM portfolio at fair value as of December 31, 2015, and on a total of 52 LMM portfolio companies for the year ended December 31, 2014, representing approximately 83% of the total LMM portfolio at fair value as of December 31, 2014. Excluding investments in new LMM portfolio companies which have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment as of December 31, 2015 and 2014, as applicable, and investments in the LMM portfolio companies that were not reviewed because their equity is publicly traded, the percentage of the LMM portfolio reviewed by the independent financial advisory services firm for the years ended December 31, 2015 and 2014 was 98% and 99% of the total LMM portfolio at fair value as of December 31, 2015 and 2014, respectively.

       For valuation purposes, all of Main Street's Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. The Company does not generally consult with any financial advisory services firms in connection with determining the fair value of its Middle Market debt investments. Because 99% and 98% of the Middle Market portfolio investments as of December 31, 2015 and 2014, respectively, were valued using third party

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quotes or other independent pricing services, we do not generally consult with any financial advisory services firms in connection with determining the fair value of our Middle Market investments.

       For valuation purposes, all of Main Street's Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.

       In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations regarding the Company's determinations of the fair value of its Private Loan portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street's investments in each Private Loan portfolio company at least once every calendar year, and for Main Street's investments in new Private Loan portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders' best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street's investment in a Private Loan portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with its independent financial advisory services firm in arriving at its determination of fair value on its investments in a total of 16 Private Loan portfolio companies for the year ended December 31, 2015, representing approximately 49% of the total Private Loan portfolio at fair value as of December 31, 2015. Excluding its investments in new Private Loan portfolio companies which have not been in the Investment Portfolio for at least twelve months subsequent to the most recent investment decision as of December 31, 2015 and its investments in the Private Loan portfolio companies that were not reviewed because the investment is publicly traded or quoted by banks, the percentage of the Private Loan portfolio reviewed by its independent financial advisory services firm for the year ended December 31, 2015 was 95% of the total Private Loan portfolio at fair value as of December 31, 2015.

       For valuation purposes, all of Main Street's Other Portfolio investments are non-control investments. Main Street's Other Portfolio investments comprised approximately 4.2% and 3.8%, respectively, of Main Street's Investment Portfolio at fair value as of December 31, 2015 and 2014. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, Main Street generally determines the fair value of its investments using the NAV valuation method. For Other Portfolio debt investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Other Portfolio debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method. For Other Portfolio debt investments for which third-party quotes or other independent pricing are available and appropriate, Main Street determines the fair value of these investments through obtaining third party quotes or other independent pricing to the extent that these inputs are available and appropriate to determine fair value.

       For valuation purposes, Main Street's investment in the External Investment Manager is a control investment. Market quotations are not readily available for this investment, and as a result, Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the

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market approach. In estimating the enterprise value, Main Street analyzes various factors, including the entity's historical and projected financial results, as well as its size, marketability and performance relative to the population of market comparables. This valuation approach estimates the value of the investment as if Main Street were to sell, or exit, the investment. In addition, Main Street considers the value associated with Main Street's ability to control the capital structure of the company, as well as the timing of a potential exit.

       Due to the inherent uncertainty in the valuation process, Main Street's determination of fair value for its Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. Main Street determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation.

       Main Street uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for its LMM portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM portfolio company and the investments held therein.

       The Board of Directors of Main Street has the final responsibility for overseeing, reviewing and approving, in good faith, Main Street's determination of the fair value for its Investment Portfolio, as well as its valuation procedures, consistent with 1940 Act requirements. Main Street believes its Investment Portfolio as of December 31, 2015 and 2014 approximates fair value as of those dates based on the markets in which Main Street operates and other conditions in existence on those reporting dates.

2.    Use of Estimates

       The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1., the financial statements include investments in the Investment Portfolio whose values have been estimated by Main Street with the oversight, review and approval by Main Street's Board of Directors in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ significantly from the values that would have been determined had a readily available market for the investments existed, and it is reasonably possible that the differences could be material.

3.    Cash and Cash Equivalents

       Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.

       At December 31, 2015, cash balances totaling $17.5 million exceeded Federal Deposit Insurance Corporation insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company's cash deposits are held at large established high credit quality financial institutions and management believes that the risk of loss associated with any uninsured balances is remote.

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4.    Marketable Securities and Idle Funds Investments

       Marketable securities and idle funds investments include intermediate-term secured debt investments, independently rated debt investments and publicly traded debt and equity investments. See the "Consolidated Schedule of Investments" for more information on Marketable securities and idle funds investments.

5.    Interest, Dividend and Fee Income (Structuring and Advisory Services)

       Main Street records interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with Main Street's valuation policies, Main Street evaluates accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if Main Street otherwise does not expect the debtor to be able to service all of its debt or other obligations, Main Street will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security's status significantly improves regarding the debtor's ability to service the debt or other obligations, or if a loan or debt security is fully impaired, sold or written off, Main Street removes it from non-accrual status.

       Main Street holds certain debt and preferred equity instruments in its Investment Portfolio that contain payment-in-kind ("PIK") interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the PIK interest and cumulative dividends in cash. Main Street stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31, 2015, 2014 and 2013, (i) approximately 2.2%, 3.3% and 4.3%, respectively, of Main Street's total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.0%, 1.3% and 1.2%, respectively, of Main Street's total investment income was attributable to cumulative dividend income not paid currently in cash.

       As of December 31, 2015, Main Street's total Investment Portfolio had six investments on non-accrual status, which comprised approximately 0.4% of its fair value and 3.7% of its cost. As of December 31, 2014, Main Street's total Investment Portfolio had five investments on non-accrual status, which comprised approximately 1.7% of its fair value and 4.7% of its cost.

       Main Street may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into interest income over the life of the financing.

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       A presentation of the investment income Main Street received from its Investment Portfolio in each of the periods presented is as follows:

 
  Twelve Months Ended December 31,  
 
  2015   2014   2013  
 
  (dollars in thousands)
 

Interest, fee and dividend income:

                   

Interest income

  $ 131,333   $ 110,362   $ 94,546  

Dividend income

    24,266     22,235     14,124  

Fee income

    8,004     7,342     6,488  

Total interest, fee and dividend income

  $ 163,603   $ 139,939   $ 115,158  

6.    Deferred Financing Costs

       Deferred financing costs include SBIC debenture commitment fees and SBIC debenture leverage fees on the SBIC debentures which are not accounted for under the fair value option under ASC 825 (as discussed further in Note B.11.). These fees are approximately 3.4% of the total commitment and draw amounts, as applicable. These deferred financing costs have been capitalized and are being amortized into interest expense over the ten year term of each debenture agreement.

       Deferred financing costs also include commitment fees and other costs related to Main Street's multi-year investment credit facility (the "Credit Facility", as discussed further in Note G) and its notes (as discussed further in Note H). These costs have been capitalized and are amortized into interest expense over the term of the individual instrument.

7.    Unearned Income — Debt Origination Fees and Original Issue Discount and Discounts/Premiums to Par Value

       Main Street capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into interest income based on the effective interest method over the life of the financing.

       In connection with its portfolio debt investments, Main Street sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, "nominal cost equity") that are valued as part of the negotiation process with the particular portfolio company. When Main Street receives nominal cost equity, Main Street allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest income based on the effective interest method over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment.

       Main Street may also purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, Main Street records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income based on the effective interest method over the life of the debt investment. In the case of a purchase at a premium, Main Street records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income based on the effective interest method over the life of the debt investment.

       To maintain RIC tax treatment (as discussed below in Note B.9.), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have

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collected the interest income. For the years ended December 31, 2015, 2014 and 2013, approximately 2.6%, 3.1% and 3.3%, respectively, of Main Street's total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction.

8.    Share-Based Compensation

       Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation — Stock Compensation. Accordingly, for restricted stock awards, Main Street measures the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

9.    Income Taxes

       MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment company taxable income" (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S Federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S federal income tax return for the applicable fiscal year or (ii) fifteenth day of the ninth month following the close of the year which generated such taxable income.

       The Taxable Subsidiaries hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street's consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in Main Street's consolidated financial statements.

       As noted above, beginning April 1, 2013, MSCC's wholly owned subsidiary MSCP is included in Main Street's consolidated financial statements for financing reporting purposes. For tax purposes, MSCP has elected to be treated as a taxable entity, and therefore is not consolidated with MSCC for income tax purposes and is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The taxable income, or loss, of MSCP may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in Main Street's consolidated financial statements.

       The Taxable Subsidiaries and MSCP use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

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       Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

10.  Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

       Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net change in unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.

11.  Fair Value of Financial Instruments

       Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Main Street believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short term nature of these instruments. Marketable securities and idle funds investments may include investments in certificates of deposit, U.S. government agency securities, independently rated debt investments, diversified bond funds and publicly traded debt and equity investments and the fair value determination for these investments under the provisions of ASC 820 generally consists of Level 1 and 2 observable inputs, similar in nature to those discussed further in Note C.

       As part of Main Street's acquisition of the majority of the equity interests of MSC II in January 2010 (the "MSC II Acquisition"), Main Street elected the fair value option under ASC 825, Financial Instruments ("ASC 825") relating to accounting for debt obligations at their fair value, for the MSC II SBIC debentures acquired (the "Acquired Debentures") as part of the acquisition accounting related to the MSC II Acquisition and values those obligations as discussed further in Note C. In order to provide for a more consistent basis of presentation, Main Street has continued to elect the fair value option for SBIC debentures issued by MSC II subsequent to the MSC II Acquisition. When the fair value option is elected for a given SBIC debenture, the deferred loan costs associated with the debenture are fully expensed in the current period to "Net Change in Unrealized Appreciation (Depreciation) — SBIC debentures" as part of the fair value adjustment. Interest incurred in connection with SBIC debentures which are valued at fair value is included in interest expense.

12.  Earnings per Share

       Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. In accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock awarded pursuant to Main Street's equity compensation plans are participating securities and are included in the basic earnings per share calculation. As a result, for all periods presented, there is no difference between diluted earnings per share and basic earnings per share amounts.

13.  Recently Issued or Adopted Accounting Standards

       In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-9 supersedes the revenue recognition requirements under ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The

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core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. The FASB tentatively decided to defer the effective date of the new revenue standard for public entities under U.S. GAAP for one year. If finalized, the new guidance will be effective for the annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. Early adoption would be permitted for annual reporting periods beginning after December 15, 2016. Main Street is currently evaluating the impact the adoption of this new accounting standard will have on its financial statements.

       In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The impact of the adoption of this new accounting standard on Main Street's consolidated financial statements is currently being evaluated.

       In May 2015, the FASB issued ASU 2015-07, Fair Value Measurements — Disclosures for Certain Entities that Calculate Net Asset Value per Share. This amendment updates guidance intended to eliminate the diversity in practice surrounding how investments measured at net asset value under the practical expedient with future redemption dates have been categorized in the fair value hierarchy. Under the updated guidance, investments for which fair value is measured at net asset value per share using the practical expedient should no longer be categorized in the fair value hierarchy, while investments for which fair value is measured at net asset value per share but the practical expedient is not applied should continue to be categorized in the fair value hierarchy. The updated guidance requires retrospective adoption for all periods presented and is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. The impact of the adoption of this new accounting standard on Main Street's consolidated financial statements is currently being evaluated.

       From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by Main Street as of the specified effective date. Main Street believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its financial statements upon adoption.

NOTE C — FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES — PORTFOLIO COMPOSITION

       ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. Main Street accounts for its investments at fair value.

Fair Value Hierarchy

       In accordance with ASC 820, Main Street has categorized its investments based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the

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highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3).

       Investments recorded on Main Street's balance sheet are categorized based on the inputs to the valuation techniques as follows:

       As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Main Street conducts reviews of fair value hierarchy classifications on a quarterly basis. During the classification process, Main Street may determine that it is appropriate to transfer investments between fair value hierarchy Levels. These transfers occur when Main Street has concluded that it is appropriate for the classification of an individual asset to be changed due to a change in the factors used to determine the selection of the Level. Any such changes are deemed to be effective during the quarter in which the transfer occurs.

       As of December 31, 2015 and 2014, all except for one of Main Street's LMM portfolio investments consisted of illiquid securities issued by private companies. The remaining investment was a publicly traded equity security. As a result, the fair value determination for the LMM portfolio investments primarily consisted of unobservable inputs. The fair value determination for the publicly traded equity security consisted of observable inputs in non-active markets for which sufficient observable inputs were available to determine the fair value. As a result, all of Main Street's LMM portfolio investments were categorized as Level 3 as of December 31, 2015 and 2014, except for the one publicly traded equity security which was categorized as Level 2.

       As of December 31, 2015 and 2014, Main Street's Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments.

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The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Middle Market portfolio investments were categorized as Level 3 as of December 31, 2015 and 2014.

       As of December 31, 2015 and 2014, Main Street's Private Loan portfolio investments primarily consisted of investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Private Loan portfolio investments were categorized as Level 3 as of December 31, 2015 and 2014.

       As of December 31, 2015 and 2014, Main Street's Other Portfolio investments consisted of illiquid securities issued by private companies. The fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street's Other Portfolio investments were categorized as Level 3 as of December 31, 2015 and 2014.

       As of December 31, 2015 and 2014, Main Street's Marketable securities and idle funds investments consisted primarily of investments in publicly traded debt and equity investments. The fair value determination for these investments consisted of a combination of observable inputs in active markets for which sufficient observable inputs were available to determine the fair value of these investments. As a result, all of Main Street's Marketable securities and idle funds investments were categorized as Level 1 as of December 31, 2015 and 2014.

       The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs:

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       The significant unobservable inputs used in the fair value measurement of Main Street's LMM equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the weighted-average cost of capital ("WACC"). Significant increases (decreases) in EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement. On the contrary, significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of Main Street's LMM, Middle Market, Private Loan and Other Portfolio debt securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (described in Note B.1. — Valuation of the Investment Portfolio) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below.

       The following tables provide a summary of the significant unobservable inputs used to fair value Main Street's Level 3 portfolio investments as of December 31, 2015 and 2014:

Type of Investment
  Fair Value as of
December 31,
2015
(in thousands)
  Valuation Technique   Significant
Unobservable Inputs
  Range(3)   Weighted
Average(3)
  Median(3)  

Equity investments

  $ 530,612  

Discounted cash flow

 

Weighted-average cost of capital

  10.5% - 25.1%     13.4 %   13.9 %

       

Market comparable / Enterprise Value

 

EBITDA multiple(1)

  4.0x - 8.5x(2)     7.0x     5.5x  

Debt investments

 
$

628,492
 

Discounted cash flow

 

Risk adjusted discount factor

 

8.1% - 15.3%(2)

   
11.9

%
 
11.9

%

           

Expected principal recovery percentage

  16.6% - 100.0%     99.7 %   100.0 %

Debt investments

 
$

637,052
 

Market approach

 

Third party quote

 

12.1 - 100.1

             

Total Level 3 investments

  $ 1,796,156                          

(1)
EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)
Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 18.8x and the range for risk adjusted discount factor is 6.7% - 29.6%.

(3)
Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Type of Investment
  Fair Value as of
December 31,
2014
(in thousands)
  Valuation Technique   Significant
Unobservable Inputs
  Range(3)   Weighted
Average(3)
  Median(3)  

Equity investments

  $ 407,569  

Discounted cash flow

 

Weighted average cost of capital

  11.4% - 23.4%     13.9 %   14.3 %

       

Market comparable / Enterprise Value

 

EBITDA multiple(1)

  4.0x - 7.8x(2)     6.4x     5.2x  

Debt investments

  $ 557,604  

Discounted cash flow

 

Risk adjusted discount factor

  7.5% - 15.8%(2)     12.1 %   11.1 %

           

Expected principal recovery percentage

  42.0% - 100.0%     99.3 %   100.0 %

Debt investments

  $ 589,677  

Market approach

 

Third party quote

  60.1 - 102.3              

Total Level 3 investments

  $ 1,554,850                          

(1)
EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)
Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 17.5x and the range for risk adjusted discount factor is 6.0% - 32.0%.

(3)
Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

       The following tables provide a summary of changes in fair value of Main Street's Level 3 portfolio investments for the years ended December 31, 2015 and 2014 (amounts in thousands):

Type of
Investment
  Fair Value
as of
December 31,
2014
  Transfers
Into Level 3
Hierarchy
  Redemptions/
Repayments
  New
Investments
  Net
Changes
from
Unrealized
to Realized
  Net
Unrealized
Appreciation
(Depreciation)
  Other(1)   Fair Value
as of
December 31,
2015
 

Debt

    1,147,281         (598,076 )   759,778     27,080     (59,269 )   (11,250 )   1,265,544  

Equity

    391,933         (18,172 )   80,746     (7,958 )   62,994     10,423     519,966  

Equity Warrant

    15,636         (9,723 )   2,153     2,153     2     425     10,646  

    1,554,850         (625,971 )   842,677     21,275     3,727     (402 )   1,796,156  

(1)
Includes the impact of non-cash conversions.

Type of
Investment
  Fair Value
as of
December 31,
2013
  Transfers
Into Level 3
Hierarchy
  Redemptions/
Repayments(1)
  New
Investments(1)
  Net
Changes
from
Unrealized
to Realized
  Net
Unrealized
Appreciation
(Depreciation)
  Other(1)   Fair Value
as of
December 31,
2014
 

Debt

  $ 897,568   $ 55,102   $ (525,138 ) $ 753,965   $ 8,071   $ (36,590 ) $ (5,697 ) $ 1,147,281  

Equity

    270,764         (16,460 )   72,289     (5,212 )   65,515     5,037     391,933  

Equity Warrant

    36,558         (1,537 )   1,080     (13,113 )   (7,435 )   83     15,636  

  $ 1,204,890   $ 55,102   $ (543,135 ) $ 827,334   $ (10,254 ) $ 21,490   $ (577 ) $ 1,554,850  

(1)
Includes the impact of non-cash conversions.

       As of December 31, 2015 and 2014, the fair value determination for the SBIC debentures recorded at fair value primarily consisted of unobservable inputs. As a result, the SBIC debentures which are recorded at fair value were categorized as Level 3. Main Street determines the fair value of these instruments primarily using a Yield-to-Maturity approach that analyzes the discounted cash flows of interest and principal for each SBIC debenture recorded at fair value based on estimated market interest rates for debt instruments of similar structure, terms, and maturity. Main Street's estimate of the expected repayment date of principal for each

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

SBIC debenture recorded at fair value is the legal maturity date of the instrument. The significant unobservable inputs used in the fair value measurement of Main Street's SBIC debentures recorded at fair value are the estimated market interest rates used to fair value each debenture using the yield valuation technique described above. Significant increases (decreases) in the Yield-to-Maturity valuation inputs in isolation would result in a significantly lower (higher) fair value measurement.

       The following tables provide a summary of the significant unobservable inputs used to fair value Main Street's Level 3 SBIC debentures as of December 31, 2015 and 2014 (amounts in thousands):

Type of Instrument
  Fair Value
as of
December 31, 2015
  Valuation Technique   Significant
Unobservable Inputs
  Range   Weighted
Average
 

SBIC debentures

  $ 73,860   Discounted cash flow   Estimated market interest rates   4.1% - 5.8%     4.9 %

 

Type of Instrument
  Fair Value
as of
December 31, 2014
  Valuation Technique   Significant
Unobservable Inputs
  Range   Weighted Average  

SBIC debentures

  $ 72,981   Discounted cash flow   Estimated market interest rates   4.6% - 6.0%     5.3 %

       The following tables provide a summary of changes for the Level 3 SBIC debentures recorded at fair value for the years ended December 31, 2015 and 2014 (amounts in thousands):

Type of Instrument
  Fair Value
as of
December 31,
2014
  Repayments   New SBIC
Debentures
  Net
Unrealized
(Appreciation)
Depreciation
  Fair Value
as of
December 31,
2015
 

SBIC debentures at fair value

  $ 72,981   $   $   $ 879   $ 73,860  

Type of Instrument
  Fair Value
as of
December 31,
2013
  Repayments   New SBIC
Debentures
  Net
Unrealized
(Appreciation)
Depreciation
  Fair Value
as of
December 31,
2014
 

SBIC debentures at fair value

  $ 62,050   $   $   $ 10,931   $ 72,981  

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       At December 31, 2015 and 2014, Main Street's investments and SBIC debentures at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:

 
   
  Fair Value Measurements  
 
   
  (in thousands)
 
At December 31, 2015
  Fair Value   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant Other
Observable Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

LMM portfolio investments

  $ 862,710   $   $ 3,840   $ 858,870  

Middle Market portfolio investments

    586,900             586,900  

Private Loan portfolio investments

    248,313             248,313  

Other Portfolio investments

    74,801             74,801  

External Investment Manager

    27,272             27,272  

Total portfolio investments

    1,799,996         3,840     1,796,156  

Marketable securities and idle funds investments

    3,693     3,693          

Total investments

  $ 1,803,689   $ 3,693   $ 3,840   $ 1,796,156  

SBIC debentures at fair value

  $ 73,860   $   $   $ 73,860  

 

 
   
  Fair Value Measurements  
 
   
  (in thousands)
 
At December 31, 2014
  Fair Value   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant Other
Observable Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

LMM portfolio investments

  $ 733,191   $   $ 8,480   $ 724,711  

Middle Market portfolio investments

    542,688             542,688  

Private Loan portfolio investments

    213,015             213,015  

Other Portfolio investments

    58,856             58,856  

External Investment Manager

    15,580             15,580  

Total portfolio investments

    1,563,330         8,480     1,554,850  

Marketable securities and idle funds investments

    9,067     9,067          

Total investments

  $ 1,572,397   $ 9,067   $ 8,480   $ 1,554,850  

SBIC debentures at fair value

  $ 72,981   $   $   $ 72,981  

Investment Portfolio Composition

       Main Street's lower middle market ("LMM") portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Main Street's LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, generally bear interest at fixed rates, and generally have a term of between five and seven years from the original investment date. In most LMM portfolio investments, Main Street receives nominally priced equity warrants and/or makes direct equity investments in connection with a debt investment.

       Main Street's middle market ("Middle Market") portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in Main Street's LMM

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

portfolio. Main Street's Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and its Middle Market investments generally range in size from $3 million to $15 million. Main Street's Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

       Main Street's private loan ("Private Loan") portfolio investments are primarily debt securities which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street's Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

       Main Street's other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, Main Street may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

       Main Street's external asset management business is conducted through its External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. Main Street has entered into an agreement to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, Main Street provides management and other services to the External Investment Manager, as well as access to Main Street's employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, Main Street began charging the External Investment Manager the cost for these services. Main Street's total expenses for the years ended December 31, 2015 and 2014 are net of expenses charged to the External Investment Manager of $4.3 million and $2.0 million, respectively.

       Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio companies. For the years ended December 31, 2015, 2014 and 2013, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       The following tables provide a summary of Main Street's investments in the LMM, Middle Market and Private Loan portfolios as of December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

 
  As of December 31, 2015  
 
  LMM(a)   Middle
Market
  Private
Loan
 
 
  (dollars in millions)
 

Number of portfolio companies

    71     86     40  

Fair value

  $ 862.7   $ 586.9   $ 248.3  

Cost

  $ 685.6   $ 637.2   $ 268.6  

% of portfolio at cost — debt

    70.4 %   98.3 %   94.3 %

% of portfolio at cost — equity

    29.6 %   1.7 %   5.7 %

% of debt investments at cost secured by first priority lien

    91.8 %   86.6 %   87.3 %

Weighted-average annual effective yield(b)

    12.2 %   8.0 %   9.5 %

Average EBITDA(c)

  $ 6.0   $ 98.8   $ 13.1  

(a)
At December 31, 2015, Main Street had equity ownership in approximately 96% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 36%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2015, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. Weighted-average annual effective yield is higher than what an investor in shares of Main Street's common stock will realize on its investment because it does not reflect Main Street's expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including five LMM portfolio companies, three Middle Market portfolio companies and six Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

 
  As of December 31, 2014  
 
  LMM(a)   Middle
Market
  Private
Loan
 
 
  (dollars in millions)
 

Number of portfolio companies

    66     86     31  

Fair value

  $ 733.2   $ 542.7   $ 213.0  

Cost

  $ 599.4   $ 561.8   $ 224.0  

% of portfolio at cost — debt

    71.5 %   99.8 %   95.6 %

% of portfolio at cost — equity

    28.5 %   0.2 %   4.4 %

% of debt investments at cost secured by first priority lien

    89.6 %   85.1 %   87.8 %

Weighted-average annual effective yield(b)

    13.2 %   7.8 %   10.1 %

Average EBITDA(c)

  $ 5.0   $ 77.2   $ 18.1  

(a)
At December 31, 2014, Main Street had equity ownership in approximately 95% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 35%.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2014, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. Weighted-average annual effective yield is higher than what an investor in shares of Main Street's common stock will realize on its investment because it does not reflect Main Street's expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including two LMM portfolio companies, one Middle Market portfolio company and five Private Loan portfolio companies as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

       As of December 31, 2015, Main Street had Other Portfolio investments in ten companies, collectively totaling approximately $74.8 million in fair value and approximately $75.2 million in cost basis and which comprised approximately 4.2% of Main Street's Investment Portfolio at fair value. As of December 31, 2014, Main Street had Other Portfolio investments in six companies, collectively totaling approximately $58.9 million in fair value and approximately $56.2 million in cost basis and which comprised approximately 3.8% of Main Street's Investment Portfolio at fair value.

       As discussed further in Note A.1., Main Street holds an investment in the External Investment Manager, a wholly owned subsidiary that is treated as a portfolio investment. As of December 31, 2015, there was no cost basis in this investment and the investment had a fair value of $27.3 million, which comprised 1.5% of Main Street's Investment Portfolio at fair value. As of December 31, 2014, there was no cost basis in this investment and the investment had a fair value of $15.6 million, which comprised 1.0% of Main Street's Investment Portfolio at fair value.

       The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  December 31,
2015
  December 31,
2014
 

First lien debt

    75.8%     75.7%  

Equity

    13.5%     11.6%  

Second lien debt

    8.7%     10.0%  

Equity warrants

    0.9%     1.5%  

Other

    1.1%     1.2%  

    100.0%     100.0%  

 

Fair Value:
  December 31,
2015
  December 31,
2014
 

First lien debt

    66.1%     66.9%  

Equity

    24.9%     21.9%  

Second lien debt

    7.7%     9.2%  

Equity warrants

    0.6%     1.0%  

Other

    0.7%     1.0%  

    100.0%     100.0%  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

Cost:
  December 31,
2015
  December 31,
2014
 

Southwest

    33.4%     29.6%  

Northeast

    18.3%     19.9%  

Midwest

    16.7%     13.5%  

West

    14.6%     18.7%  

Southeast

    13.5%     15.4%  

Canada

    2.2%     0.7%  

Other Non-United States

    1.3%     2.2%  

    100.0%     100.0%  

 

Fair Value:
  December 31,
2015
  December 31,
2014
 

Southwest

    36.7%     33.7%  

Northeast

    16.3%     18.3%  

West

    16.1%     20.4%  

Midwest

    15.1%     12.7%  

Southeast

    12.6%     12.4%  

Canada

    2.0%     0.6%  

Other Non-United States

    1.2%     1.9%  

    100.0%     100.0%  

       Main Street's LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by industry at cost and fair value as of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  December 31,
2015
  December 31,
2014
 

Hotels, Restaurants & Leisure

    7.9%     5.6%  

Energy Equipment & Services

    7.3%     8.3%  

Machinery

    5.7%     6.5%  

Media

    5.6%     8.3%  

IT Services

    5.1%     5.9%  

Specialty Retail

    5.1%     4.7%  

Construction & Engineering

    4.6%     5.3%  

Software

    4.5%     5.4%  

Electronic Equipment, Instruments & Components

    4.3%     3.0%  

Health Care Providers & Services

    4.1%     4.9%  

Diversified Consumer Services

    3.7%     2.9%  

Commercial Services & Supplies

    3.3%     1.0%  

Internet Software & Services

    3.1%     1.9%  

Health Care Equipment & Supplies

    3.1%     2.1%  

Diversified Telecommunication Services

    2.9%     4.0%  

Auto Components

    2.7%     2.3%  

Food Products

    2.4%     1.8%  

Diversified Financial Services

    2.3%     1.0%  

Oil, Gas & Consumable Fuels

    2.1%     2.5%  

Pharmaceuticals

    1.9%     1.8%  

Building Products

    1.9%     1.1%  

Professional Services

    1.9%     1.1%  

Road & Rail

    1.6%     1.8%  

Leisure Equipment & Products

    1.1%     0.5%  

Air Freight & Logistics

    1.1%     0.9%  

Aerospace & Defense

    1.0%     1.2%  

Distributors

    0.7%     1.0%  

Chemicals

    0.6%     1.3%  

Textiles, Apparel & Luxury Goods

    0.6%     1.3%  

Trading Companies & Distributors

    0.0%     1.2%  

Other(1)

    7.8%     9.4%  

    100.0%     100.0%  

(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value:
  December 31,
2015
  December 31,
2014
 

Hotels, Restaurants & Leisure

    7.8%     5.6%  

Machinery

    7.0%     8.1%  

Energy Equipment & Services

    6.0%     7.9%  

Specialty Retail

    6.0%     4.9%  

Software

    5.9%     5.5%  

Diversified Consumer Services

    5.7%     4.4%  

Media

    5.1%     7.7%  

Construction & Engineering

    5.1%     5.5%  

IT Services

    4.6%     5.4%  

Electronic Equipment, Instruments & Components

    3.7%     2.5%  

Health Care Providers & Services

    3.3%     4.4%  

Commercial Services & Supplies

    3.1%     1.0%  

Internet Software & Services

    2.9%     2.3%  

Health Care Equipment & Supplies

    2.9%     1.9%  

Auto Components

    2.8%     2.5%  

Diversified Telecommunication Services

    2.7%     3.8%  

Road & Rail

    2.6%     2.3%  

Diversified Financial Services

    2.2%     1.0%  

Food Products

    2.1%     1.6%  

Pharmaceuticals

    1.7%     1.7%  

Professional Services

    1.7%     1.0%  

Building Products

    1.6%     0.9%  

Air Freight & Logistics

    1.3%     0.8%  

Oil, Gas & Consumable Fuels

    1.2%     1.9%  

Leisure Equipment & Products

    1.1%     0.4%  

Aerospace & Defense

    0.9%     1.1%  

Distributors

    0.6%     1.0%  

Chemicals

    0.6%     1.2%  

Paper & Forest Products

    0.6%     1.2%  

Textiles, Apparel & Luxury Goods

    0.4%     1.2%  

Trading Companies & Distributors

    0.0%     1.1%  

Other(1)

    6.8%     8.2%  

    100.0%     100.0%  

(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

       At December 31, 2015 and 2014, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Unconsolidated Significant Subsidiaries

       Main Street's investments are generally in small and mid-sized companies in a variety of industries. In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, Main Street must determine which of its unconsolidated controlled portfolio companies are considered "significant subsidiaries", if any. In evaluating these investments, there are three tests utilized to determine if any of Main Street's Control Investments (as defined in Note A, including those investments in which Main Street owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation) are considered significant subsidiaries (including portfolio companies): the investment test, the asset test and the income test. Rule 3-09 of Regulation S-X, as interpreted by the SEC, requires Main Street to include separate audited financial statements of an unconsolidated majority-owned subsidiary (including portfolio companies in which Main Street owns greater than 50% of the voting securities) in an annual report if any of the three tests exceed 20% of Main Street's total investments at fair value, total assets or total income, respectively. Rule 4-08(g) of Regulation S-X requires summarized financial information of an unconsolidated subsidiary (including portfolio companies) in an annual report if any of the three tests exceeds 10% of Main Street's total amounts and summarized financial information in a quarterly report if any of the three tests exceeds 20% of Main Street's total amounts.

       As of December 31, 2015, Main Street had no single investment that represented greater than 10% of its total Investment Portfolio at fair value and no single investment whose total assets represented greater than 10% of its total assets. After performing the income test for the year ended December 31, 2015, excluding investments which were fully exited after December 31, 2015, Main Street determined that its income from two of its Control Investments individually generated more than 10% of its total income, primarily due to the unrealized appreciation that was recognized on the investments during the year ended December 31, 2015. As such, the wholly owned External Investment Manager was considered a significant subsidiary at the 10% level as of December 31, 2015 (see further discussion and summarized financial information in Note D). Additionally, CBT Nuggets, LLC, an unconsolidated portfolio company that was a Control Investment, but which was not majority-owned by Main Street, was also considered a significant subsidiary at the 10% level as of December 31, 2015.

       The following table shows the summarized financial information for CBT Nuggets, LLC:

 
  2015   2014  
 
  (dollars in thousands)
 

Balance Sheet Data

             

Current Assets

  $ 4,499   $ 4,958  

Noncurrent Assets

    16,749     14,102  

Current Liabilities

    15,490     12,912  

Noncurrent Liabilities

         

 

 
  Twelve Months Ended
December 31,
 
 
  2015   2014   2013  
 
  (dollars in thousands)
 

Summary of Operations

                   

Total Revenue

  $ 33,924   $ 25,645   $ 18,071  

Gross Profit

    29,352     21,196     14,453  

Income from Operations

    12,099     8,687     5,132  

Net Income

    12,343     10,100     5,134  

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE D — EXTERNAL INVESTMENT MANAGER

       As discussed further in Note A.1., the External Investment Manager provides investment management and other services to External Parties. The External Investment Manager is accounted for as a portfolio investment of MSCC since the External Investment Manager conducts all of its investment management activities for External Parties.

       During May 2012, Main Street entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-publicly traded BDC whose registration statement on Form N-2 was declared effective by the SEC in June 2012, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow it to own a registered investment adviser, Main Street assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on MSCC's ability to meet the source-of-income requirement necessary for it to maintain its RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. Based upon several fee waiver agreements with HMS Income and HMS Adviser, the External Investment Manager did not begin accruing the base management fee and incentive fees, if any, until January 1, 2014. Beginning January 1, 2015, the External Investment Manager conditionally agreed to waive a limited amount of the base management fee and incentive fees otherwise earned during the year ended December 31, 2015. During the years ended December 31, 2015 and 2014, the External Investment Manager earned $7.8 million and $2.8 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

       The investment in the External Investment Manager is accounted for using fair value accounting, with the fair value determined by Main Street and approved, in good faith, by Main Street's Board of Directors. Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach (see further discussion in Note B.1.). Any change in fair value of the investment in the External Investment Manager is recognized on Main Street's consolidated statement of operations in "Net Change in Unrealized Appreciation (Depreciation) — Portfolio investments".

       The External Investment Manager has elected, for tax purposes, to be treated as a taxable entity, is not consolidated with Main Street for income tax purposes and is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The External Investment Manager has elected to be treated as a taxable entity to enable it to receive fee income and to allow MSCC to continue to comply with the "source-income" requirements contained in the RIC tax provisions of the Code. The taxable income, or loss, of the External Investment Manager may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. The External Investment Manager provides for any income tax expense, or benefit, and any tax assets or liabilities in its separate financial statements.

       Main Street provides services to the External Investment Manager and charges the expenses necessary to perform these services to the External Investment Manager generally based on a combination of the direct time spent, new investment origination activity and assets under management, depending on the nature of the expense. For the years ended December 31, 2015 and 2014, Main Street charged $4.3 million and $2.0 million of total expenses, respectively, to the External Investment Manager. The total contribution of the External Investment Manager to Main Street's net investment income consists of the combination of the expenses charged to the External Investment Manager and dividend income from the External Investment Manager. For the years ended December 31, 2015 and 2014, the total contribution to Main Street's net investment income was $6.5 million and $2.5 million, respectively.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       Summarized financial information from the separate financial statements of the External Investment Manager as of December 31, 2015 and 2014 and for the year ended December 31, 2014 is as follows:

 
  As of
December 31,
 
 
  2015   2014  
 
  (dollars in thousands)
 

Cash

  $ 31   $ 130  

Accounts receivable — HMS Income

    2,262     1,120  

Total assets

  $ 2,293   $ 1,250  

Accounts payable to MSCC and its subsidiaries

  $ 1,333   $ 699  

Dividend payable to MSCC

    677     253  

Taxes payable

    283     298  

Equity

         

Total liabilities and equity

  $ 2,293   $ 1,250  

 
  Twelve Months
Ended December 31,
 
 
  2015   2014  
 
  (dollars in thousands)
 

Management fee income

  $ 7,767   $ 2,795  

Expenses allocated from MSCC or its subsidiaries:

             

Salaries, share-based compensation and other personnel costs

    (3,005 )   (1,479 )

Other G&A expenses

    (1,330 )   (569 )

Total allocated expenses

    (4,335 )   (2,048 )

Other direct G&A expenses

        (2 )

Total expenses

    (4,335 )   (2,050 )

Pre-tax income

    3,432     745  

Tax expense

    (1,235 )   (298 )

Net income

  $ 2,197   $ 447  

NOTE E — DEFERRED FINANCING COSTS

       Deferred financing costs balances as of December 31, 2015 and 2014 are as follows (amounts in thousands):

 
  As of December 31,  
 
  2015   2014  

Credit Facility Fees

  $ 8,467   $ 7,208  

SBIC debenture leverage fees

    5,000     5,000  

4.50% Notes

    3,668     3,668  

6.125% Notes

    3,049     3,088  

SBIC debenture commitment fees

    2,048     2,048  

Subtotal

    22,232     21,012  

Accumulated amortization

    (8,965 )   (6,462 )

Net deferred financing costs balance

  $ 13,267   $ 14,550  

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       Estimated aggregate amortization expense for each of the five years succeeding December 31, 2015 and thereafter is as follows (amounts in thousands):

Years Ended December 31,
  Estimated
Amortization
 

2016

  $ 2,569  

2017

  $ 2,569  

2018

  $ 2,569  

2019

  $ 2,506  

2020

  $ 1,532  

2021 and thereafter

  $ 1,522  

NOTE F — SBIC DEBENTURES

       SBIC debentures payable were $225.0 million at both December 31, 2015 and 2014. SBIC debentures provide for interest to be paid semi-annually, with principal due at the applicable 10-year maturity date of each debenture. The weighted-average annual interest rate on the SBIC debentures was 4.2% as of both December 31, 2015 and 2014. The first principal maturity due under the existing SBIC debentures is in 2017, and the remaining weighted-average duration as of December 31, 2015 was approximately 5.6 years. For the years ended December 31, 2015, 2014 and 2013, Main Street recognized interest expense attributable to the SBIC debentures of $9.9 million, $9.5 million and $10.3 million, respectively. Main Street has incurred upfront leverage and other miscellaneous fees of approximately 3.4% of the debenture principal amount. In accordance with SBA regulations, the Funds are precluded from incurring additional non-SBIC debt without the prior approval of the SBA. The Funds are subject to annual compliance examinations by the SBA. There have been no historical findings resulting from these examinations.

       As of December 31, 2015, the recorded value of the SBIC debentures was $223.7 million which consisted of (i) $73.9 million recorded at fair value, or $1.3 million less than the $75.2 million face value of the SBIC debentures held in MSC II, and (ii) $149.8 million reported at face value and held in MSMF. As of December 31, 2015, if Main Street had adopted the fair value option under ASC 825 for all of its SBIC debentures, Main Street estimates the fair value of its SBIC debentures would be approximately $211.8 million, or $13.2 million less than the $225.0 million face value of the SBIC debentures.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       The maturity dates and fixed interest rates for Main Street's SBIC Debentures as of December 31, 2015 and 2014 are summarized in the following table:

Maturity Date
  Fixed
Interest
Rate
  December 31,
2015
  December 31,
2014
 

9/1/2017

    6.43%     15,000,000     15,000,000  

3/1/2018

    6.38%     10,200,000     10,200,000  

9/1/2019

    4.95%     20,000,000     20,000,000  

3/1/2020

    4.51%     10,000,000     10,000,000  

9/1/2020

    3.50%     35,000,000     35,000,000  

9/1/2020

    3.93%     10,000,000     10,000,000  

3/1/2021

    4.37%     10,000,000     10,000,000  

3/1/2021

    4.60%     20,000,000     20,000,000  

9/1/2021

    3.39%     10,000,000     10,000,000  

9/1/2022

    2.53%     5,000,000     5,000,000  

3/1/2023

    3.16%     16,000,000     16,000,000  

3/1/2024

    3.95%     8,000,000     8,000,000  

3/1/2024

    3.95%     12,000,000     12,000,000  

3/1/2024

    3.95%     11,400,000     11,400,000  

3/1/2024

    3.95%     7,600,000     7,600,000  

3/1/2024

    3.55%     24,800,000     24,800,000  

Ending Balance

          225,000,000     225,000,000  

NOTE G — CREDIT FACILITY

       Main Street maintains the Credit Facility to provide additional liquidity to support its investment and operational activities. The Credit Facility provides for commitments from a diversified group of fourteen lenders and was amended during 2015 to change the total commitments to $555.0 million, increase the accordion feature of the Credit Facility from $650.0 million to $750.0 million, increase the amount of unsecured debt Main Street is permitted to incur, providing us additional financial flexibility in our capital structure, decrease the interest rate to the rates described below and to extend the maturity one year to September 2020. The accordion feature allows Main Street to increase the total commitments under the facility from new and existing lenders on the same terms and conditions as the existing commitments.

       Borrowings under the Credit Facility bear interest, subject to Main Street's election, on a per annum basis at a rate equal to the applicable LIBOR rate (0.24%) as of December 31, 2015) plus (i) 1.875% (or the applicable base rate (Prime Rate of 3.50% as of December 31, 2015) plus 0.875%), as long as Main Street maintains an investment grade rating and meets certain agreed upon excess collateral and maximum leverage requirements, (ii) 2.0% (or the applicable base rate plus 1.0%) if Main Street maintains an investment grade rating but does not meet certain excess collateral and maximum leverage requirements or (iii) 2.25% (or the applicable base rate plus 1.25%) if Main Street does not maintain an investment grade rating. Main Street pays unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. The Credit Facility contains certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio of at least 1.5 to 1.0, and (iv) maintaining a minimum tangible net worth. The Credit Facility is provided on a revolving basis through its final maturity date in September 2020, and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       At December 31, 2015, Main Street had $291.0 million in borrowings outstanding under the Credit Facility. As of December 31, 2015, if Main Street had adopted the fair value option under ASC 825 for its Credit Facility, Main Street estimates its fair value would approximate its recorded value. Main Street recognized interest expense related to the Credit Facility, including unused commitment fees and amortization of deferred loan costs, of $7.7 million, $6.9 million and $5.6 million, respectively, for the years ended December 31, 2015, 2014 and 2013. As of December 31, 2015, the interest rate on the Credit Facility was 2.1%. The average interest rate for the year ended December 31, 2015 was 2.2%. Main Street was in compliance with all financial covenants of the Credit Facility.

NOTE H — NOTES

       In April 2013, Main Street issued $92.0 million, including the underwriters full exercise of their option to purchase additional principal amounts to cover over-allotments, in aggregate principal amount of 6.125% Notes due 2023 (the "6.125% Notes"). The 6.125% Notes are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at Main Street's option on or after April 1, 2018. The 6.125% Notes bear interest at a rate of 6.125% per year payable quarterly on January 1, April 1, July 1 and October 1 of each year. The total net proceeds to Main Street from the 6.125% Notes, after underwriting discounts and estimated offering expenses payable by Main Street, were approximately $89.0 million. Main Street has listed the 6.125% Notes on the New York Stock Exchange under the trading symbol "MSCA". Main Street may from time to time repurchase the 6.125% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2015, the outstanding balance of the 6.125% Notes was $90.7 million. As of December 31, 2015, if Main Street had adopted the fair value option under ASC 825 for the 6.125% Notes, Main Street estimates the fair value would be approximately $91.7 million. Main Street recognized interest expense related to the 6.125% Notes, including amortization of deferred loan costs, of $5.9 million, $5.9 million and $4.4 million for each of the years ended December 31, 2015, 2014 and 2013, respectively.

       The indenture governing the 6.125% Notes (the "6.125% Notes Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 6.125% Notes and the Trustee if Main Street ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 6.125% Notes Indenture.

       In November 2014, Main Street issued $175.0 million in aggregate principal amount of 4.50% unsecured notes due 2019 (the "4.50% Notes") at an issue price of 99.53%. The 4.50% Notes are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 4.50% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes mature on December 1, 2019, and may be redeemed in whole or in part at any time at Main Street's option subject to certain make whole provisions. The 4.50% Notes bear interest at a rate of 4.50% per year payable semi-annually on June 1 and December 1 of each year. The total net proceeds from the 4.50% Notes, resulting from the issue price and after underwriting discounts and estimated offering expenses payable by us, were approximately $171.2 million. Main Street may from time to time repurchase the 4.50% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2015, the outstanding balance of the 4.50% Notes was $175.0 million. As of December 31, 2015, if Main Street had adopted the fair value option under ASC 825 for the 4.50% Notes, Main Street estimates its fair value would be approximately $179.1 million. Main Street recognized interest expense related to the 4.50% Notes, including amortization of deferred loan costs, of $8.6 million and $1.3 million for the years ended December 31, 2015 and 2014, respectively.

       The indenture governing the 4.50% Notes (the "4.50% Notes Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 4.50% Notes and the Trustee if Main Street ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes Indenture.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE I — FINANCIAL HIGHLIGHTS

 
  Twelve Months Ended December 31,  
Per Share Data:
  2015   2014   2013   2012   2011  

NAV at the beginning of the period

  $ 20.85   $ 19.89   $ 18.59   $ 15.19   $ 13.06  

Net investment income(1)(3)

    2.18     2.20     2.06     2.01     1.69  

Net realized gain (loss)(1)(2)(3)

    (0.43 )   0.53     0.07     0.55     0.11  

Net change in net unrealized appreciation(1)(2)(3)

    0.20     (0.27 )   0.52     1.34     1.23  

Income tax benefit (provision)(1)(2)(3)

    0.18     (0.15 )       (0.37 )   (0.27 )

Net increase in net assets resulting from operations(1)(3)

    2.13     2.31     2.65     3.53     2.76  

Dividends paid to stockholders from net investment income

    (2.49 )   (2.17 )   (2.29 )   (1.17 )   (1.46 )

Distributions from capital gains

    (0.16 )   (0.38 )   (0.37 )   (0.54 )   (0.10 )

Total dividends paid

    (2.65 )   (2.55 )   (2.66 )   (1.71 )   (1.56 )

Impact of the net change in monthly dividends declared prior to the end of the period and paid in the subsequent period

    (0.01 )   (0.01 )   (0.02 )   (0.02 )   (0.14 )

Accretive effect of public stock offerings (issuing shares above NAV per share)

    0.74     1.07     1.13     1.33     0.74  

Accretive effect of DRIP issuance (issuing shares above NAV per share)

    0.12     0.12     0.13     0.07     0.05  

Other(4)

    0.06     0.02     0.07     0.20     0.28  

NAV at the end of the period

  $ 21.24   $ 20.85   $ 19.89   $ 18.59   $ 15.19  

Market value at the end of the period

  $ 29.08   $ 29.24   $ 32.69   $ 30.51   $ 21.24  

Shares outstanding at the end of the period

    50,413,744     45,079,150     39,852,604     34,589,484     26,714,384  

(1)
Based on weighted-average number of common shares outstanding for the period.

(2)
Net realized gains or losses, net change in unrealized appreciation or depreciation, and income taxes can fluctuate significantly from period to period.

(3)
Per share amounts are net of the amounts attributable to the noncontrolling equity interests in MSC II for the periods prior to the completion of the acquisition of MSC II during the first quarter of 2012.

(4)
Includes the impact of the different share amounts as a result of calculating certain per share data based on the weighted-average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
  Twelve Months Ended December 31,  
 
  2015   2014   2013   2012   2011  
 
  (dollars in thousands)
 

NAV at end of period

  $ 1,070,894   $ 939,982   $ 792,533   $ 642,976   $ 405,711  

Average NAV

  $ 1,055,313   $ 885,568   $ 706,056   $ 512,156   $ 327,386  

Average outstanding debt

  $ 759,396   $ 575,524   $ 444,331   $ 322,154   $ 277,692  

Ratio of total expenses, including income tax expense, to average NAV (1)(2)

    4.63%     5.82%     5.82%     8.18%     9.82%  

Ratio of operating expenses to average NAV(1)(3)

    5.45%     5.11%     5.82%     6.07%     7.96%  

Ratio of operating expenses, excluding interest expense, to average NAV(1)(3)

    2.41%     2.44%     2.95%     3.03%     4.01%  

Ratio of net investment income to average NAV(1)

    10.15%     10.79%     10.68%     11.57%     11.76%  

Portfolio turnover ratio

    25.37%     35.71%     36.10%     56.22%     30.82%  

Total investment return(4)

    8.49%     –3.09%     16.68%     53.60%     26.95%  

Total return based on change in NAV(5)

    11.11%     12.71%     15.06%     25.73%     25.64%  

(1)
Ratios are net of the amounts attributable to the noncontrolling equity interests in MSC II for the periods prior to the completion of the acquisition of MSC II during the first quarter of 2012.

(2)
Total expenses are the sum of operating expenses and net income tax provision/benefit. Net income tax provision/benefit includes the accrual of net deferred tax provision/benefit relating to the net unrealized appreciation/depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in net operating loss carryforwards, which are non-cash in nature and may vary significantly from period to period. Main Street is required to include net deferred tax provision/benefit in calculating its total expenses even though these net deferred taxes are not currently payable/receivable.

(3)
Operating expenses include compensation, general and administrative and share-based compensation expenses, net of expenses charged to the External Investment Manager.

(4)
Total investment return based on purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by Main Street's dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.

(5)
Total return based on change in net asset value was calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value.

NOTE J — DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

       During 2015, Main Street paid supplemental dividends of $0.275 per share in each of June and December 2015, regular monthly dividends of $0.170 per share for each month of January through March 2015, regular monthly dividends of $0.175 per share for each month of April through September 2015, and regular monthly dividends of $0.180 per share for each month of October through December 2015, with such dividends totaling $130.0 million, or $2.650 per share. The 2015 regular monthly dividends, which total $102.4 million, or $2.10 per share, represent a 5.3% increase from the monthly dividends paid per share for the year ended 2014. For tax purposes, the 2015 dividends, which included the effects of accrued dividends, total $2.66 per share and were comprised of (i) ordinary income totaling approximately $2.325 per share, (ii) long term capital gain totaling approximately $0.231 per share, and (iii) qualified dividend income totaling approximately $0.105 per share. As of December 31, 2015, Main Street estimates that it has generated undistributed taxable income of approximately $38.8 million, or $0.77 per share, that will be carried forward toward distributions to be paid in 2016. For the years ended December 31, 2014 and 2013,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Main Street paid total monthly dividends of approximately $110.9 million, or $2.545 per share, and $96.8 million, or $2.66 per share, respectively.

       Ordinary dividend distributions from a RIC do not qualify for the reduced maximum tax rate on qualified dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for dividends will generally include both ordinary income and capital gains but may also include qualified dividends or return of capital. The tax character of distributions paid for the years ended December 31, 2015, 2014 and 2013 was as follows:

 
  Twelve Months Ended December 31,  
 
  2015   2014   2013  
 
  (dollars in thousands)
 

Ordinary income(1)

  $ 114,975   $ 91,369   $ 68,630  

Qualified dividends

    5,179     2,106     17,058  

Distributions of long term capital gains

    11,285     18,502     12,507  

Distributions on tax basis

  $ 131,439   $ 111,977   $ 98,195  

(1)
The years ended December 31, 2015 and 2014 include $1.5 million and $1.2 million, respectively, that was reported as compensation for services for tax purposes in accordance with Section 83 of the Code.

       MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment company taxable income" (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S Federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S federal income tax return for the applicable fiscal year or (ii) fifteenth day of the ninth month following the close of the year which generated such taxable income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       Listed below is a reconciliation of "Net increase in net assets resulting from operations" to taxable income and to total distributions declared to common stockholders for the years ended December 31, 2015, 2014 and 2013.

 
  Twelve Months Ended December 31,  
 
  2015   2014   2013  
 
  (estimated, dollars in thousands)
 

Net increase in net assets resulting from operations

  $ 104,437   $ 100,748   $ 96,855  

Book tax difference share-based compensation expense

    1,006     4,215     4,210  

Net change in net unrealized appreciation

    (9,992 )   11,707     (18,895 )

Income tax provision (benefit)

    (8,687 )   6,287     (35 )

Pre-tax book (income) loss not consolidated for tax purposes

    32,323     (7,721 )   (437 )

Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates

    3,397     (1,667 )   9,128  

Estimated taxable income(1)

    122,484     113,569     90,826  

Taxable income earned in prior year and carried forward for distribution in current year

    38,638     37,046     44,415  

Taxable income earned prior to period end and carried forward for distribution next period

    (38,757 )   (46,301 )   (43,622 )

Dividend payable as of period end and paid in the following period

    9,074     7,663     6,576  

Total distributions accrued or paid to common stockholders

  $ 131,439   $ 111,977   $ 98,195  

(1)
Main Street's taxable income for each period is an estimate and will not be finally determined until the company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate.

       The Taxable Subsidiaries hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street's consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in Main Street's consolidated financial statements.

       As noted above, beginning April 1, 2013, MSCC's wholly owned subsidiary MSCP is included in Main Street's consolidated financial statements for financing reporting purposes. For tax purposes, MSCP has elected to be treated as a taxable entity, and therefore is not consolidated with MSCC for income tax purposes and is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The taxable income, or loss, of MSCP may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in Main Street's consolidated financial statements.

       The income tax expense, or benefit, and the related tax assets and liabilities generated by the Taxable Subsidiaries and the MSCP, if any, are reflected in Main Street's consolidated statement of operations. Main

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Street's provision for income taxes was comprised of the following for the years ended December 31, 2015, 2014 and 2013 (amounts in thousands):

 
  Twelve Months Ended
December 31,
 
 
  2015   2014   2013  

Current tax expense:

                   

Federal

  $ 607   $ 734   $ 1,153  

State

    1,181     847     591  

Total current tax expense

    1,788     1,581     1,744  

Deferred tax expense (benefit):

                   

Federal

    (10,781 )   2,515     (2,822 )

State

    (870 )   759     (769 )

Total deferred tax expense (benefit)

    (11,651 )   3,274     (3,591 )

Excise tax

    1,176     1,432     1,812  

Total income tax provision (benefit)

  $ (8,687 ) $ 6,287   $ (35 )

       As of December 31, 2015, the cost of investments for U.S. federal income tax purposes was $1,663.8 million, with such investments having a gross unrealized appreciation of $283.9 million and gross unrealized depreciation of $144.0 million.

       The net deferred tax asset at December 31, 2015 was $4.0 million compared to a net deferred tax liability of $9.2 million as of December 31, 2014, which was primarily related to net loss carryforwards (primarily resulting from historical realized losses on portfolio investments held by the Taxable Subsidiaries), offset by net unrealized appreciation of portfolio investments held by the Taxable Subsidiaries, basis differences of portfolio investments held by the Taxable Subsidiaries which are "pass-through" entities for tax purposes and excess deductions resulting from the restricted stock plans (see further discussion in Note M). As of December 31, 2015, the Taxable Subsidiaries had a capital loss carryforward of $8.0 million. For U.S. federal income tax purposes, the capital loss carryforward will expire in 2020. The timing and manner in which Main Street will utilize any net loss carryforwards in any year, or in total, may be limited in the future under the provisions of the Code.

       In accordance with the realization requirements of ASC 718, Compensation — Stock Compensation, Main Street uses tax law ordering when determining when tax benefits related to equity compensation greater than equity compensation recognized for financial reporting should be realized. For the years ended December 31, 2015 Main Street recognized no increase in paid-in-capital due to tax deductions related to equity compensation greater than equity compensation recognized for financial reporting compared to a $1.0 million increase for the period ended December 31, 2014. Paid-in capital increases of $1.8 million will be recognized in future periods when such tax benefits are ultimately realized by reducing taxes payable.

       Management believes that the realization of the deferred tax assets is more likely than not based on expectations as to future taxable income and scheduled reversals of temporary differences. Accordingly, Main Street did not record a valuation allowance related to its deferred tax assets at December 31, 2015 and 2014.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the significant components of net deferred tax assets and liabilities as of December 31, 2015 and 2014 (amounts in thousands):

 
  Years Ended
December 31,
 
 
  2015   2014  

Deferred tax assets:

             

Net operating loss carryforwards

  $ 23,508   $ 11,066  

Net basis differences in portfolio investments

        657  

Other

    2,423      

Total deferred tax assets

    25,931     11,723  

Deferred tax liabilities:

             

Net unrealized appreciation of portfolio investments

    (19,482 )   (20,820 )

Net basis differences in portfolio investments

    (2,446 )    

Other

        (117 )

Total deferred tax liabilities

    (21,928 )   (20,937 )

Total net deferred tax assets (liabilities)

  $ 4,003   $ (9,214 )

       For U.S. federal income tax purposes, the net loss carryforwards expire in various years from 2029 through 2035. The timing and manner in which Main Street will utilize any net loss carryforwards in any year, or in total, may be limited in the future under the provisions of the Code.

NOTE K — COMMON STOCK

       During November 2015, Main Street entered into a program (the "ATM Program") with underwriters through which it could sell, by means of at-the-market offerings from time to time, up to 1,000,000 shares of our common stock. During the fourth quarter of 2015, Main Street sold 140,568 shares of our common stock at a weighted-average price of $31.98 per share and raised $4.5 million of gross proceeds under the ATM Program. Net proceeds were $4.3 million after commissions to the underwriter on shares sold and offering costs. As of December 31, 2015, 859,432 shares were available for sale under the ATM Program.

       During March 2015, Main Street completed a follow-on public equity offering of 4,370,000 shares of common stock, including the underwriters' full exercise of their option to purchase 570,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of approximately $127.8 million.

       During April 2014, Main Street completed a follow-on public equity offering of 4,600,000 shares of common stock, including the underwriters' full exercise of their option to purchase 600,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of approximately $139.7 million.

       During August 2013, Main Street completed a follow-on public equity offering of 4,600,000 shares of common stock, including the underwriters' full exercise of their option to purchase 600,000 additional shares, at a price to the public of $29.75 per share, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of approximately $131.5 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE L — DIVIDEND REINVESTMENT PLAN ("DRIP")

       Main Street's DRIP provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if Main Street declares a cash dividend, the company's stockholders who have not "opted out" of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of shares of common stock or through open market purchases of common stock. Newly issued shares will be valued based upon the final closing price of MSCC's common stock on the valuation date determined for each dividend by Main Street's Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased, before any associated brokerage or other costs. Main Street's DRIP is administered by its transfer agent on behalf of Main Street's record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in Main Street's DRIP but may provide a similar dividend reinvestment plan for their clients.

       For the year ended December 31, 2015, $19.4 million of the total $130.0 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 636,079 newly issued shares and with the purchase of 3,131 shares of common stock in the open market. For the year ended December 31, 2014, $17.4 million of the total $110.9 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 468,417 newly issued shares and with the purchase of 85,754 shares of common stock in the open market. For the year ended December 31, 2013, $17.5 million of the total $96.8 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 433,218 newly issued shares and with the purchase of 134,659 shares of common stock in the open market. The shares disclosed above relate only to Main Street's DRIP and exclude any activity related to broker-managed dividend reinvestment plans.

NOTE M — SHARE-BASED COMPENSATION

       Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation — Stock Compensation. Accordingly, for restricted stock awards, Main Street measured the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

       Main Street's Board of Directors approves the issuance of shares of restricted stock to Main Street employees pursuant to the Main Street Capital Corporation 2015 Equity and Incentive Plan. These shares generally vest over a three-year period from the grant date. The fair value is expensed over the service period, starting on the grant date. The following table summarizes the restricted stock issuances approved by Main Street's Board of Directors under the 2015 Equity and Incentive Plan, net of shares forfeited, and the remaining shares of restricted stock available for issuance as of December 31, 2015.

Restricted stock authorized under the plan

    3,000,000  

Less net restricted stock granted during:

       

Year ended December 31, 2015

    (900 )

Restricted stock available for issuance as of December 31, 2015

    2,999,100  

(1)
Shares indicated are net of forfeited shares

       As of December 31, 2015, the following table summarizes the restricted stock issued to Main Street's independent directors and the remaining shares of restricted stock available for issuance pursuant to the Main

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan. These shares are granted upon appointment or election to the board and vest on the day immediately preceding the annual meeting of stockholders following the respective grant date and are expensed over such service period.

Restricted stock authorized under the plan

    300,000  

Less net restricted stock granted during:

       

Year ended December 31, 2015

    (6,806 )

Restricted stock available for issuance as of December 31, 2015

    293,194  

       For the years ended December 31, 2015, 2014 and 2013, Main Street recognized total share-based compensation expense of $6.3 million, $4.2 million and $4.2 million, respectively, related to the restricted stock issued to Main Street employees and independent directors. As of December 31, 2015, there was $12.2 million of total unrecognized compensation expense related to Main Street's non-vested restricted shares. This compensation expense is expected to be recognized over a remaining weighted-average period of approximately 2.1 years as of December 31, 2015.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE N — COMMITMENTS AND CONTINGENCIES

       At December 31, 2015, Main Street had the following outstanding firm commitments (in thousands):

 
  Amount  

Investments with equity capital commitments that have not yet funded:

       

Encap Energy Fund Investments

   
 
 

EnCap Energy Capital Fund VIII, L.P. 

  $ 967  

EnCap Energy Capital Fund VIII Co-Investors, L.P. 

    193  

EnCap Energy Capital Fund IX, L.P. 

    1,925  

EnCap Energy Capital Fund X, L.P. 

    9,308  

EnCap Flatrock Midstream Fund II, L.P. 

    7,442  

EnCap Flatrock Midstream Fund III, L.P. 

    7,036  

  $ 26,871  

Congruent Credit Opportunities Funds

   
 
 

Congruent Credit Opportunities Fund II, LP

  $ 8,488  

Congruent Credit Opportunities Fund III, LP

    17,980  

  $ 26,468  

Freeport Fund Investments

   
 
 

Freeport First Lien Loan Fund III LP

  $ 10,423  

Freeport Financial SBIC Fund LP

    1,375  

  $ 11,798  

I-45 SLF LLC

  $ 9,800  

Dos Rios Partners

   
 
 

Dos Rios Partners, LP

  $ 4,486  

Dos Rios Partners — A, LP

    1,424  

  $ 5,910  

EIG Traverse Co-Investment, L.P. 

 
$

5,245
 

EIG Fund Investments

 
$

4,283
 

Brightwood Capital Fund III, LP

 
$

3,750
 

LKCM Headwater Investments I, L.P. 

 
$

2,500
 

Total equity commitments

  $ 96,625  

Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded:

   
 
 

Volusion, LLC

 
$

7,000
 

Barfly Ventures, LLC

    4,594  

PT Network, LLC

    3,033  

Apex Linen Service, Inc. 

    2,997  

Buca C, LLC

    2,670  

Hojeij Branded Foods, LLC

    2,143  

Applied Products, Inc. 

    2,000  

Mid-Columbia Lumber Products, LLC

    2,000  

Minute Key, Inc. 

    2,000  

Glowpoint, Inc. 

    1,600  

Datacom, LLC

    1,800  

LaMi Products, LLC

    1,521  

Guerdon Modular Holdings, Inc. 

    1,600  

IDX Broker, LLC

    1,500  

Subsea Global Solutions, LLC

    1,078  

Messenger, LLC

    1,417  

Arcus Hunting LLC

    2,393  

Ceres Management, LLC (Lambs Tire & Automotive)

    1,000  

AccuMED, Corp. 

    875  

HW Temps LLC

    800  

Mystic Logistics, Inc. 

    800  

Jackmont Hospitality, Inc. 

    667  

Vision Interests, Inc. 

    524  

Insurance Technologies, LLC

    522  

Jensen Jewelers of Idaho, LLC

    500  

UniTek Global Services, Inc. 

    483  

Brainworks Software, LLC

    111  

Total loan commitments

  $ 47,628  

Total commitments

  $ 144,253  

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       Main Street may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to impose liability on Main Street in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, Main Street does not expect any current matters will materially affect its financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on Main Street's financial condition or results of operations in any future reporting period.

NOTE O — SELECTED QUARTERLY DATA (UNAUDITED)

 
  2015  
 
  (dollars in thousands,
except per share amounts)
 
 
  Qtr. 1   Qtr. 2   Qtr. 3   Qtr. 4  

Total investment income

  $ 37,179   $ 41,308   $ 42,608   $ 43,493  

Net investment income

  $ 23,491   $ 27,201   $ 27,861   $ 28,520  

Net increase in net assets resulting from operations

  $ 35,424   $ 40,802   $ 20,668   $ 7,543  

Net investment income per share-basic and diluted

  $ 0.51   $ 0.55   $ 0.56   $ 0.57  

Net increase in net assets resulting from operations per share-basic and diluted

  $ 0.77   $ 0.82   $ 0.41   $ 0.15  

 

 
  2014  
 
  (dollars in thousands,
except per share amounts)
 
 
  Qtr. 1   Qtr. 2   Qtr. 3   Qtr. 4  

Total investment income

  $ 30,776   $ 34,877   $ 36,351   $ 38,759  

Net investment income

  $ 20,739   $ 23,578   $ 24,887   $ 26,332  

Net increase in net assets resulting from operations

  $ 27,234   $ 29,950   $ 21,569   $ 21,995  

Net investment income per share-basic and diluted

  $ 0.52   $ 0.53   $ 0.55   $ 0.59  

Net increase in net assets resulting from operations per share-basic and diluted

  $ 0.68   $ 0.68   $ 0.48   $ 0.49  

 

 
  2013  
 
  (dollars in thousands,
except per share amounts)
 
 
  Qtr. 1   Qtr. 2   Qtr. 3   Qtr. 4  

Total investment income

  $ 25,644   $ 27,800   $ 29,659   $ 33,394  

Net investment income

  $ 17,283   $ 17,833   $ 17,477   $ 22,830  

Net increase in net assets resulting from operations

  $ 23,629   $ 24,004   $ 28,054   $ 21,168  

Net investment income per share-basic and diluted

  $ 0.50   $ 0.51   $ 0.47   $ 0.57  

Net increase in net assets resulting from operations share-basic and diluted

  $ 0.68   $ 0.69   $ 0.76   $ 0.53  

NOTE P — RELATED PARTY TRANSACTIONS

       As discussed further in Note D, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of Main Street's Investment Portfolio. At December 31, 2015, Main Street had a receivable of $2.0 million due from the External Investment Manager which included approximately $1.3 million related primarily to operating expenses incurred by MSCC or its subsidiaries as

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

required to support the External Investment Manager's business, along with dividends declared but not paid by the External Investment Manager of approximately $0.7 million.

       In June 2013, our board of directors approved and adopted the Deferred Compensation Plan for Non-Employee Directors (the "2013 Deferred Compensation Plan") for the non-employee members of our board of directors, which allowed the directors at their option to defer all or a portion of the fees paid for their services as directors and have such deferred fees paid in shares of our common stock within 90 days after the participant's end of service as a director. As of December 31, 2015, $1.1 million of directors' fees had been deferred under this plan. These deferred fees represented 34,645 shares of Main Street common shares. These shares will not be issued or included as outstanding on the consolidated statement of changes in net assets until each applicable participant's end of service as a director, but are included in operating expenses and weighted-average shares outstanding on Main Street's consolidated statement of operations as earned.

       In November 2015, our board of directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the "2015 Deferred Compensation Plan"). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the 2013 Deferred Compensation Plan. Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units.

NOTE Q — SUBSEQUENT EVENTS

       During January 2016, Main Street fully exited its debt and equity investments in Southern RV, LLC, a four-location dealer of new and used recreational vehicles ("RV") and its affiliated real estate entity (together, "Southern RV") through a sale of Southern RV's assets and business. Southern RV has facilities in Tyler, TX, Bossier City, LA, Lafayette, LA, and Biloxi, MS and also engages in financing, parts sales and RV services. Southern RV's predecessor was originally founded in 2000 and offers its customers a variety of Travel Trailers, Fifth Wheels, Toy Haulers, Class A Motorhomes, and Class C Motorhomes from top-selling manufacturers. Main Street made its initial investment in Southern RV in August 2013 and realized a gain of approximately $14.4 million on the exit of its equity investments in Southern RV. The Southern RV investments triggered the annual summarized balance sheet and income statement information requirement imposed by Rule 4-08(g) of Regulation S-X for the year ended December 31, 2015 (as discussed further above in Note C), but Main Street is not including such information in this Annual Report on Form 10-K as it would not be meaningful to the Company's investors due to the fact that the Company no longer holds any investments in Southern RV.

       During February 2016, Main Street led a new portfolio investment totaling $15.0 million of invested capital in UniRush, LLC ("UniRush") to fund UniRush's growth initiatives and refinance existing debt, with Main Street funding $12.0 million of the investment. The investment in UniRush consisted of first-lien, senior secured term debt. In addition, Main Street and its co-investor provided UniRush a $5.0 million delayed draw term loan facility to support its future growth opportunities. Headquartered in Cincinnati, Ohio and founded in 2003, UniRush is a leading provider of prepaid debit card solutions branded under the "RushCard" and "Rapid PayCard". RushCard was one of the first prepaid, reloadable Visa debit card programs, and provides financial services for the more than 65 million individuals in the United States who cannot or choose not to establish a traditional banking relationship. Rapid PayCard is a provider of prepaid, payroll debit cards for employers as an alternative to issuing paper checks to employees.

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       During February 2016, Main Street declared regular monthly dividends of $0.180 per share for each of April, May and June 2016. These regular monthly dividends equal a total of $0.540 per share for the second quarter of 2016. The second quarter 2016 regular monthly dividends represent a 2.9% increase from the dividends declared for the second quarter of 2015. Including the dividends declared for the second quarter of 2016, Main Street will have paid $16.960 per share in cumulative dividends since its October 2007 initial public offering.

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Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders'
Main Street Capital Corporation

       We have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) the consolidated financial statements of Main Street Capital Corporation (a Maryland corporation) and subsidiaries (the "Company") referred to in our report dated February 26, 2016, which is included in the annual report on Form 10-K. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(2), which is the responsibility of the Company's management. In our opinion, this financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ GRANT THORNTON LLP

Dallas, Texas
February 26, 2016

F-99


Table of Contents


Schedule 12-14

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments in and Advances to Affiliates
December 31, 2015
(dollars in thousands)

Company
 
Investments(1)
  Amount of
Interest or
Dividends
Credited to
Income(2)
  December 31,
2014 Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2015
Fair Value
 

Control Investments

                                   

                                   

Majority-owned investments

                                   

                                   

Café Brazil, LLC

  Member Units   $ 1,070   $ 6,980   $ 350   $   $ 7,330  

GRT Rubber Technologies LLC

  LIBOR Plus 9.00% (Floor 1.00%)     1,783     16,585     32     629     15,988  

  Member Units     82     13,065     2,515         15,580  

Hydratec, Inc.

  Common Stock     2,207     13,720     1,230         14,950  

  9% Secured Debt     4         500     500      

IDX Broker, LLC

  LIBOR Plus 6.50% (Floor 1.50%)     11     125         125      

  12.5% Secured Debt     1,455     10,571     798     19     11,350  

  Member Units         5,450     990         6,440  

Jensen Jewelers of Idaho, LLC

  Prime Plus 6.75% (Floor 2.00%)     458     3,655     1,010     610     4,055  

  Member Units     1,036     3,580     1,170         4,750  

Lamb's Venture, LLC

  11% Secured Debt     641     3,916     4,424     378     7,962  

  Class B Member Units     376     4,048     704     4,424     328  

  Member Units         2,510     2,180         4,690  

  9.5% Secured Debt     72     968         49     919  

  Member Units     91     1,240             1,240  

Lighting Unlimited, LLC

  8% Secured Debt     123     1,550         36     1,514  

  Preferred Equity         439         9     430  

  Warrants         40             40  

  Member Units     120     360         10     350  

Mid-Columbia Lumber

  10% Secured Debt     177     1,750             1,750  

Products, LLC

  12% Secured Debt     474     3,900             3,900  

  Member Units     (56 )   10,180         7,600     2,580  

  9.5% Secured Debt     87     927         46     881  

  Member Units     22     550             550  

MSC Adviser I, LLC

  Member Units     2,197     15,580     11,692         27,272  

Mystic Logistics Holdings, LLC

  12% Secured Debt     1,240     9,790     210     552     9,448  

  Common Stock     112     2,720     3,250         5,970  

NRP Jones, LLC

  12% Secured Debt     1,839     11,590     1,534     176     12,948  

  Warrants         970         520     450  

  Member Units         3,190         1,710     1,480  

PPL RVs, Inc.

  11.1% Secured Debt     1,141     7,860     2,112     262     9,710  

  Common Stock         8,160     1,610         9,770  

Principle Environmental, LLC

  12% Secured Debt     721     4,060     227     227     4,060  

  12% Current / 2% PIK Secured Debt     476     3,244     82     16     3,310  

  Preferred Member Units     262     11,830         5,770     6,060  

  Warrants         720         410     310  

Quality Lease Service, LLC

  8% PIK Secured Debt     288         6,538         6,538  

  Member Units             2,638         2,638  

Southern RV, LLC

  13% Secured Debt     1,533     11,400     30     30     11,400  

  Member Units     982     4,920     10,180         15,100  

  13% Secured Debt     437     3,250     9     9     3,250  

  Member Units         470     730         1,200  

The MPI Group, LLC

  9% Secured Debt     379     2,724     197         2,921  

  Series A Preferred Units         980         290     690  

  Warrants                      

  Member Units         2,300         70     2,230  

F-100


Table of Contents

Company
 
Investments(1)
  Amount of
Interest or
Dividends
Credited to
Income(2)
  December 31,
2014 Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2015
Fair Value
 

Travis Acquisition LLC

  12% Secured Debt     635     4,693     33     1,213     3,513  

  Member Units         13,650     830         14,480  

Uvalco Supply, LLC

  9% Secured Debt     137     1,802         488     1,314  

  Member Units     179     3,500     2,730     770     5,460  

Vision Interests, Inc.

  13% Secured Debt     433     3,154     31     133     3,052  

  Series A Preferred Stock         3,250     300         3,550  

  Common Stock         100     110         210  

Ziegler's NYPD, LLC

  6.5% Secured Debt     92     1,491     1     500     992  

  12% Secured Debt     56         500         500  

  14% Secured Debt     394     4,880     629     2,759     2,750  

  Warrants             50         50  

  Member units             3,400         3,400  

Other controlled investments

                                   

                                   

Access Media Holdings, LLC

  5.00% Current / 5.00% PIK Secured Debt     553         21,554     1,174     20,380  

  Preferred Member Units             4,394     2,394     2,000  

  Member Units             1     1      

AmeriTech College, LLC

  10% Secured Debt     2         514         514  

  10% Secured Debt     67     979         490     489  

  10% Secured Debt     409     6,050         3,025     3,025  

  Preferred Member Units     5         2,291         2,291  

ASC Interests, LLC

  11% Secured Debt     327     3,000     16     516     2,500  

  Member Units     89     1,970     260         2,230  

Bond-Coat, Inc.

  12% Secured Debt     1,480     13,570     49     2,023     11,596  

  Common Stock         11,210         2,070     9,140  

California Healthcare Medical

  9% Secured Debt     361     8,703     135     8,838      

Billing, Inc.

  Warrants         3,480         3,480      

  Common Stock         1,460         1,460      

CBT Nuggets, LLC

  Member Units     4,765     27,200     14,920         42,120  

CMS Minerals LLC

  Preferred Member Units     1,923         7,672     758     6,914  

Datacom, LLC

  10.5% Secured Debt     1,271     11,103     19     152     10,970  

  8% Secured Debt     21         900     900      

  Preferred Member Units     54     6,030     1,181     951     6,260  

Garreco, LLC

  14% Secured Debt     832     5,320     419         5,739  

  Member Units     (45 )   1,360         90     1,270  

Gulf Manufacturing, LLC

  9% PIK Secured Debt     69     744     33         777  

  Member Units     543     16,540         2,770     13,770  

Harrison Hydra-Gen, Ltd.

  9% Secured Debt     661     5,487     78     555     5,010  

  Preferred Stock     101     1,260     101         1,361  

  Common Stock         1,830     770         2,600  

Hawthorne Customs and Dispatch

  Member Units     47     370     90         460  

Services, LLC

  Member Units     291     2,220             2,220  

HW Temps LLC

  LIBOR Plus 9.50% (Floor 1.00%)     642         9,884         9,884  

  Preferred Member Units     299         3,942         3,942  

Impact Telecom, Inc.

  LIBOR Plus 6.50% (Floor 2.00%)     153     1,569     1     1,570      

  13% Secured Debt     3,321     15,515     378     15,893      

  Warrants         4,160     3,440     7,600      

Indianapolis Aviation Partners, LLC

  15% Secured Debt     566     3,100             3,100  

  Warrants         2,540             2,540  

Marine Shelters Holdings, LLC

  12% PIK Secured Debt     1,209     10,112     458     1,700     8,870  

(LoneStar Marine Shelters)

  Preferred Member Units         3,750     1,602     471     4,881  

MH Corbin Holding LLC

  10% Secured Debt     487         13,869         13,869  

  Preferred Member Units     47         6,000         6,000  

NAPCO Precast, LLC

  Prime Plus 2.00% (Floor 7.00%)     67     625     10     10     625  

  Prime Plus 2.00% (Floor 7.00%)     281     2,923     464     7     3,380  

  18% Secured Debt     856     4,468     482     26     4,924  

  Member Units     1,016     7,560     1,030         8,590  

F-101


Table of Contents

Company
 
Investments(1)
  Amount of
Interest or
Dividends
Credited to
Income(2)
  December 31,
2014 Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2015
Fair Value
 

NRI Clinical Research, LLC

  14% Secured Debt     769     4,779     31     271     4,539  

  Warrants         160     180         340  

  Member Units         722     620         1,342  

OMi Holdings, Inc.

  Common Stock         13,420     220         13,640  

Pegasus Research Group, LLC (Televerde)

  Member Units     444     5,860     980         6,840  

River Aggregates, LLC

  Zero Coupon Secured Debt     89     468     88         556  

  12% Secure Debt     16     500         500      

  Member Units     268     2,570     1,260         3,830  

  Member Units         369     1,991         2,360  

SoftTouch Medical Holdings LLC

  LIBOR Plus 9.00% (Floor 1.00%)     963     8,417     18     425     8,010  

  Member Units     796     5,015     780     85     5,710  

Other

                                   

Amounts related to investments transferred to or from other 1940 Act classification during the period

        (49 )   (7,029 )            

      $ 49,832   $ 469,846   $ 168,681   $ 90,545   $ 555,011  

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Table of Contents

Company
 
Investments(1)
  Amount of
Interest or
Dividends
Credited to
Income(2)
  December 31,
2014 Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2015
Fair Value
 

Affiliate Investments

                                   

                                   

AFG Capital Group, LLC

  11% Secured Debt   $ 1,458   $ 6,465   $ 6,325   $   $ 12,790  

  Warrants         259     231         490  

  Member Units         1,200     820         2,020  

Boss Industries, LLC

  Preferred Member Units     287     2,000     586         2,586  

Bridge Capital Solutions

  13% Secured Debt     957     5,837     1,053         6,890  

Corporation

  Warrants         710     590         1,300  

Buca C, LLC

  LIBOR Plus 7.25% (Floor 1.00%)     1,367         25,299         25,299  

  Preferred Member Units     111         3,711         3,711  

CAI Software LLC

  12% Secured Debt     644     5,348     52     739     4,661  

  Member Units         654     346         1,000  

Condit Exhibits, LLC

  Member Units     23     610     400         1,010  

Congruent Credit Opportunities

  LP Interests (Fund II, LP)     1,331     18,378         15,544     2,834  

Funds

  LP Interests (Fund III, LP)     374     7,734     4,369     79     12,024  

Daseke, Inc.

  12% Current / 2.5% PIK Secured Debt     3,165     20,723     600     70     21,253  

  Common Stock         13,780     8,880         22,660  

Dos Rios Partners

  LP Interests (Fund)         2,325     779     1,073     2,031  

  LP Interests (Fund A)         738     248     338     648  

East Teak Fine Hardwoods, Inc.

  Common Stock     66     860             860  

East West Copolymer &

  12% Secured Debt     1,242     9,436     27         9,463  

Rubber, LLC

  Warrants         50             50  

EIG Traverse Co-Investment, L.P.(12)

  LP Interests     50         4,755         4,755  

Freeport Financial SBIC Fund LP

  LP Interests             2,077         2,077  

  LP Interests     592     4,677     1,368         6,045  

Gault Financial, LLC (RMB

  10% Secured Debt     1,525     10,782     148         10,930  

Capital, LLC)

  Warrants                      

Glowpoint, Inc.

  8% Secured Debt     19     396     614     613     397  

  12% Secured Debt     1,120     8,909     20         8,929  

  Common Stock         8,480     158     4,798     3,840  

Guerdon Modular Holdings, Inc.

  13% Secured Debt     1,397     11,044     36     800     10,280  

  Common Stock         2,400     583     993     1,990  

Houston Plating and Coatings, LLC

  Member Units     230     11,470         3,030     8,440  

I-45 SLF LLC(12)

  Member Units             7,200         7,200  

Indianhead Pipeline Services, LLC

  12% Secured Debt     908     6,625     128     900     5,853  

  Preferred Member Units     52     1,960     342         2,302  

  Warrants                      

  Member Units                      

KBK Industries, LLC

  12.5% Secured Debt     920     8,250     27     2,377     5,900  

  Member Units     159     6,120         2,440     3,680  

L.F. Manufacturing Holdings, LLC

  Member Units     140     2,374         889     1,485  

MPS Denver, LLC

  Member Units         1,130             1,130  

OnAsset Intelligence, Inc.

  12% PIK Secured Debt     454     3,553     453         4,006  

  Preferred Stock     34     2,700     34     1,354     1,380  

  Warrants                      

OPI International Ltd.

  10% Unsecured Debt     22         473         473  

  Common Stock         4,971         1,771     3,200  

PCI Holding Company, Inc.

  Preferred Stock     503     4,430     503     46     4,887  

Radial Drilling Services Inc.

  12% Secured Debt     531     3,792     149     2,441     1,500  

  Warrants                      

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Table of Contents

Company
 
Investments(1)
  Amount of
Interest or
Dividends
Credited to
Income(2)
  December 31,
2014 Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2015
Fair Value
 

Rocaceia, LLC (Quality Lease and

  12% Secured Debt         11,500     300     11,550     250  

Rental Holdings, LLC)

  8% Secured Debt         157         157      

  Preferred Member Units                      

Samba Holdings, Inc.

  12.5% Secured Debt     3,418     26,418     121     1,877     24,662  

  Common Stock         6,030     24,190         30,220  

SYNEO, LLC

  12% Secured Debt     182     2,674     26     2,700      

  Member Units     (27 )   801         801      

Tin Roof Acquisition Company

  12% Secured Debt     1,864     13,861     52     106     13,807  

  Class C Preferred Stock     236     2,241     236         2,477  

UniTek Global Services, Inc.

  LIBOR Plus 7.50% (Floor 1.00%)     100         2,826     14     2,812  

  LIBOR Plus 8.50% (Floor 1.00%)1.00% PIK     24         1,524     269     1,255  

  15% PIK Unsecured Debt             641     3     638  

  Warrants             449     449      

  Common Stock                      

  Preferred Stock             5,540         5,540  

Universal Wellhead Services Holdings, LLC

  Class A Units     194         4,000     1,000     3,000  

Volusion, LLC

  10.5% Secured Debt     1,579         16,199         16,199  

  Warrants             1,400         1,400  

  Preferred Member Units             14,000         14,000  

Other

                                   

Amounts related to investments transferred to or from other 1940 Act classification during the period

        (51 )   13,823              

      $ 27,200   $ 278,675   $ 144,888   $ 59,221   $ 350,519  

(1)
The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.

(2)
Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control, Non-Control, Non-Affiliate and Affiliate categories during the period, any income or investments balances related to the time period it was in the category other than the one shown at period-end is included in "Amounts to or from investments transferred from other 1940 Act classifications during the period".

(3)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.

(4)
Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

F-104


Table of Contents

 

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Common Stock
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Warrants
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Units



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Table of Contents


PART C
Other Information

Item 25.    Financial Statements And Exhibits

(1)
Financial Statements

        The following financial statements of Main Street Capital Corporation (the "Registrant" or the "Company") are included in Part A of this Registration Statement:

Report of Independent Registered Public Accounting Firm

    F-2  

Consolidated Balance Sheets as of December 31, 2015 and 2014

    F-3  

Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014, and 2013

    F-4  

Consolidated Statements of Changes in Net Assets for the Years Ended December 31, 2015, 2014, and 2013

    F-5  

Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014, and 2013

    F-6  

Consolidated Schedules of Investments as of December 31, 2015 and 2014

    F-7  

Notes to Consolidated Financial Statements

    F-56  
(2)
Exhibits

  (a)   Articles of Amendment and Restatement of Main Street Capital Corporation (previously filed as Exhibit (a) to Main Street Capital Corporation's Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on August 15, 2007 (Reg. No. 333-142879))

 

(b)

 

Amended and Restated Bylaws of Main Street Capital Corporation (previously filed as Exhibit 3.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on March 6, 2013 (File No. 1-33723))

 

(c)

 

Not Applicable

 

(d)(1)

 

Form of Common Stock Certificate (previously filed as Exhibit (d) to Main Street Capital Corporation's Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on August 15, 2007 (Reg. No. 333-142879))

 

(d)(2)

 

Form of Subscription Certificate*

 

(d)(3)

 

Form of Subscription Agent Agreement*

 

(d)(4)

 

Form of Warrant Agreement*

 

(d)(5)

 

Form of Preferred Stock Certificate*

 

(d)(6)

 

Form of Indenture between Main Street Capital Corporation and The Bank of New York Mellon Trust Company, N.A. (previously filed as Exhibit (d)(6) to Main Street Capital Corporation's Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on March 28, 2013 (Reg. No. 333-183555))

 

(d)(7)

 

Statement of Eligibility of Trustee on Form T-1 of The Bank of New York Mellon Trust Company, N.A., as trustee with respect to the Indenture under Exhibit (d)(6) dated as of April 2, 2013***

C-1


Table of Contents

  (d)(8)   Form of First Supplemental Indenture relating to the 6.125% Notes due 2023, between Main Street Capital Corporation and The Bank of New York Mellon Trust Company, N.A. (previously filed as Exhibit (d)(8) to Main Street Capital Corporation's Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on March 28, 2013 (Reg. No. 333-183555))

 

(d)(9)

 

Form of 6.125% Notes due 2023 (incorporated by reference to Exhibit (d)(8))

 

(d)(10)

 

Form of Second Supplemental Indenture relating to the 4.50% Notes due 2019, between Main Street Capital Corporation and The Bank of New York Mellon Trust Company, N.A. (previously filed as Exhibit (d)(10) to Main Street Capital Corporation's Post-Effective Amendment No. 9 to the Registration Statement on Form N-2 filed on November 4, 2014 (Reg. No. 333-183555))

 

(d)(11)

 

Form of 4.50% Notes due 2019 (incorporated by reference to Exhibit (d)(10))

 

(e)

 

Dividend Reinvestment Plan (previously filed as Exhibit (e) to Main Street Capital Corporation's Post-Effective Amendment No. 8 to the Registration Statement on Form N-2 filed on May 7, 2014 (Reg. No. 333-183555))

 

(f)(1)

 

Main Street Mezzanine Fund, LP SBIC debentures guaranteed by the SBA (previously filed as Exhibit (f)(1) to Main Street Capital Corporation's Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 filed on June 22, 2007 (Reg. No. 333-142879))

 

(f)(2)

 

Main Street Capital II, LP SBIC debentures guaranteed by the SBA (see Exhibit (f)(1) to Pre-Effective Amendment No. 1 to Form N-2 of Main Street Capital Corporation filed with the SEC on June 22, 2007 for a substantially identical copy of the form of debentures)

 

(g)(1)

 

Investment Sub-Advisory Agreement dated May 31, 2012 by and among HMS Adviser, LP, Main Street Capital Partners, LLC, Main Street Capital Corporation and HMS Income Fund, Inc. (previously filed as Exhibit (g)(2) to HMS Income Fund, Inc.'s Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on May 31, 2012 (Reg. No. 333-178548))

 

(g)(2)

 

Assignment and Assumption of Investment Sub-Advisory Agreement dated December 31, 2013 by and among MSC Adviser I, LLC, HMS Adviser, LP, Main Street Capital Partners, LLC, Main Street Capital Corporation and HMS Income Fund, Inc. (previously filed as Exhibit 10.14 to Main Street Capital Corporation's Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 28, 2014 (File. No. 1-33723))

 

(h)(1)

 

Form of Underwriting Agreement for equity securities*

 

(h)(2)

 

Form of Underwriting Agreement for debt securities*

 

(i)(1)

 

Main Street Capital Corporation 2015 Equity and Incentive Plan (previously filed as Exhibit 4.4 to Main Street Capital Corporation's Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))

 

(i)(2)

 

Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan (previously filed as Exhibit 4.5 to Main Street Capital Corporation's Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))

 

(i)(3)

 

Main Street Capital Corporation Deferred Compensation Plan Adoption Agreement and Plan Document (previously filed as Exhibit 4.1 to Main Street Capital Corporation's Registration Statement on Form S-8 filed on December 18, 2015 (File No. 333-208643))

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  (j)   Custodian Agreement (previously filed as Exhibit (j) to Main Street Capital Corporation's Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No. 333-142879))

 

(k)(1)

 

Form of Confidentiality and Non-Compete Agreement by and between Main Street Capital Corporation and Vincent D. Foster (previously filed as Exhibit (k)(12) to Main Street Capital Corporation's Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No. 333-142879))

 

(k)(2)

 

Form of Indemnification Agreement by and between Main Street Capital Corporation and each executive officer and director (previously filed as Exhibit (k)(13) to Main Street Capital Corporation's Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No. 333-142879))

 

(k)(3)

 

Second Amended and Restated Credit Agreement dated September 27, 2013 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on October 1, 2013 (File No. 1-33723))

 

(k)(4)

 

Second Amended and Restated General Security Agreement dated September 27, 2013 (previously filed as Exhibit 10.2 to Main Street Capital Corporation's Current Report on Form 8-K filed on October 1, 2013 (File No. 1-33723))

 

(k)(5)

 

Second Amended and Restated Equity Pledge Agreement dated September 27, 2013 (previously filed as Exhibit 10.3 to Main Street Capital Corporation's Current Report on Form 8-K filed on October 1, 2013 (File No. 1-33723))

 

(k)(6)

 

Amended and Restated Custodial Agreement dated September 20, 2010 (previously filed as Exhibit 10.3 to Main Street Capital Corporation's Current Report on Form 8-K filed September 21, 2010 (File No. 1-33723))

 

(k)(7)

 

Third Amendment to Amended and Restated Credit Agreement and First Amendment to Amended and Restated Custodial Agreement dated November 21, 2011 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed November 22, 2011 (File No. 1-33723))

 

(k)(8)

 

First Amendment to Second Amended and Restated Credit Agreement dated June 27, 2014 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on July 1, 2014 (File No. 1-33723))

 

(k)(9)

 

Second Amendment to Second Amended and Restated Credit Agreement dated September 25, 2014 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on September 30, 2014 (File No. 1-33723))

 

(k)(10)

 

Third Amendment to Second Amended and Restated Credit Agreement dated October 22, 2014 (previously filed as Exhibit (k)(6) to Main Street Capital Corporation's Post-Effective Amendment No. 9 to the Registration Statement on Form N-2 filed on November 4, 2014 (Reg. No. 333-183555))

 

(k)(11)

 

Supplement and Joinder Agreement dated December 11, 2014 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on December 12, 2014 (File No. 1-33723))

 

(k)(12)

 

Fourth Amendment to Second Amended and Restated Credit Agreement dated April 29, 2015 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on April 30, 2015 (File No. 1-33723))

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  (k)(13)   Fifth Amendment to Second Amended and Restated Credit Agreement and First Amendment to Security Agreement dated November 20, 2015 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on November 24, 2015 (File No. 1-33723))

 

(l)(1)

 

Opinion and Consent of Counsel***

 

(m)

 

Not Applicable

 

(n)(1)

 

Consent of Grant Thornton LLP regarding Main Street Capital Corporation**

 

(n)(2)

 

Report of Grant Thornton LLP regarding the senior security table contained herein**

 

(r)

 

Code of Ethics (previously filed as Exhibit (r) to Main Street Capital Corporation's Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on August 15, 2007 (Reg. No. 333-142879))

 

(s)

 

Power of Attorney (see signature page to this registration statement)

 

99.1

 

Statement of Computation of Ratios of Earnings to Fixed Charges (previously filed as Exhibit 12.1 to Main Street Capital Corporation's Annual Report on Form 10-K for the year ended December 31, 2015 filed on February 26, 2016 (File No. 1-33723))

 

99.2

 

Code of Business Conduct and Ethics (previously filed as Exhibit 14.1 to Main Street Capital Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 filed on August 3, 2012 (File No. 1-33723))

 

99.3

 

Form of Preliminary Prospectus Supplement for Common Stock Offerings (previously filed as Exhibit 99.3 to Main Street Capital Corporation's Registration Statement on Form N-2 filed on August 24, 2012 (Reg. No. 333-183555))

 

99.4

 

Form of Preliminary Prospectus Supplement for Preferred Stock Offerings (previously filed as Exhibit 99.4 to Main Street Capital Corporation's Registration Statement on Form N-2 filed on August 24, 2012 (Reg. No. 333-183555))

 

99.5

 

Form of Preliminary Prospectus Supplement for Warrant Offerings (previously filed as Exhibit 99.5 to Main Street Capital Corporation's Registration Statement on Form N-2 filed on August 24, 2012 (Reg. No. 333-183555))

 

99.6

 

Form of Preliminary Prospectus Supplement for Rights Offerings (previously filed as Exhibit 99.6 to Main Street Capital Corporation's Registration Statement on Form N-2 filed on August 24, 2012 (Reg. No. 333-183555))

 

99.7

 

Form of Preliminary Prospectus Supplement for Debt Securities Offerings (previously filed as Exhibit 99.7 to Main Street Capital Corporation's Registration Statement on Form N-2 filed on August 24, 2012 (Reg. No. 333-183555))

 

99.8

 

Form of Preliminary Prospectus Supplement for Unit Offerings (previously filed as Exhibit 99.8 to Main Street Capital Corporation's Registration Statement on Form N-2 filed on August 24, 2012 (Reg. No. 333-183555))

*
To be filed by post-effective amendment, if applicable.

**
Filed herewith.

***
Previously filed as an exhibit to this registration statement.

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Item 26.    Marketing Arrangements

        The information contained under the heading "Plan of Distribution" on this Registration Statement is incorporated herein by reference and any information concerning any underwriters will be contained in the accompanying prospectus supplement, if any.

Item 27.    Other Expenses Of Issuance And Distribution

SEC registration fee

  $ 174,300  

New York Stock Exchange additional listing fee

    150,000 *

FINRA filing fee

    225,500  

Accounting fees and expenses

    225,000 *

Legal fees and expenses

    300,000 *

Printing and engraving

    150,000 *

Miscellaneous fees and expenses

    50,000 *

Total

  $ 1,274,800  

*
Estimated for filing purposes.

        All of the expenses set forth above shall be borne by the Registrant.

Item 28.    Persons Controlled By Or Under Common Control

        Main Street Capital Corporation, directly or indirectly, owns 100% of each the following consolidated subsidiaries:

        In addition, Main Street Capital Corporation may be deemed to control certain portfolio companies that are not consolidated by Main Street Capital Corporation. For a more detailed discussion of these entities, see "Portfolio Companies" in the prospectus.

Item 29.    Number Of Holders Of Securities

        The following table sets forth the number of record holders of the Registrant's capital stock at March 23, 2016.

Title of Class
  Number of
Record Holders
 

Common Stock, $0.01 par value

    236  

Item 30.    Indemnification

        Maryland law permits a Maryland corporation to include in its articles of incorporation a provision limiting the liability of its directors and officers to the corporation and its stockholders for money

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damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our articles of incorporation contain such a provision that eliminates directors' and officers' liability to the maximum extent permitted by Maryland law, subject to the requirements of the Investment Company Act of 1940, as amended (the "1940 Act").

        Our articles of incorporation require us, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while a director or officer and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee, from and against any claim or liability to which such person may become subject or which such person may incur by reason of his or her service in any such capacity, except with respect to any matter as to which such person shall have been finally adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his or her action was in our best interest or to be liable to us or our stockholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office.

        Our bylaws obligate us, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while a director or officer and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee and who is made, or threatened to be made, a party to a proceeding by reason of his or her service in any such capacity from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in any such capacity, except with respect to any matter as to which such person shall have been finally adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his or her action was in our best interest or to be liable to us or our stockholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office. Our bylaws also require that, to the maximum extent permitted by Maryland law, we may pay certain expenses incurred by any such indemnified person in advance of the final disposition of a proceeding upon receipt of an undertaking by or on behalf of such indemnified person to repay amounts we have so paid if it is ultimately determined that indemnification of such expenses is not authorized under our bylaws.

        Maryland law requires a corporation (unless its articles of incorporation provide otherwise, which our articles of incorporation do not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or threatened to be made, a party by reason of his or her service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received, unless in either case a court orders indemnification, and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation's receipt of (a) a written affirmation by the director or officer of his or her good faith

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belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

        In addition, we have entered into Indemnity Agreements with our directors and executive officers. The form of Indemnity Agreement entered into with each director and officer was previously filed with the Commission as Exhibit (k)(13) to our Registration Statement on Form N-2 (Reg. No. 333-142879). The Indemnity Agreements generally provide that we will, to the extent specified in the agreements and to the fullest extent permitted by the 1940 Act and Maryland law as in effect on the day the agreement is executed, indemnify and advance expenses to each indemnitee that is, or is threatened to be made, a party to or a witness in any civil, criminal or administrative proceeding. We will indemnify the indemnitee against all expenses, judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred in connection with any such proceeding unless it is established that (i) the act or omission of the indemnitee was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) the indemnitee actually received an improper personal benefit, or (iii) in the case of a criminal proceeding, the indemnitee had reasonable cause to believe his conduct was unlawful. Additionally, for so long as the we are subject to the 1940 Act, no advancement of expenses will be made until (i) the indemnitee provides a security for his undertaking, (ii) we are insured against losses arising by reason of any lawful advances, or (iii) the majority of a quorum of our disinterested directors, or independent counsel in a written opinion, determine based on a review of readily available facts that there is reason to believe that the indemnitee ultimately will be found entitled to indemnification. The Indemnity Agreements also provide that if the indemnification rights provided for therein are unavailable for any reason, we will pay, in the first instance, the entire amount incurred by the indemnitee in connection with any covered proceeding and waive and relinquish any right of contribution we may have against the indemnitee. The rights provided by the Indemnity Agreements are in addition to any other rights to indemnification or advancement of expenses to which the indemnitee may be entitled under applicable law, our articles of incorporation, our bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment or repeal of the Indemnity Agreements will limit or restrict any right of the indemnitee in respect of any action taken or omitted by the indemnitee prior to such amendment or repeal. The Indemnity Agreements will terminate upon the later of (i) ten years after the date the indemnitee has ceased to serve as our director or officer, or (ii) one year after the final termination of any proceeding for which the indemnitee is granted rights of indemnification or advancement of expenses or which is brought by the indemnitee. The above description of the Indemnity Agreements is subject to, and is qualified in its entirety by reference to, all the provisions of the form of Indemnity Agreement, previously filed with the Commission as Exhibit (k)(13) to our Registration Statement on Form N-2 (Reg. No. 333-142879).

        We have obtained primary and excess insurance policies insuring our directors and officers against certain liabilities they may incur in their capacity as directors and officers. Under such policies, the insurer, on our behalf, may also pay amounts for which we have granted indemnification to the directors or officers.

Item 31.    Business And Other Connections Of Investment Adviser

Item 32.    Location Of Accounts And Records

        All accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940, and the rules thereunder are maintained at the Registrant's offices at 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056. In addition, our securities are held under custody agreements by Amegy Bank National Association, whose address is 1221 McKinney

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Street Level P-1 Houston, Texas 77010, and Branch Banking and Trust Company, whose address is 5130 Parkway Plaza Boulevard, Charlotte, North Carolina 28217.

Item 33.    Management Services

Item 34.    Undertakings

        1.     We hereby undertake to suspend any offering of shares until the prospectus is amended if (1) subsequent to the effective date of this registration statement, our net asset value declines more than ten percent from our net asset value as of the effective date of this registration statement or (2) our net asset value increases to an amount greater than our net proceeds (if applicable) as stated in the prospectus.

        2.     We hereby undertake:

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Post-Effective Amendment No. 3 to the Registration Statement on Form N-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on March 24, 2016.

    MAIN STREET CAPITAL CORPORATION

 

 

By:

 

/s/ VINCENT D. FOSTER

Vincent D. Foster
Chairman and Chief Executive Officer

        Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 3 to the Registration Statement on Form N-2 has been signed below by the following persons in the capacities and on the dates indicated:

Signature
 
Title
 
Date

 

 

 

 

 

 

 
/s/ VINCENT D. FOSTER

Vincent D. Foster
  Chairman and Chief Executive Officer (principal executive officer)   March 24, 2016

/s/ BRENT D. SMITH

Brent D. Smith

 

Chief Financial Officer and Treasurer (principal financial officer)

 

March 24, 2016

/s/ SHANNON D. MARTIN

Shannon D. Martin

 

Vice President and Chief Accounting Officer (principal accounting officer)

 

March 24, 2016

*

Michael Appling Jr.

 

Director

 

March 24, 2016

*

Joseph E. Canon

 

Director

 

March 24, 2016

*

Arthur L. French

 

Director

 

March 24, 2016

*

J. Kevin Griffin

 

Director

 

March 24, 2016

*

John E. Jackson

 

Director

 

March 24, 2016

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Signature
 
Title
 
Date

 

 

 

 

 

 

 
*

Brian E. Lane
  Director   March 24, 2016

*

Stephen B. Solcher

 

Director

 

March 24, 2016

*By:

 

/s/ VINCENT D. FOSTER

Vincent D. Foster
Attorney-in-fact

 

 

 

 

*
Signed by Vincent D. Foster pursuant to a power of attorney signed by each individual and filed with this Registration Statement on March 31, 2015 and with Post-Effective Amendment No. 1 to this Registration Statement on November 24, 2015.

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EXHIBIT INDEX

Exhibit
Number
  Description
  (n)(1)   Consent of Grant Thornton LLP regarding Main Street Capital Corporation

 

(n)(2)

 

Report of Grant Thornton LLP regarding the senior security table contained herein