BlackRock TCP Capital (TCPC) 10-K 2016 FY Annual report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

☒ Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Year Ended December 31, 2016

o Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Commission File Number: 814-00899

TCP CAPITAL CORP.
(Exact Name of Registrant as Specified in Charter)

Delaware (State or Other Jurisdiction of Incorporation)	56-2594706 (IRS Employer Identification No.)
2951 28th Street, Suite 1000 Santa Monica, California (Address of Principal Executive Offices)	90405 (Zip Code)

Registrant’s telephone number, including area code (310) 566-1000

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

Common Stock, par value $0.001 per share
(Title of each class) NASDAQ Global Select Market
(Name of each exchange where registered)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Noo

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

Large accelerated filer ☒
Non-accelerated filer o Accelerated filero
Smaller Reporting company o

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

The aggregate market value of the Registrant’s common stock held by non-affiliates of the Registrant at June 30, 2016 (the last business day of the Registrant’s most recently completed second quarter) was $747.2 million based upon the last sales price reported for such date on The NASDAQ Global Select Market. For purposes of this disclosure, shares of common stock beneficially owned by executive officers and directors of the Registrant and members of their families have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily conclusive for other purposes. The Registrant has no non-voting common stock.

The number of shares of the Registrant’s common stock, $0.001 par value, outstanding as of February 27, 2017 was 53,041,900.

Documents Incorporated by Reference: Portions of the Registrant’s Proxy Statement relating to the Registrant’s 2017 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K are incorporated by reference into Part III of this Report.

TCP CAPITAL CORP.
   
FORM 10-K
   
FOR THE YEAR ENDED December 31, 2016

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business		1
Item 1A.	Risk Factors		20
Item 1B.	Unresolved Staff Comments		47
Item 2.	Properties		47
Item 3.	Legal Proceedings		47
Item 4.	Mine Safety Disclosures		47
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		48
Item 6.	Selected Financial Data		51
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		52
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		67
Item 8.	Financial Statements and Supplementary Data		68
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		129
Item 9A.	Controls and Procedures		129
Item 9B.	Other Information		129
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance		130
Item 11.	Executive Compensation		130
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		130
Item 13.	Certain Relationships and Related Transactions, and Director Independence		130
Item 14.	Principal Accountant Fees and Services		130
	PART IV
Item 15.	Exhibits and Financial Statement Schedules		130
	Signatures		133

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Part I

In this annual report in Form 10-K, except as otherwise indicated, the terms:

“Holding Company” refers to Special Value Continuation Fund, LLC, a Delaware limited liability company, for the periods prior to the consummation of the Conversion described elsewhere in this report and to TCP Capital Corp. for the periods after the consummation of the Conversion;

“Operating Company” refers to Special Value Continuation Partners, LP, a Delaware limited partnership;

“TCPC Funding” refers to TCPC Funding I LLC, a Delaware limited liability company;

“SBIC” refers to TCPC SBIC, LP, a Delaware limited partnership;

The “Advisor” refers to Tennenbaum Capital Partners, LLC, a Delaware limited liability company and the investment manager; and

“General Partner” and “Administrator” refer to Series H of SVOF/MM, LLC, a series of a Delaware limited liability company, the general partner of the Operating Company and an affiliate of the Advisor and administrator of the Holding Company and the Operating Company.

For simplicity, this report uses the terms “Company,” “we,” “us” and “our” to include the Holding Company and, where appropriate in the context, the Operating Company, on a consolidated basis.

Item 1. Business

The Holding Company is a Delaware corporation formed on April 2, 2012 and is an externally managed, closed-end, non-diversified management investment company. We have elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. We seek to achieve our investment objective primarily through investments in debt securities of middle-market companies, which we typically define as those with enterprise values between $100 million and $1.5 billion. While we intend to primarily focus on privately negotiated investments in debt of middle-market companies, we may make investments of all kinds and at all levels of the capital structure, including in equity interests such as preferred or common stock and warrants or options received in connection with our debt investments. Our investment activities will benefit from what we believe are the competitive advantages of our Advisor, including its diverse in-house skills, proprietary deal flow, and consistent and rigorous investment process focused on established, middle-market companies. We expect to generate returns through a combination of the receipt of contractual interest payments on debt investments and origination and similar fees, and, to a lesser extent, equity appreciation through options, warrants, conversion rights or direct equity investments.

Investment operations are conducted in the Operating Company, either directly or in one of the Operating Company’s wholly owned subsidiaries, TCPC Funding I, LLC (“TCPC Funding”) and TCPC SBIC, LP (the “SBIC”). The Holding Company owns 100% of the common limited partner interests of the Operating Company. The Operating Company has also elected to be treated as a BDC under the 1940 Act. The General Partner of the Operating Company is Series H of SVOF/MM, LLC (“SVOF/MM”), which also serves as the administrator (the “Administrator”) of the Holding Company and the Operating Company. The managing member of SVOF/MM is Tennenbaum Capital Partners, LLC (the “Advisor”), which serves as the investment manager to both the Holding Company and the Operating Company. All of the equity interests in the General Partner are owned directly by the Advisor.

The Holding Company has elected to be treated as a regulated investment company (“RIC”) for U.S. federal income tax purposes. As a RIC, we will not be taxed on our income to the extent that we distribute such income each year and satisfy other applicable income tax requirements. The Operating Company has elected to be treated as a partnership for U.S. federal income tax purposes.

On April 2, 2012, the Holding Company converted from a limited liability company to a corporation (the “Conversion”). At the time of the Conversion, all limited liability company interests of Special Value Continuation Fund, LLC (“SVCF”) were exchanged for 15,725,635 shares of common stock in TCP Capital Corp. As a result of the Conversion, the books and records of SVCF became the books and records of the surviving entity.

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On April 3, 2012, the Company priced its initial public offering (the “Offering”), selling 5,750,000 shares of its common stock at a public offering price of $14.75 per share.

To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and timely distribute to our stockholders generally at least 90% of our investment company taxable income, as defined by the Internal Revenue Code of 1986, as amended (the “Code”), for each year. Pursuant to this election, we generally will not have to pay corporate level taxes on any income that we distribute to our stockholders provided that we satisfy those requirements.

Tennenbaum Capital Partners, LLC

Our investment activities are managed by the Advisor. The Advisor is a leading investment manager (including specialty lending to middle-market companies). The Advisor is a Delaware limited liability company and is registered as an investment advisor under the Investment Advisers Act of 1940. As of December 31, 2016, the Advisor had in excess of $7.1 billion in committed capital under management, approximately 23.5% of which consists of the Company’s committed capital, and a team of approximately 80 people including investment professionals and other personnel that focus on operations, finance, legal, and compliance, accounting and reporting, investor relations, information technology, and administration. The Advisor was founded in 1999 by Michael E. Tennenbaum, Mark K. Holdsworth and Howard M. Levkowitz, and its predecessor entity, formed by the same individuals, commenced operations in 1996. Mark K. Holdsworth and Howard M. Levkowitz along with Michael E. Leitner, Philip M. Tseng, Rajneesh Vig, and Lee Landrum constitute the Advisor’s active partners (the “Advisor Partners”). The Advisor Partners have significant industry experience, including experience investing in middle-market companies. Together, the Advisor Partners have invested approximately $18.2 billion in 501 companies since the Advisor’s inception, through multiple business and credit cycles, across all segments of the capital structure and through a broad set of credit-oriented strategies including leveraged loan origination, secondary investments of discounted debt securities, and distressed and control opportunities. We believe the Advisor Partners’ investment perspectives, complementary skills, and collective investment experience provide the Advisor with a strategic and competitive advantage in middle-market investing.

As our investment advisor, the Advisor is responsible for sourcing potential investments, conducting research, analyzing investment opportunities and structuring our investments and monitoring our portfolio companies on an ongoing basis. We believe that the Advisor has a proven long-term track record of positive performance, notwithstanding some periods during which losses were incurred, of sourcing deals, originating loans and successfully investing in middle-market companies and that the relationships of its investment professionals are integral to the Advisor’s success. The Advisor’s investment professionals have long-term working relationships with key sources of investment opportunities and industry expertise, including investment bankers, financial advisors, attorneys, private equity sponsors, other senior lenders, high-yield bond specialists, research analysts, accountants, and senior management teams. Additionally, the Advisor’s structure includes both a board of advisors and a group of senior executive advisors, a team comprised of approximately 18 current and former executives from a variety of industries, which extends the reach of the Advisor’s relationships through a group of seasoned industry leaders and that can enhance our deal sourcing and due diligence activities.

We also benefit from the existing infrastructure and administrative capabilities of an established investment manager. The General Partner, an affiliate of the Advisor, serves as our Administrator and provides us with office space, equipment and office services. The tasks of our Administrator include overseeing our financial records, preparing reports to our stockholders and reports filed with the SEC and generally monitoring the payment of our expenses and the performance of administrative and professional services rendered to us by others.

Since the beginning of 2011, the Advisor executed across its funds approximately $6.3 billion in direct origination leveraged loans primarily to middle-market companies, of which approximately $2.3 billion was for our account. There can be no assurance that similar deal flow or terms will be available in the future for loans in which we may invest.

Operating and Regulatory Tax Structure

The Holding Company elected to be treated for U.S. federal income tax purposes as a RIC under the Code. As a RIC, the Holding Company generally does not have to pay corporate-level federal income taxes on any net ordinary income or capital gain that we distribute to our stockholders as dividends if we meet certain source-of-income, distribution and asset diversification requirements. The Operating Company is not a RIC nor

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will it seek RIC status and instead is intended to be treated as a partnership for tax purposes. The Holding Company and the Operating Company have elected to be treated as BDCs under the 1940 Act. As a BDC we are required to invest at least 70% of our total assets primarily in securities of private and certain public U.S. companies (other than investment companies and certain financial institutions), cash, cash equivalents, U.S. Government securities, and other high-quality debt investments that mature in one year or less and to comply with other regulatory requirements, including limitations on our use of debt. Because the Holding Company and the Operating Company are each BDCs, their assets, liabilities and results of operations will be consolidated for purposes of this 70% requirement.

Investment Strategy

To achieve our investment objectives, we intend to focus on a subset of the broader investment strategies historically pursued by the Advisor. Our primary investment focus is the ongoing origination of and investments in leveraged loans of performing middle-market companies, building on the Advisor’s established track record of origination and participation in the original syndication of approximately $10.1 billion of leveraged loans to 286 companies since 1999, of which we invested over $2.9 billion in 171 companies. For the purposes of this filing, the term “leveraged loans” refers to senior debt investments that rank ahead of subordinated debt and that generally have the benefit of security interests in the assets of the borrower. Our investments generally range from $10 million to $50 million per company, the size of which may grow over time in proportion with our capital base. We expect to generate current returns through a combination of the receipt of contractual interest payments on debt investments and origination and similar fees, and, to a lesser extent, equity appreciation through options, warrants, conversion rights or direct equity investments. We often receive equity interests such as preferred or common stock and warrants or options in connection with our debt investments. From time to time we may also use other investment strategies, which are not our primary focus, to attempt to enhance the overall return of our portfolio. These investment strategies may include, but are not limited to, the purchase of discounted debt, opportunistic investments, and financial instruments to hedge currency or interest rate risk associated with our portfolio.

Our typical investments are in performing middle-market companies. We believe that middle-market companies are generally less able to secure financing than larger companies and thus offer better return opportunities for those able to conduct the necessary diligence to appropriately evaluate these companies. We focus primarily on U.S. companies where we believe our Advisor’s perspective, complementary skills and investment experience provides us with a competitive advantage and in industries where our Advisor sees an attractive risk reward profile due to macroeconomic trends and existing Advisor industry expertise.

Investment Portfolio

At December 31, 2016, our investment portfolio of $1,315.0 million (at fair value) consisted of 90 portfolio companies and was invested 95.0% in debt investments, substantially all of which was in senior secured debt. In aggregate, our investment portfolio was invested 83.7% in senior secured loans, 11.3% in senior secured notes and 5.0% in equity investments. Our average portfolio company investment at fair value was approximately $14.6 million. Our largest portfolio company investment by value was approximately $46.2 million and our five largest portfolio company investments by value comprised approximately 14.1% of our portfolio at December 31, 2016.

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The following charts summarize our portfolio mix by industry and type based on the fair value of our investments as of December 31, 2016.

 

Investment Process

The Advisor’s investment process is designed to maximize its strategic advantages: a strong brand name as a specialty lender to the middle-market and diverse in-house expertise and skills. The Advisor seeks out opportunities by conducting a rigorous and disciplined investment process that combines the following characteristics:

Deal Sourcing

As a leading middle-market corporate debt investment manager with a 17-year history and in excess of $7.1 billion in committed capital as of December 31, 2016, approximately 23.5% of which consists of the Company’s committed capital, the Advisor is active in new deal financing opportunities in the middle-market segment. However, we believe that the Advisor’s real deal flow advantage comes from the proprietary network of established relationships of its investment professionals and synergies among its professionals and portfolio companies. Members of the Advisor’s Investment Committee for the Company ( the “Investment Committee”) have long-term relationships with deal sources including investment bankers, restructuring professionals, bankruptcy attorneys, senior lenders, high yield bond specialists, research analysts, accountants, fund management teams, the Advisor’s advisory board, senior executive advisors, board members of former clients, former colleagues and other operating professionals to facilitate deal flow. The Investment Committee is currently comprised of five voting members. In total, the Investment Committee consists of approximately 30 members from the Advisor. The number of voting and non-voting members of the Investment Committee is subject to increase or decrease in the sole discretion of the Advisor. All members of the Investment Committee attend investment meetings and are encouraged to participate in discussions. In addition, members of the Investment Committee have relationships with other investors, including insurance companies, bond funds, mezzanine funds, private equity funds, hedge funds and other funds which invest in similar assets. Further, the Advisor regularly calls on both active and recently retired senior executives from the relevant industries to assist with the due diligence of potential investments. Historically, these relationships with retired senior executives have also been a valuable source of transactions and information. The Advisor anticipates that they will continue to provide future opportunities. We believe the Advisor’s strong relationships with its portfolio companies facilitate positive word-of-mouth recommendations to other companies seeking the Advisor’s expertise. The Advisor’s relationships often result in the ability to access investment opportunities earlier than many of its competitors and in some cases on an exclusive basis.

Due Diligence Process

The foundation of the Advisor’s investment process is intensive investment research and analysis by its experienced staff of investment professionals. The Advisor’s senior professionals have worked together for

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numerous years and we believe that they have a superior level of credit investing knowledge relative to other credit investors. The Advisor supplements its in-house knowledge with industry experts, including CEO/CFO-level executives, with direct management experience in the industries under consideration. The Advisor prefers these industry experts to consultants because of the practical business advice that comes from having managed businesses. The Advisor rigorously and comprehensively analyzes issuers of securities of interest. The process includes a quantitative and qualitative assessment of the issuer’s business, an evaluation of its management, an analysis of the business strategy and industry trends, and an in-depth examination of the company’s capital structure, financial results and projections. The Advisor’s due diligence process includes:

• an assessment of the outlook for the industry and general macroeconomic trends;

• discussions with issuer management and other industry executives, including the assessment of management/board strengths and weaknesses;

• an analysis of the fundamental asset values and the enterprise value of the issuer;

• review of the issuer’s key assets, core competencies, competitive advantages, historical and projected financial statements, capitalization, financial flexibility, debt amortization requirements, and tax, environmental, legal and regulatory contingencies;

• review of the issuer’s existing credit documents, including credit agreements, indentures, intercreditor agreements, and security agreements; and

• review of documents governing the issuer, including charter, by-laws, and key contracts.

Structuring Originations

As an early non-bank participant in the leveraged loan market, we believe that loan origination is a core competency of the Advisor. Supplementing industry deal teams’ experience and competency, the Advisor has a number of professionals with legal experience, including significant experience in bankruptcy and secured credit. Deal teams work with the Advisor’s in-house legal specialists and outside counsel to structure over-collateralized loans with what we believe to be strong creditor protections and contractual controls over borrower operations. In many cases, the Advisor works to obtain contractual governance rights and board observer seats to protect principal and maximize post-investment returns. Deals usually include original issue discounts, upfront fees, exit fees and/or equity participations through warrants or direct equity stakes.

Trading and Secondary Market Purchases

A key element in maximizing investment returns in secondary purchases is buying and selling investments at the best available prices. The Advisor has a dedicated trading staff for both the highly specialized traded loan market and for high-yield bonds. Through its trading operations, the Advisor maintains its established relationships with a network of broker-dealers in the debt securities markets. These relationships provide the Advisor with access to the trading dynamics of existing or potential investments and assist it in effectively executing transactions. These relationships may also lead to the early identification of potential investment opportunities for the Company.

Portfolio Management & Monitoring

The Advisor actively monitors the financial performance of its portfolio companies and market developments. This constant monitoring permits the Advisor to update position risk assessments, seek to address potential problems early, refine exit plans, and make follow-on investment decisions quickly. We view active portfolio monitoring as a vital part of our investment process.

We consider board observation and information rights, regular dialogue with company management and sponsors, and detailed internally generated monitoring reports to be critical to our performance. We have developed a monitoring template that seeks to ensure compliance with these standards and that is used as a tool by the Investment Committee to assess investment performance relative to plan.

• Deal teams maintain contact with portfolio company management through regularly scheduled and ad hoc conference calls and onsite visits.

• Deal teams review portfolio company progress relative to plan and pre-determined performance benchmarks.

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• Adverse or unexpected developments, as well as consequential routine updates, are reported to the Investment Committee and thoroughly discussed at regularly scheduled weekly meetings. If merited, the Investment Committee will hold ad hoc meetings as necessary to address urgent issues.

• Deal teams, with Investment Committee approval, encourage portfolio company managers to catalyze events to monetize holdings for greater return, or where needed, take corrective actions to address shortfalls to plan or benchmarks.

• All existing portfolio holdings are formally reviewed in detail by the entire Investment Committee once per quarter at the Advisor’s quarterly portfolio review.

Investment Committee and Decision Process

The Advisor’s investment process is organized around the Investment Committee that provides for a centralized, repeatable decision process. The Investment Committee meets weekly and, with respect to each fund the Advisor advises, certain members of the Investment Committee are voting members. The voting members of the Investment Committee for the Company are currently Mark K. Holdsworth, Michael E. Leitner, Howard M. Levkowitz, Philip M. Tseng and Rajneesh Vig. Approval by a simple majority vote of the voting members of the Investment Committee for each respective fund is required for the purchase or sale of any investment, with certain de-minimis exceptions. No voting member has veto power. The Advisor’s investment process is designed to maximize risk-adjusted returns and preserve downside protection.

Regulation

We have filed an election 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 (including any investment advisors or co-advisors), principal underwriters and affiliates of those affiliates or underwriters and requires that a majority of the directors be persons other than “interested persons,” as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless approved by “a majority of our outstanding voting securities”, which is defined in the 1940 Act as the lesser of a majority of the outstanding voting securities or 67% or more of the securities voting if a quorum of a majority of the outstanding voting securities is present.

We may invest up to 100% of our assets in securities acquired directly from issuers in privately negotiated transactions. With respect to such securities, we may, for the purpose of public resale, be deemed an “underwriter” as that term is defined in the Securities Act of 1933, or the Securities Act. We do not intend to acquire securities issued by any investment company that exceed the limits imposed by the 1940 Act. Under these limits, except for registered money market funds we generally cannot acquire more than 3% of the voting stock of any investment company, invest more than 5% of the value of our total assets in the securities of one investment company or invest more than 10% of the value of our total assets in the securities of more than one investment company. With regard to that portion of our portfolio invested in securities issued by investment companies, it should be noted that such investments might indirectly subject our stockholders to additional expenses as they will indirectly be responsible for the costs and expenses of such companies. None of our investment policies are fundamental and any may be changed without stockholder approval. Pursuant to the 1940 Act, our investment in the Operating Company is not subject to these limits because, among other reasons, (i) the Operating Company is our sole investment and (ii) we “pass-through” our votes on Operating Company matters to our stockholders and vote all of our interests in the Operating Company in the same proportion and manner as our stockholders vote their common stock on such matters.

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Qualifying assets

Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. The principal categories of qualifying assets relevant to our proposed business are the following:

• Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:

• is organized under the laws of, and has its principal place of business in, the United States;

• is not an investment company (other than a small business investment company wholly owned by the BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act; and

• satisfies either of the following:

• has a market capitalization of less than $250.0 million or does not have any class of securities listed on a national securities exchange; or

• is controlled by a BDC or a group of companies including a BDC, the BDC actually exercises a controlling influence over the management or policies of the eligible portfolio company, and, as a result thereof, the BDC has an affiliated person who is a director of the eligible portfolio company.

• Securities of any eligible portfolio company which we control.

• Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.

• Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.

• Securities received in exchange for or distributed on or with respect to securities described above, or pursuant to the exercise of warrants or rights relating to such securities.

• Cash, cash equivalents, U.S. Government securities or high-quality debt securities maturing in one year or less from the time of investment.

Managerial assistance to portfolio companies

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 “Qualifying assets” above. However, in order to count portfolio securities as qualifying assets for the purpose of the 70% test, the BDC must either control the issuer of the securities or must offer to make available to the issuer of the securities significant managerial assistance. Where the BDC purchases such securities in conjunction with one or more other persons acting together, the BDC will satisfy this test if one of the other persons in the group makes available such managerial assistance, although reliance on other investors may not be the sole method by which the BDC satisfies the requirement to make available managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby the BDC, through its investment manager, 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.

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Small Business Administration Regulations

On April 22, 2014, the SBIC received a license from the Small Business Administration (the “SBA”) to operate as a small business investment company. The SBIC license allows us to borrow funds from the SBA against eligible investments. The Small Business Investment Company regulations currently limit the amount that is available to borrow by any SBIC to $150.0 million. There is no assurance that we will draw up to the maximum limit available under the Small Business Investment Company program.

Small business investment companies are designed to stimulate the flow of private equity capital to eligible small businesses. Under present Small Business Administration regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $19.5 million and have average annual fully taxed net income not exceeding $6.5 million for the two most recent fiscal years. In addition, a small business investment company must devote 25% of its investment activity to “smaller” concerns as defined by the Small Business Administration. A smaller concern is one that has a tangible net worth not exceeding $6.0 million and has average annual fully taxed net income not exceeding $2.0 million for the two most recent fiscal years. Small Business Administration regulations also provide alternative size standard criteria to determine eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and gross sales. According to Small Business Administration regulations, small business investment companies may make long-term loans to small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services. We plan to provide long-term loans to qualifying small businesses, and in connection therewith, make equity investments.

The SBIC is periodically examined and audited by the Small Business Administration’s staff to determine its compliance with small business investment company regulations.

Taxation of the company

We have elected to be taxed as a RIC under Subchapter M of the Code. To continue to qualify as a RIC, we must, among other things, (a) derive in each taxable year at least 90 percent of our gross income from dividends, interest (including tax-exempt interest), payments with respect to certain securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, other income (including but not limited to gain from options, futures and forward contracts) derived with respect to our business of investing in stock, securities or currencies, or net income derived from an interest in a “qualified publicly traded partnership” (a “QPTP”); and (b) diversify our holdings so that, at the end of each quarter of each taxable year (i) at least 50 percent of the market value of our total assets is represented by cash and cash items, U.S. Government securities, the securities of other RICs and other securities, with other securities limited, in respect of any one issuer, to an amount not greater than five percent of the value of our total assets and not more than 10 percent of the outstanding voting securities of such issuer (subject to the exception described below), and (ii) not more than 25 percent of the market value of our total assets is invested in the securities (other than U.S. Government securities and the securities of other regulated investment companies) (A) of any issuer, (B) of any two or more issuers that we control and that are determined to be engaged in the same business or similar or related trades or businesses, or (C) of one or more QPTPs. The Code provides for certain exceptions to the foregoing diversification requirements. We may generate certain income that might not qualify as good income for purposes of the 90% annual gross income requirement described above. We monitor our transactions to endeavor to prevent our disqualification as a RIC.

If we fail to satisfy the 90% annual gross income requirement or the asset diversification requirements discussed above in any taxable year, we may be eligible for relief provisions if the failures are due to reasonable cause and not willful neglect and if a penalty tax is paid with respect to each failure to satisfy the applicable requirements. Additionally, relief is provided for certain de minimis failures of the asset diversification requirements where we correct the failure within a specified period. If the applicable relief provisions are not available or cannot be met, all of our income would be subject to corporate-level U.S. federal income tax as described below. We cannot provide assurance that we would qualify for any such relief should we fail the 90% annual gross income requirement or the asset diversification requirements discussed above.

As a RIC, in any taxable year with respect to which we timely distribute at least 90% of the sum of our (i) investment company taxable income (which includes, among other items, dividends, interest and the excess of any net short-term capital gain over net long-term capital loss and other taxable income (other than any net capital gain), reduced by deductible expenses) determined without regard to the deduction for dividends and

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distributions paid and (ii) net tax exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) (the “Annual Distribution Requirement”), we (but not our stockholders) generally will not be subject to U.S. federal income tax on investment company taxable income and net capital gain (generally, net long-term capital gain in excess of short-term capital loss) that we distribute to our stockholders. We intend to distribute annually all or substantially all of such income on a timely basis. To the extent that we retain our net capital gain for investment or any investment company taxable income, we will be subject to U.S. federal income tax at the regular corporate income tax rates. We may choose to retain our net capital gains for investment or any investment company taxable income, and pay the associated federal corporate income tax, including the federal excise tax described below.

Certain amounts not distributed during a calendar year are subject to a nondeductible four percent U.S. federal excise tax payable by us. To avoid this tax, we would need to distribute (or be deemed to have distributed) during each calendar year an amount equal to the sum of:

(1) at least 98 percent of our ordinary income (not taking into account any capital gains or losses) for the calendar year;

(2) at least 98.2 percent of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year (unless an election is made by us to use our taxable year); and

(3) certain undistributed amounts from previous years on which we paid no U.S. federal income tax.

While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the four percent federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed to avoid entirely the imposition of the tax. In that event, we will be liable for the tax only on the amount by which we do not meet the foregoing distribution requirement.

If, in any particular taxable year, we do not satisfy the Annual Distribution Requirement or otherwise were to fail to qualify as a RIC (for example, because we fail the 90% annual gross income requirement described above), and relief is not available as discussed above, all of our taxable income (including our net capital gains) will be subject to tax at regular corporate rates without any deduction for distributions to stockholders, and distributions generally will be taxable to the stockholders as ordinary dividends to the extent of our current and accumulated earnings and profits.

We may decide to be taxed as a regular corporation even if we would otherwise qualify as a RIC if we determine that treatment as a corporation for a particular year would be in our best interests.

As a RIC, we are permitted to carry forward a net capital loss realized in a taxable year beginning before December 23, 2010 to offset our capital gain, if any, realized during the eight years following the year of the loss. A capital loss carryforward realized in a taxable year beginning before December 23, 2010 is treated as a short-term capital loss in the year to which it is carried. We are permitted to carry forward a net capital loss realized in taxable years beginning on or after December 23, 2010 to offset capital gain indefinitely. For net capital losses realized in taxable years beginning on or after December 23, 2010, the excess of our net short-term capital loss over our net long-term capital gain is treated as a short-term capital loss arising on the first day of our next taxable year and the excess of our net long-term capital loss over our net short-term capital gain is treated as a long-term capital loss arising on the first day of our next taxable year. If future capital gain is offset by carried forward capital losses, such future capital gain is not subject to fund-level U.S. federal income tax, regardless of whether they are distributed to stockholders. Accordingly, we do not expect to distribute any such offsetting capital gain. A RIC cannot carry back or carry forward any net operating losses.

Investment Structure

Once we determine that a prospective portfolio company is suitable for a direct investment, we work with the management of that company and its other capital providers, including senior and junior lenders, and equity holders, to structure an investment. We negotiate among these parties to agree on how our investment is expected to be structured relative to the other capital in the portfolio company’s capital structure.

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Leveraged Loans

We structure our investments primarily as secured leveraged loans. Leveraged loans are generally senior debt instruments that rank ahead of subordinated debt of the portfolio company. Leveraged loans generally have the benefit of security interests on the assets of the portfolio company, which may rank ahead of, or be junior to, other security interests.

High-Yield Securities

The Company’s portfolio currently includes high-yield securities and the Company may invest in high-yield securities in the future. High-yield securities have historically experienced greater default rates than has been the case for investment grade securities and are generally rated below investment grade by one or more nationally recognized statistical rating organizations or will be unrated but of comparable credit quality to obligations rated below investment grade, and have greater credit and liquidity risk than more highly rated obligations. High-yield securities are generally unsecured and may be subordinate to other obligations of the obligor and are often issued in connection with leveraged acquisitions or recapitalizations in which the issuers incur a substantially higher amount of indebtedness than the level at which they had previously operated. The Company’s portfolio may also include mezzanine investments which are generally unsecured and rated below investment grade. Mezzanine investments of the type in which the Company invests in are primarily privately negotiated subordinated debt securities often issued in connection with leveraged transactions, such as management buyouts, acquisitions, re-financings, recapitalizations and later stage growth capital financings, and are generally accompanied by related equity participation features such as options, warrants, preferred and common stock. In some cases, our debt investments may provide for a portion of the interest payable to be paid-in-kind interest. To the extent interest is paid-in-kind, it will be payable through the increase of the principal amount of the obligation by the amount of interest due on the then-outstanding aggregate principal amount of such obligation.

Warrants, Options and Minority Equity

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

Distressed Debt

The Company’s portfolio currently includes distressed debt investments and the Company is authorized to continue to invest in the securities and other obligations of distressed and bankrupt issuers, including debt obligations that are in covenant or payment default. As of December 31, 2016, two of the Company’s debt investments were in non-accrual status. The Company does not anticipate distressed debt to be a significant part of its ongoing investment strategy. Such investments generally trade significantly below par and are considered speculative. The repayment of defaulted obligations is subject to significant uncertainties. Defaulted obligations might be repaid only after lengthy workout or bankruptcy proceedings, during which the issuer might not make any interest or other payments. Typically such workout or bankruptcy proceedings result in only partial recovery of cash payments or an exchange of the defaulted obligation for other debt or equity securities of the issuer or its affiliates, which may in turn be illiquid or speculative.

Opportunistic Investments

Opportunistic investments may include, but are not limited to, investments in debt securities of all kinds and at all levels of the capital structure and may include equity securities of public companies that are thinly traded, emerging market debt, structured finance vehicles such as CLO funds and debt of middle-market companies located outside the United States. We do not intend such investments to be our primary focus.

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We tailor the terms of each investment to the facts and circumstances of the transaction and the prospective portfolio company, negotiating a structure that protects our rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its operating results. We seek to limit the downside potential of our investments by:

• requiring a total return on our investments (including both interest and potential equity appreciation) that we believe will compensate us appropriately for credit risk;

• negotiating covenants in connection with our investments that afford our portfolio companies as much flexibility in managing their businesses as possible, consistent with the preservation of our capital. Such restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control provisions and board rights, including either observation or rights to a seat on the board of directors under some circumstances; and

• selecting investments that we believe have a very low probability of loss.

We expect to hold most of our investments to maturity or repayment, but we may sell some of our investments earlier if a liquidity event occurs, such as a sale, recapitalization or worsening of the credit quality of the portfolio company.

Code of Ethics

We and the Advisor have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Investment Advisers Act of 1940 (the “Advisers Act”), respectively, that establishes procedures for personal investments and restricts certain transactions by our personnel. Our codes of ethics generally do not permit investments by our employees in securities that may be purchased or held by us. You may read and copy these codes of ethics at the SEC’s Public Reference Room in Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1 (800) SEC-0330. In addition, each code of ethics is available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. You may also access the codes of ethics by going to our website at http://investors.tcpcapital.com/.

Compliance Policies and Procedures

We and the Advisor have adopted and implemented written policies and procedures reasonably designed to detect and prevent violation of the federal securities laws. We are required to review these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation and to designate a chief compliance officer to be responsible for their administration. Elizabeth Greenwood currently serves as our chief compliance officer.

Proxy Voting Policies and Procedures

We have delegated our proxy voting responsibility to our investment adviser. A summary of the Proxy Voting Policies and Procedures of the Advisor are set forth below. The guidelines are reviewed periodically by the adviser and our non-interested directors, and, accordingly, are subject to change.

The Advisor is registered under the Investment Advisers Act of 1940 and has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, it recognizes that it must vote securities held by its clients in a timely manner free of conflicts of interest. These policies and procedures for voting proxies for investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

Our investment adviser votes proxies relating to our portfolio securities in the best interest of our stockholders. The Advisor reviews on a case-by-case basis each proposal submitted for a proxy vote to determine its impact on our investments. Although it generally votes against proposals that may have a negative impact on our investments, it may vote for such a proposal if there exists compelling long-term reasons to do so.

The proxy voting decisions of the Advisor are made by the senior officers who are responsible for monitoring each of our investments. To ensure that our vote is not the product of a conflict of interest, it requires that: (i) anyone involved in the decision making process disclose to the managing member any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote; and (ii) employees involved in the decision making process or vote administration are generally prohibited from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties.

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You may obtain information about how we voted proxies by making a written request for proxy voting information to: Tennenbaum Capital Partners, LLC, 2951 28^th Street, Suite 1000, Santa Monica, CA 90405, Attention: Investor Relations.

Privacy Principles

We are committed to maintaining the privacy of our stockholders and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with select other parties.

Generally, we do not receive any non-public personal information relating to our stockholders, although certain non-public personal information of our stockholders may become available to us. We do not disclose any non-public personal information about our stockholders or former stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts (for example, to a transfer agent or third-party administrator).

We restrict access to non-public personal information about our stockholders to employees of the Advisor and its affiliates with a legitimate business need for the information. We maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of our stockholders.

Investment Management Agreements

The Holding Company and the Operating Company have entered into separate but substantially identical investment management agreements with the Advisor, under which the Advisor, subject to the overall supervision of our respective boards of directors, manages the day-to-day operations and provides investment advisory services to the Holding Company and the Operating Company. In addition, pursuant to the Amended and Restated Limited Partnership Agreement, the General Partner directs and executes the day-to-day operational activities of the Operating Company. For providing these services, the Advisor receives a base management fee and, in addition, the Advisor or the General Partner may receive incentive compensation.

The base management fee is currently paid by the Operating Company to the Advisor and the incentive compensation, if any, is paid by the Operating Company to the General Partner or the Advisor. The Holding Company, therefore, indirectly bears these amounts, which are reflected in our consolidated financial statements. If the Operating Company is terminated or for any other reasons incentive compensation is not paid by the Operating Company, such amounts will be paid directly by the Holding Company to the Advisor pursuant to its investment management agreement with the Advisor.

Under the terms of our investment management agreements, the Advisor:

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

• identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies); and

• closes, monitors and administers the investments we make, including the exercise of any voting or consent rights.

The Advisor’s services under the investment management agreements are not exclusive, and it is free to furnish similar services to other entities so long as its services to us are not impaired.

Pursuant to our investment management agreements, we pay the Advisor compensation for investment advisory and management services consisting of base management compensation and a two-part incentive compensation.

Management Fee.   The base management fee is calculated at an annual rate of 1.5% of the Holding Company’s total assets (excluding cash and cash equivalents) payable quarterly in arrears. For purposes of calculating the base management fee, “total assets” is determined without deduction for any borrowings or other liabilities. The base management fee is calculated based on the value of our total assets (excluding cash and cash equivalents) at the end of the most recently completed calendar quarter. The base management fee for any partial quarter is appropriately pro-rated.

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Incentive Compensation.   We also pay incentive compensation to the Advisor or the General Partner. Under the investment management agreements and the Amended and Restated Limited Partnership Agreement, no incentive compensation was incurred until after January 1, 2013.

Beginning January 1, 2013, the incentive compensation equals the sum of (1) 20% of all ordinary income since that date and (2) 20% of all net realized capital gains (net of any net unrealized capital depreciation) since that date, with each component being subject to a total return requirement of 8% of contributed common equity annually. The incentive compensation initially is an equity allocation to the General Partner under the Amended and Restated Limited Partnership Agreement. If the Operating Company is terminated or for any other reasons incentive compensation is not distributed by the Operating Company, it would be paid pursuant to the investment management agreement between the Holding Company and the Advisor.

The incentive compensation has two components, ordinary income and capital gains. Each component is payable or distributable quarterly in arrears (or upon termination of the Advisor as the investment manager or the General Partner as the general partner of the Operating Company, as of the termination date) beginning January 1, 2013 and calculated as follows:

Each of the two components of incentive compensation is separately subject to a total return limitation. Thus, notwithstanding the following provisions, we are not be obligated to pay or distribute any ordinary income incentive compensation or any capital gains incentive compensation if our cumulative total return does not exceed an 8% annual return on daily weighted average contributed common equity. If our cumulative annual total return is above 8%, the total cumulative incentive compensation we pay will not be more than 20% of our cumulative total return, or, if lower, the amount of our cumulative total return that exceeds the 8% annual rate.

Subject to the above limitation, the ordinary income component is the amount, if positive, equal to 20% of the cumulative ordinary income before incentive compensation, less cumulative ordinary income incentive compensation previously paid or distributed.

Subject to the above limitation, the capital gains component is the amount, if positive, equal to 20% of the cumulative realized capital gains (computed net of cumulative realized losses and cumulative net unrealized capital depreciation), less cumulative capital gains incentive compensation previously paid or distributed. For assets held on January 1, 2013, capital gain, loss and depreciation are measured on an asset by asset basis against the value as of December 31, 2012. The capital gains component is paid or distributed in full prior to payment or distribution of the ordinary income component.

For purposes of the foregoing computations and the total return limitation, the following definitions apply:

• “cumulative” means amounts for the period commencing January 1, 2013 and ending as of the applicable calculation date.

• “contributed common equity” means the value of net assets attributable to our common stock as of December 31, 2012 plus the proceeds to us of all issuances of common stock less (A) offering costs of any of our securities or leverage facilities, (B) all distributions by us representing a return of capital and (C) the total cost of all repurchases of our common stock by us, in each case after December 31, 2012 and through the end of the preceding calendar quarter in question, in each case as determined on an accrual and consolidated basis.

• “ordinary income before incentive compensation” means our interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial assistance and consulting fees or other fees that we receive from portfolio companies) during the period, (i) minus our operating expenses during the period (including the base management fee, expenses payable under the administration agreement, any interest expense and any dividends paid on any issued and outstanding preferred stock), (ii) plus increases and minus decreases in net assets not treated as components of income, operating expense, gain, loss, appreciation or depreciation and not treated as contributions or distributions in respect of common equity, and (iii) without reduction for any incentive compensation and any organization or offering costs, in each case determined on an accrual and consolidated basis.

• “total return” means the amount equal to the combination of ordinary income before incentive compensation, realized capital gains and losses and unrealized capital appreciation and depreciation of the Company for the period, in each case determined on an accrual and consolidated basis.

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If our total return does not exceed the total return limitation, the limitation will not have the effect of eliminating the possibility of paying such incentive compensation, but rather will postpone any incentive compensation until our cumulative annual total return exceeds the 8% threshold. The nature of the total return limitation may also make it easier for the Advisor to earn incentive compensation in higher interest rate environments or if our net asset value has increased.

Total Return Limitation
(based on cumulative annual total return)

 

Percentage of ordinary income and net realized capital gain
separately payable at various levels of total return.

The financial highlights in the notes to our financial statements include a calculation of total return based on the change in the market value of our shares. The financial highlights in the notes to our financial statements also include a calculation of total return based on the change in our net asset value from period to period. The total return limitation for purposes of the incentive compensation calculations is based on the stated elements of return: ordinary income before incentive compensation, realized capital gain and loss and unrealized capital appreciation and depreciation. It differs from the total return based on the market value or net asset value of our shares in that it is a cumulative measurement that is compared to our daily weighted-average contributed common equity rather than a periodic measurement that is compared to our net asset value or market value, and in that it excludes incentive compensation.

Examples of Incentive Compensation Calculation

Example 1: Income Portion of Incentive Compensation:

Assumptions

• Total return limitation⁽¹⁾ = 8%

• Management fee⁽²⁾ = 1.5%

• Other expenses (legal, accounting, custodian, transfer agent, etc.)⁽³⁾ = 1%

Alternative 1

Additional Assumptions

• cumulative gross ordinary income (including interest, dividends, fees, etc.) = 11.5%

• cumulative ordinary income before incentive compensation (gross ordinary income-(management fee + other expenses)) = 9%

• cumulative annual total return = 7%

• prior ordinary income incentive compensation = 0%

Cumulative total return does not exceed total return limitation, therefore there is no income incentive compensation.

(1) Represents 8.0% annualized total return limitation.

(2) Represents 1.5% annualized management fee, assuming no liabilities.

(3) Excludes organizational and offering costs.

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Alternative 2

Additional Assumptions

• cumulative gross ordinary income (including interest, dividends, fees, etc.) = 11%

• cumulative ordinary income before incentive compensation (gross ordinary
income – (management fee + other expenses)) = 8.5%

• cumulative annual total return = 9.5%

• prior ordinary income incentive compensation = 0%

Cumulative ordinary income before incentive compensation is positive and the cumulative total return exceeds the total return limitation, therefore there is income incentive compensation.

Income incentive compensation = ((20% x ordinary income before incentive compensation) but not more than ((100% x (cumulative total return up to 10% – 8% total return limitation)) + (20% x cumulative total return above 10%)))

= ((20% x 8.5%) or, if less, ((100% x (9.5% – 8%) + (20% x 0%)))

= 1.7% or, if less, 1.5%

= 1.5%

Alternative 3

Additional Assumptions

• cumulative gross ordinary income (including interest, dividends, fees, etc.) = 15.5%

• cumulative ordinary income before incentive compensation (gross ordinary income – (management fee + other expenses)) = 13%

• cumulative annual total return = 18%

• prior ordinary income incentive compensation = 1%

Cumulative ordinary income before incentive compensation is positive and cumulative total return exceeds the total return limitation, therefore there is income incentive compensation.

Income incentive compensation = ((20% x ordinary income before incentive compensation) but not more than ((100% x (cumulative total return up to 10% – 8% total return limitation)) + (20% x cumulative total return above 10%))), less income incentive compensation previously paid

= ((20% x 13%) or, if less, ((100% x (10% – 8%) + (20% x (18% – 10%))) – 1%

= (2.6% or, if less, ((2% + (20% x 8%))) – 1%

= (2.6% or, if less, (2% + 1.6%)) – 1%

= (2.6% or, if less, 3.6%) – 1%

= 1.6%

Note that due to the priority of capital gains compensation over ordinary income compensation, had the 5%(4) of cumulative unrealized capital gains been realized, the capital gains incentive compensation would have been 1% (i.e. 20% x 5%) and would have reduced ordinary income compensation from 1.6% to 0.6%. Further, if there had been 1.6% or more of prior capital gains compensation, the ordinary income compensation payment would have been zero.

(4) 5% of cumulative unrealized capital gains = 18% cumulative annual total return – 13% cumulative ordinary income before incentive compensation.

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Example 2: Capital Gains Portion of Incentive Compensation:

Alternative 1:

Assumptions

• Year 1: $20 million investment made in Company A (“Investment A”), and $30 million investment made in Company B (“Investment B”).

• Year 2: Investment A sold for $50 million and fair market value, or FMV, of Investment B determined to be $32 million. Cumulative annual total return of 40%.

• Year 3: FMV of Investment B determined to be $25 million. Cumulative annual total return of 15%.

• Year 4: Investment B sold for $31 million. Cumulative annual total return of 10%.

The capital gains portion of the incentive compensation would be:

• Year 1: None.

• Year 2: Capital gains incentive compensation of $6 million ($6 million = $30 million realized capital gains on sale of Investment A multiplied by 20% and total return limitation satisfied).

• Year 3: None; no realized capital gains.

• Year 4: Capital gains incentive compensation of $0.2 million ($31 million cumulative realized capital gains multiplied by 20%, less $6 million of capital gains incentive compensation paid in year 2 and total return limitation satisfied).

Alternative 2

Assumptions

• Year 1: $20 million investment made in Company A (“Investment A”), $30 million investment made in Company B (“Investment B”) and $25 million investment made in Company C (“Investment C”).

• Year 2: Investment A sold for $50 million, FMV of Investment B determined to be $25 million and FMV of Investment C determined to be $25 million. Cumulative annual total return of 15%.

• Year 3: FMV of Investment B determined to be $27 million and Investment C sold for $30 million. Cumulative annual total return of 7%.

• Year 4: FMV of Investment B determined to be $35 million. Cumulative annual total return of 20%.

• Year 5: Investment B sold for $40 million. Cumulative annual total return of 20%.

The capital gains portion of the incentive compensation would be:

• Year 1: None.

• Year 2: Capital gains incentive compensation of $5 million; 20% multiplied by $25 million ($30 million realized capital gains on Investment A less $5 million unrealized capital depreciation on Investment B, and the total return limitation is satisfied).

• Year 3: None as the total return limitation is not satisfied.

• Year 4: Capital gains incentive compensation of $2 million ($35 million cumulative realized capital gains (including $5 million of realized capital gains from year 3 at a time when the total return limitation was not satisfied and no cumulative unrealized capital depreciation) multiplied by 20%, less $5 million capital gains incentive compensation paid in year 2, and the total return limitation is satisfied).

• Year 5: Capital gains incentive compensation of $2 million ($45 million cumulative realized capital gains multiplied by 20%, less $7 million in capital gains incentive compensation paid in years 2 and 4, and the total return limitation is satisfied).

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Payment of our expenses

All investment professionals and staff of the Advisor, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such services (including health insurance, 401(k) plan benefits, payroll taxes and other compensation related matters), are provided and paid for by the Advisor. We bear all other costs and expenses of our operations and transactions, including those relating to:

• our organization;

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

• expenses, including travel expense, incurred by the Advisor or payable to third parties in performing due diligence on prospective portfolio companies, monitoring our investments and, if necessary, enforcing our rights;

• interest payable on debt, if any, incurred to finance our investments;

• the costs of all future offerings of common stock and other securities, if any;

• the base management fee and any incentive management fee;

• distributions on our shares;

• administration fees payable under our administration agreement;

• transfer agent and custody fees and expenses;

• the allocated costs incurred by the General Partner as our Administrator in providing managerial assistance to those portfolio companies that request it;

• amounts payable to third parties relating to, or associated with, evaluating, making and disposing of investments;

• brokerage fees and commissions;

• registration fees;

• listing fees;

• taxes;

• director fees and expenses;

• costs of preparing and filing reports or other documents with the SEC;

• the costs of any reports, proxy statements or other notices to our stockholders, including printing costs;

• costs of holding stockholder meetings;

• our fidelity bond;

• directors and officers/errors and omissions liability insurance, and any other insurance premiums;

• litigation, indemnification and other non-recurring or extraordinary expenses;

• direct costs and expenses of administration and operation, including audit and legal costs;

• dues, fees and charges of any trade association of which we are a member; and

• all other expenses reasonably incurred by us or the Administrator in connection with administering our business, such as the allocable portion of overhead under our administration agreement, including rent and other allocable portions of the cost of certain of our officers and their respective staffs.

From time to time, the Advisor may pay amounts owed by us to third party providers of goods or services. We will subsequently reimburse the Advisor for such amounts paid on our behalf.

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Limitation of liability and indemnification

The investment management agreements provide that the Advisor and its officers, directors, employees and affiliates are not liable to us or any of our stockholders for any act or omission by it or its employees in the supervision or management of our investment activities or for any loss sustained by us or our stockholders, except that the foregoing exculpation does not extend to any act or omission constituting willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations under the investment management agreement. The investment management agreements also provide for indemnification by us of the Advisor’s members, directors, officers, employees, agents and control persons for liabilities incurred by it in connection with their services to us, subject to the same limitations and to certain conditions.

Board and shareholder approval of the investment management agreements

Our board of directors held an in-person meeting on May 4, 2016, in order to consider and reapprove our investment management agreements. In its consideration of the investment management agreement, the board of directors focused on information it had received relating to, among other things: (a) the nature, quality and extent of the advisory and other services to be provided to us by the Advisor; (b) comparative data with respect to advisory fees or similar expenses paid by other business development companies with similar investment objectives; (c) our financial performance, operating expenses and expense ratio compared to business development companies with similar investment objectives; (d) any existing and potential sources of indirect income to the Advisor from its relationships with us and the profitability of those relationships; (e) information about the services performed and the personnel performing such services under the investment management agreements; (f) the organizational capability and financial condition of the Advisor and its affiliates; (g) the Advisor’s practices regarding the selection and compensation of brokers that execute our portfolio transactions and the brokers’ provision of brokerage and research services to our investment advisor; and (h) the possibility of obtaining similar services from other third party service providers or through an internally managed structure.

Based on the information reviewed and the discussions, the board of directors, including a majority of the non-interested directors, concluded that the investment management fee rates are reasonable in relation to the services to be provided.

Duration and termination

The investment management agreements will remain in effect from year to year if approved annually by our board of directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not interested persons. The investment management agreements will automatically terminate in the event of its assignment. The investment management agreements may be terminated by either party without penalty upon not less than 60 days written notice to the other. Any termination by us must be authorized either by our board of directors or by vote of our stockholders. See “Risk Factors — Risks related to our business — We are dependent upon senior management personnel of the Advisor for our future success, and if the Advisor is unable to retain qualified personnel or if the Advisor loses any member of its senior management team, our ability to achieve our investment objective could be significantly harmed.”

Administration Agreement

We have entered into administration agreements with the Administrator, which we refer to as the administration agreement, under which the Administrator provides administrative services to us. The Administrator provides services including, but not limited to, the arrangement for the services of, and the overseeing of, custodians, depositories, transfer agents, dividend disbursing agents, other stockholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks, stockholders and such other persons in any such other capacity deemed to be necessary or desirable. The Administrator also makes reports to the board of its performance of obligations under the administration agreement and furnishes advice and recommendations with respect to such other aspects of our business and affairs that we determine to be desirable. The Administrator is responsible for our financial and other records that are required to be maintained and prepares all reports and other materials required by any agreement or to be filed with the Securities and Exchange Commission or any other regulatory authority, including reports on Forms 8-K, 10-Q, 10-K and periodic reports to stockholders, determining the amounts available for distribution as

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dividends and distributions to be paid by us to our stockholders, reviewing and implementing any share purchase programs authorized by the board, maintaining or overseeing the maintenance of our books and records as required under the 1940 Act, and maintaining (or overseeing maintenance by other persons) such other books and records required by law or for our proper operation. For providing these services, facilities and personnel, we reimburse the Administrator for expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of overhead under the administration agreement and the cost of certain of our officers and the Administrator’s administrative staff and providing, at our request and on our behalf, significant managerial assistance to our portfolio companies to which we are required to provide such assistance. From time to time, the Administrator may pay amounts owed by us to third-party providers of goods or services. We subsequently reimburse the Administrator for such amounts paid on our behalf.

Leverage

Our leverage program is comprised of $116.0 million in available debt under a senior secured revolving credit facility issued by the Operating Company (the “SVCP Revolver”), a $100.5 million term loan issued by the Operating Company (the “Term Loan” and together with the SVCP Revolver, the “SVCP Facility”), $350.0 million in available debt under a senior secured revolving credit facility issued by TCPC Funding (the “TCPC Funding Facility,”), $108.0 million in convertible senior unsecured notes issued by the Holding Company due 2019 (the “2019 Convertible Notes”), $140.0 million in convertible senior unsecured notes issued by the Holding Company due 2022 (the “2022 Convertible Notes”) and $150.0 million in committed leverage from the SBA (the “SBA Program” and, together with the SVCP Facility, the TCPC Funding Facility, the 2019 Convertible Notes and the 2022 Convertible Notes, the “Leverage Program”). Prior to the repurchase and retirement of the remaining preferred interests on September 3, 2015, the Leverage Program also included amounts outstanding under a preferred equity facility issued by the Operating Company (the “Preferred Interests”).

The SVCP Facility matures on July 31, 2018 and bore interest at an annual rate equal to 0.44% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points) through July 31, 2014. Advances under the SVCP Facility for periods from July 31, 2014 through September 3, 2015 bore interest at an annual rate equal to 2.50% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). Advances under the SVCP Facility from September 3, 2015 through July 31, 2016 bore interest at an annual rate equal to 1.75% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). Advances under the SVCP Facility from July 31, 2016 through the maturity date of the facility bear interest at an annual rate of 2.50% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). In addition to amounts due on outstanding debt, the SVCP Revolver accrues commitment fees of 0.20% per annum on the unused portion of the facility, or 0.25% per annum when less than $46.4 million in borrowings are outstanding.

The TCPC Funding Facility matures on March 6, 2020, subject to extension by the lender at the request of TCPC Funding, and contains an accordion feature which allows for expansion of the facility up to $400.0 million subject to consent from the lender and other customary conditions. Borrowings under the TCPC Funding Facility bear interest at a rate of LIBOR plus either 2.25% or 2.50% per annum subject to certain funding requirements, plus an administrative fee of 0.25% per annum. In addition to amounts due on outstanding debt, the facility accrues commitment fees of 0.50% per annum on the unused portion of the facility, or 0.75% per annum when the unused portion is greater than 33.0% of the total facility, plus an administrative fee of 0.25% per annum.

On June 11, 2014, the Company issued $108.0 million of convertible senior unsecured notes that mature on December 15, 2019, unless previously converted or repurchased in accordance with their terms. The 2019 Convertible Notes are general unsecured obligations of the Company, and rank structurally junior to the SVCP Facility, TCPC Funding Facility and the SBA Program. The Company does not have the right to redeem the 2019 Convertible Notes prior to maturity. The 2019 Convertible Notes bear interest at an annual rate of 5.25%, payable semi-annually.

On August 30, 2016 the Company issued $140.0 million of convertible senior unsecured notes that mature on March 1, 2022, unless previously converted or repurchased in accordance with their terms. The 2022 Convertible Notes are general unsecured obligations of the Company, and rank structurally junior to the SVCP Facility, TCPC Funding Facility and the SBA Program. The Company does not have the right to redeem the 2022 Convertible Notes prior to maturity. The 2022 Convertible Notes bear interest at an annual rate of 4.625%, payable semi-annually.

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The SBIC is able to issue up to $150.0 million in debt under the SBA Program, subject to funded regulatory capital and other customary regulatory requirements. The Operating Company has committed $75.0 million of regulatory capital to the SBIC, all of which had been funded at December 31, 2016. Debt issued under the SBA Program is non-recourse and may be prepaid at any time without penalty. The interest rate on such debt is fixed at the time of issuance at a market-driven spread over 10-year U.S. Treasury Notes.

The Leverage Program is subject to certain financial or other covenants. As of December 31, 2016, we were in full compliance with such covenants.

Sarbanes-Oxley Act of 2002

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

• Pursuant to Rule 13a-14 of the 1934 Act, our Chief Executive Officer and Chief Financial Officer must certify the accuracy of the financial statements contained in our periodic reports;

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

• Pursuant to Rule 13a-15 of the 1934 Act, our management must prepare a report regarding its assessment of our internal control over financial reporting; and

• Pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the 1934 Act, our periodic reports must disclose whether there were significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

The Sarbanes-Oxley Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations promulgated thereunder. We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.

Item 1A. Risk Factors

An investment in our securities involves certain risks relating to our structure and investment objectives. The risks set forth below are not the only risks we face, and we face other risks which we have not yet identified, which we do not currently deem material or which are not yet predictable. If any of the following risks occur, our business, financial condition and results of operations could be materially adversely affected. In such case, our net asset value and the trading price of our common stock could decline, and you may lose all or part of your investment.

Certain risks in the current environment

Capital markets may experience periods of disruption and instability. Such market conditions may materially and adversely affect debt and equity capital markets in the United States and abroad, which may have a negative impact on our business and operations.

From time to time, capital markets may experience periods of disruption and instability, which may be evidenced by a lack of liquidity in debt capital markets, write-offs in the financial services sector, re-pricing of credit risk and failure of certain major financial institutions. An example of such disruption and instability occurred between 2008 and 2009. During that period, despite actions of the U.S. federal government and foreign governments, such disruption and instability contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. While capital markets have improved in recent years, these conditions could deteriorate again and global financial markets could experience significant volatility. During such market disruptions, we may have difficulty raising debt or equity capital especially as a result of regulatory constraints. There can be no assurance that adverse market conditions will not repeat themselves or worsen in the future. Equity capital may be difficult to raise because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent

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directors. At our annual meeting of stockholders held on May 19, 2016, subject to the condition that the maximum number of shares salable below net asset value pursuant to this authority in any particular offering that could result in such dilution is limited to 25% of our then outstanding common stock immediately prior to each such offering, our stockholders approved our ability to sell or otherwise issue shares of our common stock at a price below its then current net asset value per share for a twelve month period expiring on the anniversary of the date of stockholder approval. It should be noted that, theoretically, we may offer up to 25% of our then outstanding common stock each day. In addition, our ability to incur indebtedness (including by issuing preferred stock) is limited by applicable regulations such that our asset coverage, as calculated in accordance with the 1940 Act, must equal at least 200% immediately after each time we incur indebtedness. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than our current leverage. Any inability to raise capital could have a negative effect on our business, financial condition and results of operations.

Market conditions may in the future make it difficult to extend the maturity of or refinance our existing indebtedness and any failure to do so could have a material adverse effect on our business. The re-appearance of market conditions similar to those experienced from 2008 through 2009 for any substantial length of time could make it difficult to extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with similar terms and any failure to do so could have a material adverse effect on our business. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what we currently experience. Further, if we are unable to raise or refinance debt, then our equity investors may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies.

The illiquidity of our investments may make it difficult for us to sell such investments if required. As a result, we may realize significantly less than the value at which we have recorded our investments. In addition, significant changes in the capital markets, including the disruption and volatility, have had, and may in the future have, a negative effect on the valuations of our investments and on the potential for liquidity events involving our investments. An inability to raise capital, and any required sale of our investments for liquidity purposes, could have a material adverse impact on our business, financial condition and results of operations.

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

As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or under the direction of our board of directors. Decreases in the market values or fair values of our investments are recorded as unrealized depreciation, which reduces our net asset value. Depending on market conditions, we could incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material adverse impact on our business, financial condition and results of operations.

The downgrade of the U.S. credit rating, the economic crisis in Europe, turbulence in Chinese markets and global commodity markets or other macro-economic events could negatively impact our business, financial condition and earnings.

Although U.S. lawmakers passed legislation to raise the federal debt ceiling and Standard & Poor’s Ratings Services affirmed its 'AA+' long-term sovereign credit rating on the United States and revised the outlook on the long-term rating from negative to stable in June of 2013, U.S. debt ceiling and budget deficit concerns together with signs of deteriorating sovereign debt conditions in Europe continue to present the possibility of a credit-rating downgrade, economic slowdowns, or a recession for the United States. The impact of any further downgrades to the U.S. government’s sovereign credit rating or downgraded sovereign credit ratings of European countries or the Russian Federation, or their perceived creditworthiness could adversely affect the U.S. and global financial markets and economic conditions. These developments, along with any further European sovereign debt issues, could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. Continued adverse economic conditions could have a material adverse effect on our business, financial condition and results of operations.

In 2010, a financial crisis emerged in Europe, triggered by high budget deficits and rising direct and contingent sovereign debt in Greece, Ireland, Italy, Portugal and Spain, which created concerns about the ability

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of these nations to continue to service their sovereign debt obligations. While the financial stability of many of such countries has improved significantly, risks resulting from any future debt crisis in Europe or any similar crisis could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in these countries and the financial condition of European financial institutions. In July and August 2015, Greece reached agreements with its international creditors for bailouts that provide aid in exchange for austerity terms that had previously been rejected by Greek voters. Market and economic disruptions have affected, and may in the future affect, consumer confidence levels and spending, personal bankruptcy rates, levels of incurrence and default on consumer debt and home prices, among other factors. We cannot assure you that market disruptions in Europe, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy, and we cannot assure you that assistance packages will be available, or if available, be sufficient to stabilize countries and markets in Europe or elsewhere affected by a financial crisis. To the extent uncertainty regarding any economic recovery in Europe negatively impacts consumer confidence and consumer credit factors, our business, financial condition and results of operations could be significantly and adversely affected.

In addition, stock prices in China experienced a significant decline in the second quarter of 2015, resulting primarily from continued sell-off of shares trading in Chinese markets. In August 2015, Chinese authorities sharply devalued China's currency. Chinese market volatility has been followed by volatility in stock markets around the world, including in the United States, and increased volatility in commodity markets, such as reductions in prices of crude oil. Continued volatility in Chinese markets may have a contagion effect across the financial markets. These market and economic disruptions affected, and may in the future affect, the U.S. capital markets, which could adversely affect our business.

Additionally, Russian intervention in Ukraine beginning in 2014 significantly increased regional geopolitical tensions. The situation remains fluid with potential for further escalation of geopolitical tensions, increased severity of sanctions against Russian interests, and possible Russian countermeasures. Further economic sanctions could destabilize the economic environment and result in increased volatility. Should the economic recovery in the United States be adversely impacted by increased volatility in the global financial markets caused by developments as a result of the Russian sanctions, further turbulence in Chinese markets and global commodity markets or for any other reason, loan and asset growth and liquidity conditions at U.S. financial institutions, including us, may deteriorate.

In October 2014, the Federal Reserve announced that it was concluding its bond-buying program, or quantitative easing, which was designed to stimulate the economy and expand the Federal Reserve's holdings of long-term securities, suggesting that key economic indicators, such as the unemployment rate, had showed signs of improvement since the inception of the program. In December 2016, the Federal Reserve raised the target range for the federal funds rate, which was only the second such interest rate hike in nearly a decade. To the extent the Federal Reserve continues to raise rates, and without quantitative easing by the Federal Reserve, there is a risk that the debt markets may experience increased volatility and that the liquidity of certain of our investments may be reduced. These developments, along with the corresponding potential rise in interest rates and borrowing costs, the United States government's credit and deficit concerns and the European sovereign debt crisis, may negatively impact our ability to access the debt markets on favorable terms.

In November 2016, the U.S. held its federal election and elected Donald Trump as president. While campaigning, Mr. Trump made statements suggesting he may seek to adopt legislation that could significantly affect the regulation of United States financial markets. Areas subject to potential change, amendment or repeal include the Dodd-Frank Act, including the Volcker Rule and various swaps and derivatives regulations, the authority of the Federal Reserve and the Financial Stability Oversight Council, and renewed proposals to separate banks’ commercial and investment banking activities. Mr. Trump also suggested he may seek to adopt new tax legislation which may include limits on interest deductibility and other changes that may impact corporate credit demand or the profitability and cash flow of certain businesses. Mr. Trump also stated he would cause the United States to withdraw from or renegotiate various trade agreements and take other actions that would change current trade policies of the United States. We cannot predict which, if any, of these actions will be taken or, if taken, their effect on the financial stability of the United States. Such actions could have a significant adverse effect on our business, financial condition and results of operations.

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Uncertainty regarding the United Kingdom Referendum Regarding Departure from the European Union could negatively impact our business, financial condition and earnings.

As a consequence of the United Kingdom’s vote to withdraw from the European Union, the government of the United Kingdom may give notice of its withdrawal from the European Union. There is still considerable uncertainty relating to the potential consequences and precise timeframe for the exit, how the negotiations for the terms of withdrawal and new trade agreements will be conducted, and whether the United Kingdom’s exit will increase the likelihood of other countries also departing the European Union. During this period of uncertainty, the negative impact on not only the United Kingdom and European economies, but the broader global economy, could be significant, potentially resulting in increased volatility and illiquidity and lower economic growth for companies that rely significantly on Europe for their business activities and revenues. Any further exits from the European Union, or the possibility of such exits, would likely cause additional market disruption globally and introduce new legal and regulatory uncertainties.

Rising interest rates may adversely affect the value of our portfolio investments which could have an adverse effect on our business, financial condition and results of operations.

Our debt investments may be based on floating rates, such as London Interbank Offer Rate (“LIBOR”), EURIBOR, the Federal Funds Rate or the Prime Rate. General interest rate fluctuations may have a substantial negative impact on our investments, the value of our common stock and our rate of return on invested capital. A reduction in the interest rates on new investments relative to interest rates on current investments could also have an adverse impact on our net interest income. An increase in interest rates could decrease the value of any investments we hold which earn fixed interest rates, including subordinated loans, senior and junior secured and unsecured debt securities and loans and high yield bonds, and also could increase our interest expense, thereby decreasing our net income. Also, an increase in interest rates available to investors could make investment in our common stock less attractive if we are not able to increase our dividend rate, which could reduce the value of our common stock.

Because we have borrowed money, and may issue preferred stock to finance investments, our net investment income depends, in part, upon the difference between the rate at which we borrow funds or pay distributions on preferred stock and the rate that our investments yield. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In periods of rising interest rates, our cost of funds would increase except to the extent we have issued fixed rate debt or preferred stock, which could reduce our net investment income.

You should also be aware that a change in the general level of interest rates can be expected to lead to a change in the interest rate we receive on many of our debt investments. Accordingly, a change in the interest rate could make it easier for us to meet or exceed the performance threshold and may result in a substantial increase in the amount of incentive fees payable to our Advisor with respect to the portion of the Incentive Fee based on income.

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

In the recent past, concerns have been publicized that some of the member banks surveyed by the British Bankers’ Association (“BBA”) in connection with the calculation of LIBOR across a range of maturities and currencies may have been under-reporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivatives positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various jurisdictions are ongoing.

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

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Risks related to our business

We may not replicate the Company’s historical performance or the historical performance of other entities managed or supported by the Advisor.

We may not be able to replicate the Company’s historical performance or the historical performance of the Advisor’s investments, and our investment returns may be substantially lower than the returns achieved by the Company in the past. We can offer no assurance that the Advisor will be able to continue to implement our investment objective with the same degree of success as it has had in the past.

Our business model depends upon the development and maintenance of strong referral relationships with other asset managers and investment banking firms.

We are substantially dependent on our informal relationships, which we use to help identify and gain access to investment opportunities. If we fail to maintain our relationships with key firms, or if we fail to establish strong referral relationships with other firms or other sources of investment opportunities, we will not be able to grow our portfolio of equity investments and achieve our investment objective. In addition, persons with whom we have informal relationships are not obligated to inform us of investment opportunities, and therefore such relationships may not lead to the origination of equity or other investments. Any loss or diminishment of such relationships could effectively reduce our ability to identify attractive portfolio companies that meet our investment criteria, either for direct equity investments or for investments through private secondary market transactions or other secondary transactions.

The Advisor’s liability is limited under the investment management agreement, and we are required to indemnify the Advisor against certain liabilities, which may lead the Advisor to act in a riskier manner on our behalf than it would when acting for its own account.

The Advisor has not assumed any responsibility to us other than to render the services described in the investment management agreement, and it will not be responsible for any action of our board of directors in declining to follow the Advisor's advice or recommendations. Pursuant to the investment management agreement, the Advisor and its members and their respective officers, managers, partners, agents, employees, controlling persons and members and any other person or entity affiliated with it will not be liable to us for their acts under the investment management agreement, absent willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties. We have agreed to indemnify, defend and protect the Advisor and its members and their respective officers, managers, partners, agents, employees, controlling persons and members and any other person or entity affiliated with it with respect to all damages, liabilities, costs and expenses resulting from acts of the Advisor not arising out of willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties under the investment and management agreement. These protections may lead the Advisor to act in a riskier manner when acting on our behalf than it would when acting for its own account.

We may suffer credit losses.

Investment in middle-market companies is highly speculative and involves a high degree of risk of credit loss, and therefore our securities may not be suitable for someone with a low tolerance for risk. These risks are likely to increase during an economic recession.

Our use of borrowed funds, including under the Leverage Program, to make investments exposes us to risks typically associated with leverage.

The Operating Company borrows money, both directly and indirectly through TCPC Funding and the SBIC. As a result:

• our common stock is exposed to incremental risk of loss and a decrease in the value of our investments would have a greater negative impact on the value of our common stock than if we did not use leverage;

• adverse changes in interest rates could reduce or eliminate the incremental income we make with the proceeds of leverage;

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• we, and indirectly our common stockholders, bear the entire cost of issuing and paying interest or dividends on any borrowed funds issued by us or the Operating Company;

• our ability to pay dividends on our common stock will be restricted if our asset coverage ratio is not at least 200% and any amounts used to service indebtedness would not be available for such dividends; and

• our ability to amend the Operating Company organizational documents or investment management agreements may be restricted if such amendment could have a material adverse impact on lenders under our Leverage Program.

The use of leverage creates increased risk of loss and is considered a speculative investment technique. The use of leverage magnifies the potential gains and losses from an investment and increases the risk of loss of capital. To the extent that income derived by us from investments purchased with borrowed funds is greater than the cost of borrowing, our net income will be greater than if borrowing had not been used. Conversely, if the income from investments purchased from these sources is not sufficient to cover the cost of the leverage, our net investment income will be less than if leverage had not been used, and the amount available for ultimate distribution to the holders of common stock will be reduced. The extent to which the gains and losses associated with leveraged investing are increased will generally depend on the degree of leverage employed. We may, under some circumstances, be required to dispose of investments under unfavorable market conditions in order to maintain our leverage, thus causing us to recognize a loss that might not otherwise have occurred. In the event of a sale of investments upon default under our borrowing arrangements, secured creditors will be contractually entitled to direct such sales and may be expected to do so in their interest, rather than in the interests of the holders of common stock. Holders of common stock will incur losses if the proceeds from a sale in any of the foregoing circumstances are insufficient, after payment in full of amounts due and payable on leverage, including administrative expenses, to repay such holders investments in our common stock. As a result, you could experience a total loss of your investment. Any decrease in our revenue would cause our net income to decline more than it would have had we not borrowed funds and could negatively affect our ability to make distributions on our common stock. The ability to service any debt that we have or may have outstanding depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. There is no limitation on the percentage of portfolio investments that can be pledged to secure borrowings. The amount of leverage that we employ at any particular time will depend on our Advisor’s and our board of director’s assessments of market and other factors at the time of any proposed borrowing.

In addition to regulatory restrictions that restrict our ability to raise capital, the Leverage Program contains various covenants which, if not complied with, could accelerate repayment under the SVCP Facility and TCPC Funding Facility, thereby materially and adversely affecting our liquidity, financial condition and results of operations.

Under the Leverage Program, we must comply with certain financial and operational covenants. These covenants include:

• restrictions on the level of indebtedness that we are permitted to incur in relation to the value of our assets;

• restrictions on our ability to make distributions and other restricted payments under certain circumstances;

• restrictions on extraordinary events, such as mergers, consolidation and sales of assets;

• restrictions on our ability to incur liens and incur indebtedness; and

• maintenance of a minimum level of stockholders’ equity.

In addition, by limiting the circumstances in which borrowings may occur under the SVCP Facility and TCPC Funding Facility, the credit agreements related to such facilities (the “Credit Agreements”) in effect provide for various asset coverage, credit quality and diversification limitations on our investments. Such limitations may cause us to be unable to make or retain certain potentially attractive investments or to be forced to sell investments at an inappropriate time and consequently impair our profitability or increase losses or result in adverse tax consequences. As of February 27, 2017, we were in compliance with these covenants. However our continued compliance with these covenants depends on many factors, some of which are beyond our control.

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Accordingly, there are no assurances that we will continue to comply with the covenants in the Credit Agreements. Failure to comply with these covenants would result in a default under the Credit Agreements which, if we were unable to obtain a waiver from the respective lenders thereunder, could result in an acceleration of repayments under the Credit Agreements.

The SVCP Facility also has certain “key man” provisions. For example, it is an event of default if either Howard M. Levkowitz or Rajneesh Vig cease to be actively involved in the management of the Advisor and is not replaced with someone with comparable skills within 180 days. Further, if any two of the individuals cease to be actively involved in management of the Advisor, the administrative agent under the Operating Company’s Credit Agreement may veto a proposed replacement for one of such individuals and may veto any of the Operating Company’s portfolio transactions that are in excess of 15% of its total assets until a replacement has been appointed to fill one of such positions.

The SVCP Facility matures in July 2018 and the TCPC Funding Facility matures in March 2020, subject to extension by the lenders at our request. Any inability to renew, extend or replace the SVCP Facility and/or TCPC Funding Facility could adversely impact our liquidity and ability to find new investments or maintain distributions to our stockholders.

The SVCP Facility matures July 31, 2018, subject to extension by the lenders at our request. Advances under the SVCP Facility generally bear interest at LIBOR plus 2.50% per annum, subject to certain limitations. The TCPC Funding Facility matures on March 6, 2020, subject to an extension by the lender at our request. Advances under the TCPC Funding Facility generally bear interest based on LIBOR plus either 2.25% or 2.50% per annum, subject to certain limitations. We do not currently know whether we will renew, extend or replace the SVCP Facility and TCPC Funding Facility upon their maturities or whether we will be able to do so on terms that are as favorable as the SVCP Facility and TCPC Funding Facility. In addition, we will be required to liquidate assets to repay amounts due under the SVCP Facility and TCPC Funding Facility if we do not renew, extend or replace the SVCP Facility and TCPC Funding Facility prior to their respective maturities.

Upon the termination of the SVCP Facility and TCPC Funding Facility, there can be no assurance that we will be able to enter into a replacement facility on terms that are as favorable to us, if at all. Our ability to replace the SVCP Facility and TCPC Funding Facility may be constrained by then-current economic conditions affecting the credit markets. In the event that we are not able to replace the SVCP Facility and TCPC Funding Facility at the time of their maturity, this could have a material adverse effect on our liquidity and ability to fund new investments, our ability to make distributions to our stockholders and our ability to qualify as a RIC.

The creditors under the SVCP Facility and TCPC Funding Facility have a first claim on all of the Company’s assets included in the collateral for the respective facilities.

Lenders have fixed dollar claims on our assets that are superior to the claims of our common stockholders. Substantially all of our current assets have been pledged as collateral under the SVCP Facility and TCPC Funding Facility. If an event of default occurs under either of the SVCP Facility and TCPC Funding Facility, the respective lenders would be permitted to accelerate amounts due under the respective facilities and liquidate our assets to pay off amounts owed under the respective facilities and limitations would be imposed on us with respect to the purchase or sale of investments. Such limitations may cause us to be unable to make or retain certain potentially attractive investments or to be forced to sell investments at an inappropriate time and consequently impair our profitability or increase our losses or result in adverse tax consequences.

In the event of the dissolution of the Operating Company or otherwise, if the proceeds of the Operating Company’s assets (after payment in full of obligations to any such debtors) are insufficient to repay capital invested in us by the holders of the common stock, no other assets will be available for the payment of any deficiency. None of our board of directors, the Advisor, the General Partner or any of their respective affiliates, have any liability for the repayment of capital contributions made to the Company by the holders of common stock. Holders of common stock could experience a total loss of their investment in the Company.

Lenders under the SVCP Facility may have a veto power over the Company’s investment policies.

If a default has occurred under the SVCP Facility, the lenders under the SVCP Facility may veto changes in investment policies. The SVCP Facility also has certain limitations on unusual types of investments such as commodities, real estate and speculative derivatives, which are not part of the Company’s investment strategy or policies in any event.

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

The SBIC is subject to SBA regulations, and any failure to comply with SBA regulations could have an adverse effect on our operations.

On April 22, 2014, the SBIC received an SBIC license from the SBA. The SBIC license allows the SBIC to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA-guaranteed debentures are non-recourse, interest only debentures with interest payable semi-annually and have a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, will have a superior claim to the SBIC's assets over our stockholders in the event we liquidate the SBIC or the SBA exercises its remedies under the SBA-guaranteed debentures issued by the SBIC upon an event of default.

Under current SBA regulations, a licensed SBIC can provide capital to those entities that have a tangible net worth not exceeding $19.5 million and an average annual net income after Federal income taxes not exceeding $6.5 million for the two most recent fiscal years. In addition, a licensed SBIC must devote 25% of its investment activity to those entities that have a tangible net worth not exceeding $6.0 million and an average annual net income after Federal income taxes not exceeding $2.0 million for the two most recent fiscal years. The SBA regulations also provide alternative size standard criteria to determine eligibility, which depend on the industry in which the business is engaged and are based on factors such as the number of employees and gross sales. The SBA regulations permit licensed SBICs to make long term loans to small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services. 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 SBIC to forego attractive investment opportunities that are not permitted under SBA regulations.

Further, the SBA regulations require that a licensed SBIC be periodically examined and audited by the SBA to determine its compliance with the relevant SBA regulations. The SBA prohibits, without prior SBA approval, a “change of control” of an SBIC or any transfers of the capital stock of a licensed SBIC. If the SBIC fails to comply with applicable SBA regulations, the SBA could, depending on the severity of the violation, limit or prohibit its use of debentures, declare outstanding debentures immediately due and payable, and/or limit it 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. The Advisor, as the SBIC's investment adviser, does not have any previous experience managing an SBIC. Its limited experience in complying with SBA regulations may hinder its ability to take advantage of the SBIC's access to SBA-guaranteed debentures. Any failure to comply with SBA regulations could have an adverse effect on our operations.

SBA regulations limit the outstanding dollar amount of SBA-guaranteed debentures that may be issued by an SBIC or group of SBICs under common control.

The SBA regulations currently limit the dollar amount of SBA-guaranteed debentures that can be issued by any one SBIC to $150.0 million or to a group of SBICs under common control to $350.0 million.

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An SBIC may not borrow an amount in excess of two times (and in certain cases, up to three times) its regulatory capital. As of December 31, 2016, the SBIC had $61.0 million in SBA-guaranteed debentures outstanding. If we reach the maximum dollar amount of SBA-guaranteed debentures permitted, and if we require additional capital, our cost of capital may increase, and there is no assurance that we will be able to obtain additional financing on acceptable terms.

Moreover, the current status of the SBIC as an SBIC does not automatically assure that the SBIC will continue to receive SBA-guaranteed debenture funding. Receipt of SBA leverage funding is dependent upon the SBIC continuing to be in compliance with SBA regulations and policies and available SBA funding. The amount of SBA leverage funding available to SBICs is dependent upon annual Congressional authorizations and in the future may be subject to annual Congressional appropriations. There can be no assurance that there will be sufficient debenture funding available at the times desired by the SBIC.

The debentures guaranteed by the SBA have a maturity of ten years and require semi-annual payments of interest. The SBIC will need to generate sufficient cash flow to make required interest payments on the debentures. If the SBIC is unable to meet their financial obligations under the debentures, the SBA, as a creditor, will have a superior claim to the SBIC's assets over our stockholders in the event we liquidate the SBIC or the SBA exercises its remedies under such debentures as the result of a default by us.

If we incur additional leverage, it will increase the risk of investing in shares of our common stock.

The Company has indebtedness pursuant to the Leverage Program and expects, in the future, to borrow additional amounts under the SVCP Facility and TCPC Funding Facility and may increase the size of the SVCP Facility and TCPC Funding Facility or enter into other borrowing arrangements.

Illustration. The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing below. The calculation is based on our level of leverage at December 31, 2016, which represented borrowings equal to 41.8% of our total assets. On such date, we also had $1,387.6 million in total assets; $1,315.0 million in total investments; an average cost of funds of 3.95%; $579.9 million aggregate principal amount of debt outstanding; and $791.0 million of total net assets. In order to compute the “Corresponding Return to Common Stockholders,” the “Assumed Return on Portfolio (Net of Expenses Other than Interest)” is multiplied by the total value of our investment portfolio at December 31, 2016 to obtain an assumed return to us. From this amount, interest expense multiplied the combined rate of interest of 3.95% by the $579.9 million of debt is subtracted to determine the return available to stockholders. The return available to stockholders is then divided by the total value of our net assets at December 31, 2016 to determine the “Corresponding Return to Common Stockholders.” Actual interest payments may vary.

Assumed Return on Portfolio (Net of Expenses Other than Interest)	-10	%	-5	%	0	%	5	%	10	%
Corresponding Return to Common Stockholders	-20	%	-11	%	-3	%	5	%	14	%

The assumed portfolio return in the table is based on SEC regulations and is not a prediction of, and does not represent, our projected or actual performance. The table also assumes that we will maintain a constant level of leverage. The amount of leverage that we use will vary from time to time.

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

Our investments generally are made and will continue to be made in private companies. Substantially all of these securities will be subject to legal and other restrictions on resale or will be otherwise less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we had previously recorded our investments. Further, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we or an affiliated manager has material non-public information regarding such portfolio company.

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A substantial portion of our portfolio investments may be recorded at fair value as determined using a consistently applied valuation process in accordance with our documented valuation policy that has been reviewed and approved by our board of directors, who also approve in good faith the valuation of such securities and, as a result, there may be uncertainty regarding the value of our portfolio investments.

The debt and equity investments that we make for which market quotations are not readily available will be valued at fair value as determined using a consistently applied valuation process in accordance with our documented valuation policy that has been reviewed and approved by our board of directors, who also approve in good faith the valuation of such securities. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. Our net asset value could be adversely affected if determinations regarding the fair value of these investments were materially higher than the values ultimately realized upon the disposal of such investments.

We are exposed to risks associated with changes in interest rates.

General interest rate fluctuations may have a substantial negative impact on our investments, the value of our common stock and our rate of return on invested capital. A reduction in the interest rates on new investments relative to interest rates on current investments could also have an adverse impact on our net investment income. An increase in interest rates could decrease the value of any investments we hold that earn fixed interest rates, including subordinated loans, senior and junior secured and unsecured debt securities and loans and high-yield bonds, and also could increase our interest expense, thereby decreasing our net income. Also, an increase in interest rates available to investors could make investment in our common stock less attractive if we are not able to increase our dividend rate, which could reduce the value of our common stock.

The Advisor may face conflicts in allocating investment opportunities between us and certain other entities that could adversely impact our investment returns.

The Advisor and its affiliates, employees and associates currently do and in the future may manage other funds and accounts, including for other funds and accounts in which certain holders of our common stock have investments, which we refer to as Other Advisor Accounts. Other Advisor Accounts invest in assets that are also eligible for purchase by us. Our investment policies, fee arrangements and other circumstances may vary from those of Other Advisor Accounts. Accordingly, conflicts may arise regarding the allocation of investments or opportunities among us and Other Advisor Accounts. In general, the Advisor and its affiliates will allocate investment opportunities pro rata among us and Other Advisor Accounts (assuming the investment satisfies the objectives of each) based on the amount of committed capital each then has available. The allocation of certain investment opportunities in private placements is subject to independent director approval pursuant to the terms of the co-investment exemptive order applicable to us and described below. In certain cases, investment opportunities may be made other than on a pro rata basis. For example, we may desire to retain an asset at the same time that one or more Other Advisor Accounts desire to sell it or we may not have additional capital to invest at a time Other Advisor Accounts do. When our investment allocations are made on a basis other than pro rata our investment performance may be less favorable when compared to the investment performance of Other Advisor Accounts with respect to those investments. The Advisor and its affiliates intend to allocate investment opportunities to us and Other Advisor Accounts in a manner that they believe in their judgment and based upon their fiduciary duties to be appropriate given the investment objectives, size of transaction, investable assets, alternative investments potentially available, prior allocations, liquidity, maturity, expected holding period, diversification, lender covenants and other limitations of ours and the Other Advisor Accounts. See “— Risks related to our operations as a BDC — While our ability to enter into transactions with our affiliates is restricted under the 1940 Act, we have received an exemptive order from the SEC permitting certain affiliated investments subject to certain conditions. As a result, the Advisor may face conflicts of interests and investments made pursuant to the exemptive order conditions could in certain circumstances adversely affect the price paid or received by us or the availability or size of the position purchased or sold by us.”

There may be situations in which Other Advisor Accounts and the Company might invest in different securities issued by the same portfolio company. It is possible that if the portfolio company’s financial performance and condition deteriorates such that one or both investments are or could be impaired, the Advisor might face a conflict of interest given the difference in seniority of the respective investments. In such situations,

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the Advisor would review the conflict on a case-by-case basis and implement procedures consistent with its fiduciary duty to enable it to act fairly to the Other Advisor Accounts and the Company in the circumstances. Any steps by the Advisor will take into consideration the interests of each of the affected clients, the circumstances giving rise to the conflict, the procedural efficacy of various methods of addressing the conflict and applicable legal requirements.

Moreover, the Advisor’s investment professionals, its Investment Committee (as defined below), its senior management and employees serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business. Accordingly, these individuals may have obligations to investors in those entities or funds, the fulfillment of which might not be in our best interests or the best interests of our stockholders. In addition, certain of the personnel employed by the Advisor or focused on our business may change in ways that are detrimental to our business.

We have limited operating history as a BDC and, if the Advisor is unable to manage our investments effectively, we may be unable to achieve our investment objective.

Our ability to achieve our investment objective will depend on our ability to manage our business, which will depend, in turn, on the ability of the Advisor to identify, invest in and monitor companies that meet our investment criteria. Accomplishing this result will largely be a function of the Advisor's investment process. Although the Advisor has managed closed-end funds with similar restrictions, the 1940 Act imposes numerous constraints on the operations of BDCs. The Advisor's limited experience in operating under these constraints may hinder the Advisor's ability to help us take advantage of attractive investment opportunities and to achieve our investment objectives. For example, BDCs are prohibited from making any nonqualifying investment unless at least 70% of their total assets are primarily in qualifying investments, which are primarily securities of private or thinly-traded U.S. companies (excluding certain financial companies), cash, cash equivalents, U.S. Government securities and other high quality debt investments that mature in one year or less. The Advisor has limited experience investing under these constraints. In addition, the General Partner has limited experience administering a BDC.

The Advisor and its partners, officers, directors, members, managers, employees, affiliates and agents may be subject to certain potential or actual conflicts of interest in connection with the activities of, and investments by, us.

The Advisor and its affiliates may spend substantial time on other business activities, including investment management and advisory activities for entities with the same or overlapping investment objectives, investing for their own account, financial advisory services (including services for entities in which we invest), and acting as directors, officers, creditor committee members or in similar capacities. Subject to the requirements of the 1940 Act and other applicable laws, the Advisor and its affiliates and associates intend to engage in such activities and may receive compensation from third parties for their services. Subject to the same requirements, such compensation may be payable by entities in which we invest in connection with actual or contemplated investments, and the Advisor may receive fees and other compensation in connection with structuring investments which they will share.

The Advisor’s management fee is based on a percentage of our total assets (other than cash or cash equivalents) and the Advisor may have conflicts of interest in connection with decisions that could affect our total assets, such as decisions as to whether to incur additional debt to increase management fees paid and to recoup the Advisor’s payment of half of the sales load in connection with our initial public offering in April 2012.

Our incentive compensation may induce our Advisor to make certain investments, including speculative investments.

The incentive compensation payable by us to the Advisor and the General Partner may create an incentive for the Advisor to make investments on our behalf that are risky or more speculative than would be the case in the absence of such compensation arrangement. The way in which the incentive compensation payable to the Advisor is determined may encourage the Advisor to increase the use of leverage or take additional risk to increase the return on our investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would disfavor the holders of our common stock, or of securities convertible into our common stock or warrants representing rights to purchase our common stock or securities convertible into

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our common stock. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to certain of our debt investments and may accordingly result in a substantial increase in the amount of incentive compensation payable to the Advisor with respect to our cumulative investment income. Although the incentive compensation payable to the General Partner or the Advisor is subject to a total return limitation, the Advisor may have some ability to accelerate the realization of gains to obtain incentive compensation earlier than it otherwise would when it may be in our best interests to not yet realize gains. Our directors monitor our use of leverage and the Advisor’s management of our investment program in the best interests of our common stockholders.

We may invest, to the extent permitted by law, in the securities and instruments of other investment companies, including private funds, and, to the extent we so invest, we will bear our ratable share of any such investment company’s expenses, including management and performance fees. We will also remain obligated to pay management and incentive compensation to the Advisor with respect to the assets invested in the securities and instruments of other investment companies. With respect to each of these investments, each of our common stockholders will bear his or her share of our management and incentive compensation as well as indirectly bear the management and performance fees and other expenses of any investment companies in which we invest.

We may be obligated to pay the Advisor incentive compensation payments in excess of the amounts we would have paid if such compensation was subject to clawback arrangements.

The Advisor or the General Partner is entitled to incentive compensation for each fiscal quarter after January 1, 2013 in an amount equal to a percentage of our ordinary income (before deducting incentive compensation) since that date and, separately, a percentage of our realized capital gains (net of realized capital losses and unrealized depreciation) since that date, in each case subject to a cumulative total return requirement. If we pay incentive compensation and thereafter experience additional realized capital losses or unrealized capital depreciation such that we would no longer have been required to provide incentive compensation, we will not be able to recover any portion of the incentive compensation previously paid or distributed because our incentive compensation arrangements do not contain any clawback provisions. As a result, the incentive compensation could exceed 20% of our cumulative total return, depending on the timing of unrealized appreciation, net unrealized depreciation and net realized capital losses. For example, part of the incentive compensation payable or distributable by us that relates to our ordinary income is computed on income that may include interest that has been accrued but not yet received in cash. If a portfolio company defaults on a loan, it is possible that accrued interest previously used in the calculation of the incentive compensation will become uncollectible. Similarly, the income component is measured against a total return limitation that includes unrealized gains. Such gains may not be realized or may be realized at a lower amount. Consequently, we may have paid incentive compensation on income in circumstances where we otherwise would not have done so and with respect to which we do not have a clawback right against the Advisor or the General Partner.

The General Partner may have certain interests that conflict with the interests of the board of directors in the governance of the Operating Company.

The General Partner, an affiliate of the Advisor, is responsible for the day-to-day operations of the Operating Company subject to the general supervision of the board of directors including various significant matters such as the issuance of additional classes of securities of the Operating Company and the determination of the timing and amounts of distributions payable by the Operating Company. The decisions of the General Partner with respect to these and other matters may be subject to various conflicts of interest arising out of its relationship with us and its affiliates. The General Partner could be confronted with decisions where it will, directly or indirectly, have an economic incentive to place its interests or the interests of its affiliates above ours.

We are dependent upon senior management personnel of the Advisor for our future success, and if the Advisor is unable to retain qualified personnel or if the Advisor loses any member of its senior management team, our ability to achieve our investment objective could be significantly harmed.

The success of the Company is highly dependent on the financial and managerial expertise of the Advisor. The loss of one or more of the voting members of the Investment Committee could have a material adverse effect on the performance of the Company. Although the Advisor and the voting members of the Investment Committee devote a significant amount of their respective efforts to the Company, they actively manage investments for other clients and are not required to (and will not) devote all of their time to the Company’s affairs.

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The Advisor or its affiliates may, from time to time, possess material non-public information, limiting our investment discretion.

The Advisor’s investment professionals, Investment Committee or their respective affiliates may serve as directors of, or in a similar capacity with, companies in which we invest. In the event that material non-public information is obtained with respect to such companies, or we became subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us and, consequently, your interests as a stockholder.

The Advisor can resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

The Advisor has the right, under our investment management agreement, to resign at any time upon not more than 60 days’ written notice, whether we have found a replacement or not. If the Advisor resigns, we may not be able to find a new investment advisor or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our shares may decline. In addition, the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by the Advisor and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our financial condition, business and results of operations.

We may in the future determine to fund a portion of our investments by issuing preferred stock, which would magnify the potential gains or losses and the risks of investing in us in the same manner as our borrowings.

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, preferred stock, which is another form of leverage, has the same risks to our common stockholders as borrowings because 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). Lastly, under the 1940 Act, preferred stock constitutes a “senior security” for purposes of the 200% asset coverage test.

We may experience fluctuations in our periodic operating results.

We could experience fluctuations in our periodic operating results due to a number of factors, including the interest rates payable on the debt securities we acquire, the default rate on such securities, the level of our expenses (including the interest rates payable on our borrowings), the dividend rates payable on preferred stock we issue, 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.

If we fail to maintain our status as a business development company, our business and operating flexibility could be significantly reduced.

We qualify as business development companies under the 1940 Act. The 1940 Act imposes numerous constraints on the operations of business development companies. For example, BDCs are prohibited from making any unqualifying investments unless at least 70% of their total assets are invested in qualifying investments which are primarily securities of private or thinly-traded U.S. companies, cash, cash equivalents, U.S. government securities and other high quality debt investments that mature in one year or less. Failure to comply with the requirements imposed on business development companies by the 1940 Act could cause the

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SEC to bring an enforcement action against us and/or expose us to claims of private litigants. In addition, any such failure could cause an event of default under the Leverage Program, which could have a materially adverse effect on our business, financial conditions or results of operations.

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 growth. If additional funds are unavailable or not available on favorable terms, our ability to grow will be impaired.

In order for the Holding Company to qualify for the tax benefits available to RICs and to minimize payment of excise taxes, we intend to distribute to our stockholders substantially all of our annual taxable income, except that we may retain certain net capital gains for reinvestment in common interests of the Operating Company, and treat such amounts as deemed distributions to our stockholders. If we elect to treat any amounts as deemed distributions, we must pay income taxes at the corporate rate on such deemed distributions on behalf of our stockholders and our stockholders will receive a tax credit for such amounts and an increase in basis. A stockholder that is not subject to U.S. federal income tax or otherwise is not required to file a U.S. federal income tax return would be required to file a U.S. federal income tax return on the appropriate form in order to claim a refund for the taxes we paid. As a result of these requirements, we will likely need to raise capital from other sources to grow our business. Unfavorable economic or capital market conditions may increase our funding costs, limit our access to the capital markets or could result in a decision by lenders not to extend credit to us. An inability to successfully access the capital markets could limit our ability to grow our business and fully execute our business strategy and could decrease our earnings, if any.

As a BDC, we are not able to incur senior securities unless after giving effect thereto we meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which includes all of our borrowings, of at least 200%. This means that for every $100 of net assets, we may raise $100 from senior securities, such as borrowings or issuing preferred stock. These requirements limit the amount that we may borrow. On July 13, 2015, we obtained exemptive relief from the SEC to permit us to exclude the debt of TCPC SBIC LP guaranteed by the SBA from our 200% asset coverage test under the 1940 Act. The exemptive relief provides us with increased flexibility under the 200% asset coverage test by permitting the SBIC to borrow up to $150.0 million more than it would otherwise be able to absent the receipt of this exemptive relief.

Because we will continue to need capital to grow our investment portfolio, these limitations may prevent us from incurring debt and require us to raise additional equity at a time when it may be disadvantageous to do so. While we expect we will be able to borrow and to issue additional debt securities and expect that we will be able to issue additional 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 business development company, we generally will not be 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 or common stock price could decline.

The highly competitive market in which we operate may limit our investment opportunities.

A number of entities compete with us to make the types of investments that we make. We compete with other BDCs, public and private funds, commercial and investment banks, commercial financing companies, and, to the extent they provide an alternative form of financing, private equity funds. Additionally, because competition for investment opportunities generally has increased among alternative investment vehicles, such as hedge funds, those entities now invest in areas in which they have not traditionally invested, including making investments in middle-market private companies. As a result of these new entrants, competition for investment opportunities intensified over the past several years and may intensify further in the future. Some of our existing and potential competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions and valuation requirements that the 1940 Act imposes on us as a BDC and that the Code imposes on us as a RIC. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this existing and potentially increasing

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competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we can offer no assurance that we will be able to identify and make investments that are consistent with our investment objective.

We do not seek to compete primarily based on the interest rates we offer, and we believe that some of our competitors make loans with interest rates that are comparable to or lower than the rates we offer.

We may lose investment opportunities if we do not match our competitors’ pricing, terms and structure. If we match our competitors’ pricing, terms and structure, we may experience decreased net interest income and increased risk of credit loss. As a result of operating in such a competitive environment, we may make investments that are on better terms to our portfolio companies than what we may have originally anticipated, which may impact our return on these investments.

Our board of directors may change our operating policies and strategies without prior notice or stockholder approval.

Our board of directors has the authority to modify or waive our operating policies and strategies without prior notice and without stockholder approval. We cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results or value of our stock. Nevertheless, the effects could adversely affect our business and impact our ability to make distributions and cause you to lose all or part of your investment.

Risks related to our investments

Our investments may be risky, and you could lose all or part of your investment.

We invest primarily in middle-market companies primarily through leveraged loans.

Risks Associated with middle-market companies. Investing in private middle-market companies involves a number of significant risks, including:

• these companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral;

• they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns;

• they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on the portfolio company and, in turn, on us;

• they generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position;

• our executive officers, directors and the Advisor may, in the ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies;

• changes in laws and regulations, as well as their interpretations, may adversely affect their respective businesses, financial structures or prospects; and

• they may have difficulty accessing the capital markets to meet future capital needs.

Little public information exists about private middle-market companies, and we expect to rely on the Advisor’s investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. These companies and their financial information are not subject to the Sarbanes-Oxley Act of 2002 and other rules that govern disclosures and financial controls of public companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and we may lose money on our investment.

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Lower Credit Quality Obligations. Most of our debt investments are likely to be in lower grade obligations. The lower grade investments in which we invest may be rated below investment grade by one or more nationally-recognized statistical rating agencies at the time of investment or may be unrated but determined by the Advisor to be of comparable quality. Debt securities rated below investment grade are commonly referred to as “junk bonds” and are considered speculative with respect to the issuer’s capacity to pay interest and repay principal. The debt that we invest in typically is not rated prior to our investment by any rating agency, but we believe that if such investments were rated, they would be below investment grade (rated lower than “Baa3” by Moody’s Investors Service, lower than “BBB-” by Fitch Ratings or lower than “BBB-” by Standard & Poor’s). We may invest without limit in debt of any rating, as well as debt that has not been rated by any nationally recognized statistical rating organization.

Investment in lower grade investments involves a substantial risk of loss. Lower grade securities or comparable unrated securities are considered predominantly speculative with respect to the issuer’s ability to pay interest and principal and are susceptible to default or decline in market value due to adverse economic and business developments. The market values for lower grade debt tend to be very volatile and are less liquid than investment grade securities. For these reasons, your investment in our company is subject to the following specific risks:

• increased price sensitivity to a deteriorating economic environment;

• greater risk of loss due to default or declining credit quality;

• adverse company specific events are more likely to render the issuer unable to make interest and/or principal payments; and

• if a negative perception of the lower grade debt market develops, the price and liquidity of lower grade securities may be depressed. This negative perception could last for a significant period of time.

Adverse changes in economic conditions are more likely to lead to a weakened capacity of a lower grade issuer to make principal payments and interest payments than an investment grade issuer. The principal amount of lower grade securities outstanding has proliferated in the past decade as an increasing number of issuers have used lower grade securities for corporate financing. An economic downturn could severely affect the ability of highly leveraged issuers to service their debt obligations or to repay their obligations upon maturity. Similarly, downturns in profitability in specific industries could adversely affect the ability of lower grade issuers in that industry to meet their obligations. The market values of lower grade debt tend to reflect individual developments of the issuer to a greater extent than do higher quality investments, which react primarily to fluctuations in the general level of interest rates. Factors having an adverse impact on the market value of lower grade debt may have an adverse effect on our net asset value and the market value of our common stock. In addition, we may incur additional expenses to the extent we are required to seek recovery upon a default in payment of principal of or interest on our portfolio holdings. In certain circumstances, we may be required to foreclose on an issuer’s assets and take possession of its property or operations. In such circumstances, we would incur additional costs in disposing of such assets and potential liabilities from operating any business acquired.

The secondary market for lower grade debt is unlikely to be as liquid as the secondary market for more highly rated debt, a factor which may have an adverse effect on our ability to dispose of a particular instrument. There are fewer dealers in the market for lower grade securities than investment grade obligations. The prices quoted by different dealers may vary significantly and the spread between the bid and asked price is generally larger than for higher quality instruments. Under adverse market or economic conditions, the secondary market for lower grade debt could contract further, independent of any specific adverse changes in the condition of a particular issuer, and these instruments may become highly illiquid. As a result, we could find it more difficult to sell these instruments or may be able to sell the securities only at prices lower than if such instruments were widely traded. Prices realized upon the sale of such lower rated or unrated securities, under these circumstances, may be less than the prices used in calculating our net asset value.

Since investors generally perceive that there are greater risks associated with lower grade debt of the type in which we may invest a portion of our assets, the yields and prices of such debt may tend to fluctuate more than those for higher rated instruments. In the lower quality segments of the fixed income markets, changes in perceptions of issuers’ creditworthiness tend to occur more frequently and in a more pronounced manner than do changes in higher quality segments of the income securities market, resulting in greater yield and price volatility.

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Distressed Debt Securities Risk. At times, distressed debt obligations may not produce income and may require us to bear certain extraordinary expenses (including legal, accounting, valuation and transaction expenses) in order to protect and recover our investment. Therefore, our ability to achieve current income for our stockholders may be diminished. We also will be subject to significant uncertainty as to when and in what manner and for what value the distressed debt we invest in will eventually be satisfied (e.g., through a liquidation of the obligor’s assets, an exchange offer or plan of reorganization involving the distressed debt securities or a payment of some amount in satisfaction of the obligation). In addition, even if an exchange offer is made or plan of reorganization is adopted with respect to distressed debt we hold, there can be no assurance that the securities or other assets received by us in connection with such exchange offer or plan of reorganization will not have a lower value or income potential than may have been anticipated when the investment was made. Moreover, any securities received by us upon completion of an exchange offer or plan of reorganization may be restricted as to resale. As a result of our participation in negotiations with respect to any exchange offer or plan of reorganization with respect to an issuer of distressed debt, we may be restricted from disposing of such securities.

Payment-in-kind Interest Risk. Our loans may contain a payment-in-kind, or PIK, interest provision. PIK investments carry additional risk as holders of these types of securities receive no cash until the cash payment date unless a portion of such securities is sold. If the issuer defaults the Company may obtain no return on its investment. The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan and recorded as interest income. To avoid the imposition of corporate-level tax on us, this non-cash source of income needs to be paid out to stockholders in cash distributions or, in the event that we determine to do so and in certain cases, in shares of our common stock, even though we have not yet collected and may never collect the cash relating to the PIK interest. As a result, we may have to distribute a taxable stock dividend to account for PIK interest even though we have not yet collected the cash.

Preferred Stock Risk. To the extent we invest in preferred securities, there are special risks, including:

Deferral. Preferred securities may include provisions that permit the issuer, at its discretion, to defer distributions for a stated period without any adverse consequences to the issuer. If we own a preferred security that is deferring its distributions, we may be required to report income for tax purposes although we have not yet received such income.

Subordination. Preferred securities are subordinated to bonds and other debt instruments in a company’s capital structure in terms of priority to corporate income and liquidation payments, and therefore will be subject to greater credit risk than more senior debt instruments.

Liquidity. Preferred securities may be substantially less liquid than many other securities, such as common stocks or U.S. Government securities.

Limited Voting Rights. Generally, preferred security holders have no voting rights with respect to the issuing company unless preferred dividends have been in arrears for a specified number of periods, at which time the preferred security holders may elect a number of directors to the issuer’s board. Generally, once all the arrearages have been paid, the preferred security holders no longer have voting rights.

Equity Security Risk. We may have exposure to equity securities. Although equity securities have historically generated higher average total returns than fixed-income securities over the long term, equity securities also have experienced significantly more volatility in those returns. The equity securities that we acquire may fail to appreciate and may decline in value or become worthless.

Hedging Transactions. We may employ hedging techniques to minimize currency exchange rate risks or interest rate risks, but we can offer no assurance that such strategies will be effective. If we engage in hedging transactions, we may expose ourselves to risks associated with such transactions. Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. Moreover, it may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price. Additionally, engaging in certain hedging transactions could result in adverse tax consequences, e.g. giving rise to income that does not qualify for the 90% annual gross income requirement applicable to RICs.

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Because our investments are generally not in publicly traded securities, there will be uncertainty regarding the value of our investments, which could adversely affect the determination of our net asset value.

Our portfolio investments will generally not be in publicly traded securities. As a result, although we expect that some of our equity investments may trade on private secondary marketplaces, the fair value of our direct investments in portfolio companies will often not be readily determinable. Under the 1940 Act, investments for which there are no readily available market quotations, including securities that while listed on a private securities exchange have not actively traded, will be valued at fair value as determined using a consistently applied valuation process in accordance with our documented valuation policy that has been reviewed and approved by our board of directors, who also approve in good faith the valuation of such securities. In connection with that approval, the board of directors utilizes the services of an independent valuation firm, which prepares valuation reports on a quarterly basis for most of our portfolio investments that are not publicly traded or for which we do not have readily available market quotations, including securities that while listed on a private securities exchange, have not actively traded. However, the board of directors retains ultimate authority as to the appropriate valuation of each such investment. The types of factors that the board of directors takes into account in approving fair value with respect to such non-traded investments includes, as relevant and, to the extent available, the portfolio company’s earnings, the markets in which the portfolio company does business, comparison to valuations of publicly traded companies, comparisons to recent sales of comparable companies, the discounted value of the cash flows of the portfolio company and other relevant factors. This information may not be available because it is difficult to obtain financial and other information with respect to private companies, and even where we are able to obtain such information, there can be no assurance that it is complete or accurate. Because such valuations are inherently uncertain and may be based on estimates, our determinations of fair value may differ materially from the values that would be assessed if a readily available market for these securities existed. Due to this uncertainty, our fair value determinations with respect to any non-traded investments we hold 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 may pay a higher price than the value of our investments might warrant. Conversely, investors selling securities based on a net asset value that understates the value of our investments may receive a lower price for their securities than the value of our investments might warrant.

Economic recessions or downturns could impair our portfolio companies and harm our operating results.

Many of our portfolio companies may be susceptible to economic slowdowns or recessions and may be unable to repay our loans during these periods. Therefore, our non-performing assets may increase and the value of our portfolio may decrease during these periods as we are required to record the values of our investments. Adverse economic conditions also may decrease the value of collateral securing some of our loans and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing investments and harm our operating results.

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, if one of our portfolio companies were to go bankrupt, even though we or one of our affiliates may have structured our interest in such portfolio company as senior debt, depending on the facts and circumstances, including the extent to which we actually provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize our debt holding as equity and subordinate all or a portion of our claim to claims of other creditors.

We may not be in a position to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments.

We do not generally intend to take controlling equity positions in our portfolio companies. To the extent that we do not hold a controlling equity interest in a portfolio company, we are subject to the risk that such portfolio company may make business decisions with which we disagree, and the stockholders and management of such

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portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity for the debt and equity investments that we typically hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company, and may therefore suffer a decrease in the value of our investments.

In addition, we may not be in a position to control any portfolio company by investing in its debt securities. As a result, we are subject to the risk that a portfolio company in which we invest may make business decisions with which we disagree and the management of such company, as representatives of the holders of their common equity, may take risks or otherwise act in ways that do not serve our interests as debt investors.

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

The portfolio companies we invest in usually have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt securities in which we invest. By their terms, such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of the debt securities in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt securities in which we invest, we would have to share any distributions on an equal and ratable basis with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

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

The rights we may have with respect to the collateral securing the loans we make to our portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements, including agreements governing “first out” and “last out” structures, that we enter into with the holders of senior debt. Under such an intercreditor agreement, at any time that obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect of the collateral will be in good faith under the direction of the holders of the obligations secured by the first priority liens: the ability to cause the commencement of enforcement proceedings against the collateral; the ability to control the conduct of such proceedings; the approval of amendments to collateral documents; releases of liens on the collateral; and waivers of past defaults under collateral documents. We may not have the ability to control or direct such actions, even if our rights are adversely affected.

When we are a debt or minority equity investor in a portfolio company, we are often not in a position to exert influence on the entity, and other equity holders and management of the company may make decisions that could decrease the value of our portfolio holdings.

When we make debt or minority equity investments, we are subject to the risk that a portfolio company may make business decisions with which we disagree and the other equity holders and management of such company may take risks or otherwise act in ways that do not serve our interests. As a result, a portfolio company may make decisions that could decrease the value of our investment.

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

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

If one of our portfolio companies were to go bankrupt, even though we may have structured our interest as senior debt, depending on the facts and circumstances, a bankruptcy court might recharacterize our debt holding as an equity investment and subordinate all or a portion of our claim to that of other creditors. In addition, lenders can be subject to lender liability claims for actions taken by them where they become too involved in the borrower's business or exercise control over the borrower. For example, we could become subject to a lender's liability claim, if, among other things, we actually render significant managerial assistance.

Our portfolio companies may be highly leveraged.

Some of our portfolio companies may be highly leveraged, which may have adverse consequences to these companies and to us as an investor. These companies may be subject to restrictive financial and operating covenants and the leverage may impair these companies' ability to finance their future operations and capital needs. As a result, these companies' flexibility to respond to changing business and economic conditions and to take advantage of business opportunities may be limited. Further, a leveraged company's income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used.

Our portfolio companies may prepay loans, which prepayment may reduce stated yields in the future if capital returned cannot be invested in transactions with equal or greater expected yields.

Certain of the loans we make are prepayable at any time, some of them of them at no premium to par. We cannot predict when such loans may be prepaid. Whether a loan is prepaid will depend both on the continued positive performance of the portfolio company and the existence of favorable financing market conditions that permit such company to replace existing financing with less expensive capital. As market conditions change frequently, it is unknown when, and if, this may be possible for each portfolio company. In the case of some of these loans, having the loan prepaid early may reduce the achievable yield for the Company in the future below the current yield disclosed for our portfolio if the capital returned cannot be invested in transactions with equal or greater expected yields.

Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.

Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments in order to: (1) increase or maintain in whole or in part our equity ownership percentage; (2) exercise warrants, options or convertible securities that were acquired in the original or subsequent financing; or (3) attempt to preserve or enhance the value of our initial investment.

We may elect not to make follow-on investments or otherwise lack sufficient funds to make those investments. Our failure to make follow-on investments may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful operation. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make such follow-on investment because we may not want to increase our concentration of risk, because we prefer other opportunities, because we are inhibited by compliance with BDC requirements or because we desire to maintain our tax status.

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

Our investment strategy contemplates that a portion of our investments may be in securities of foreign companies in order to provide diversification or to complement our U.S. investments, although we are required generally to invest at least 70% of our assets in companies organized and having their principal place of business within the U.S. and its possessions. Accordingly, we may invest on an opportunistic basis in certain non-U.S. companies, including those located in emerging markets, that otherwise meet our investment criteria. In regards to the regulatory requirements for business development companies, some of these investments may not qualify as investments in “eligible portfolio companies,” and thus may not be considered “qualifying assets.” “Eligible portfolio companies” generally include U.S. companies that are not investment companies and that do not have securities listed on a national exchange. If at any time less than 70% of our gross assets are comprised of qualifying assets, including as a result of an increase in the value of any non-qualifying assets or decrease in the value of any qualifying assets, we would generally not be permitted to acquire any additional non-qualifying assets until such time as 70% of our then current gross assets were comprised of qualifying assets. We would not be required, however, to dispose of any non-qualifying assets in such circumstances. In addition, investing in foreign companies, and particularly those in emerging markets, may expose us to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. These risks may be more pronounced for portfolio companies located or operating primarily in emerging markets, whose economies, markets and legal systems may be less developed. Further, we may have difficulty enforcing our rights as equity holders in foreign jurisdictions. In addition, to the extent we invest in non-U.S. companies, we may face greater exposure to foreign economic developments.

Although it is anticipated that most of our investments will be denominated in U.S. dollars, our investments that are denominated in a foreign currency will be subject to the risk that the value of a particular currency may change in relation to the U.S. dollar. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and political developments. We may employ hedging techniques to minimize these risks, but we can offer no assurance that we will, in fact, hedge currency risk or, that if we do, such strategies will be effective. As a result, a change in currency exchange rates may adversely affect our profitability.

Our investments in the software publishing sector are subject to various risks, including intellectual property infringement issues and rapid technological changes, which may adversely affect our performance. Software publishing is our largest industry concentration. Each industry contains certain industry related credit risks.

General risks of companies in the software publishing industry sector include intellectual property infringement liability issues, the inability to protect software and other proprietary technology, extensive competition and limited barriers to entry. Generally, the market for software products is characterized by rapid technological change, evolving industry standards, changes in customer requirements and frequent new product introduction and enhancements. If a portfolio company in the software publishing sector cannot develop new products and enhance its current products in response to technological changes and competing products, its business and operating results will be negatively affected. In addition, there has been a substantial amount of litigation in the software industry relating to intellectual property rights. Regardless of whether claims that a company is infringing patents or other intellectual property have any merit, these claims are time-consuming and costly. Moreover, a software publishing company must monitor the unauthorized use of its intellectual property, which may be difficult and costly. A company's failure to protect its intellectual property could put it at a disadvantage to its competitors and harm its business, results of operations and financial condition. If a software publishing company in which we invest is unable to navigate these risks, our performance may be adversely affected.

The effect of global climate change may impact the operations of our portfolio companies.

There may be evidence of global climate change. Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change. For example, the needs of

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customers of energy companies vary with weather conditions, primarily temperature and humidity. To the extent weather conditions are affected by climate change, energy use could increase or decrease depending on the duration and magnitude of any changes. Increases in the cost of energy could adversely affect the cost of operations of our portfolio companies if the use of energy products or services is material to their business. A decrease in energy use due to weather changes may affect some of our portfolio companies’ financial condition, through decreased revenues. Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stresses, including service interruptions.

Risks related to our operations as a BDC

While our ability to enter into transactions with our affiliates is restricted under the 1940 Act, we have received an exemptive order from the SEC permitting certain affiliated investments subject to certain conditions. As a result, the Advisor may face conflicts of interests and investments made pursuant to the exemptive order conditions could in certain circumstances adversely affect the price paid or received by us or the availability or size of the position purchased or sold by us.

Any person that owns, directly or indirectly, 5% or more of our outstanding voting securities or is managed by the Advisor will generally be our affiliate for purposes of the 1940 Act and we are generally prohibited from participating in certain transactions such as co-investing with, or buying or selling any security from or to, such affiliate, absent the prior approval of our independent directors and, in some cases, of the SEC. However, the Advisor and the funds managed by the Advisor have received an exemption from certain SEC regulations prohibiting transactions with affiliates. The exemptive order requires that certain procedures be followed prior to making an investment subject to the order and such procedures could in certain circumstances adversely affect the price paid or received by us or the availability or size of the position purchased or sold by us. The Advisor may also face conflicts of interest in making investments pursuant to the exemptive order. See “Risks related to our business — We have limited operating history as a BDC, and if the Advisor is unable to manage our investments effectively, we may be unable to achieve our investment objective. In addition, the Advisor may face conflicts in allocating investment opportunities between us and certain other entities that could impact our investment returns.”

The 1940 Act also prohibits certain “joint” transactions with certain of our affiliates, which could include investments in the same portfolio company (whether at the same or different times), without prior approval of our independent directors and, in some cases, of the SEC. We are prohibited from buying or selling any security from or to any person who owns more than 25% of our voting securities and from or to certain of that person's affiliates, or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC (other than certain limited situations pursuant to current regulatory guidance). The analysis of whether a particular transaction constitutes a joint transaction requires a review of the relevant facts and circumstances relating to the particular transaction. Similar restrictions limit our ability to transact business with our officers or directors or their affiliates.

Regulations governing our operation as a BDC may limit our ability to, and the way in which we raise additional capital, which could have a material adverse impact on our liquidity, financial condition and results of operations.

Our business may in the future require a substantial amount of capital. We may acquire additional capital from the issuance of additional shares of our common stock or from the additional issuance of senior securities (including debt and preferred stock). However, we may not be able to raise additional capital in the future on favorable terms or at all.

Our board of directors may decide to issue common stock to finance our operations rather than issuing debt or other senior securities. As a BDC, we are generally not able to issue our common stock at a price below net asset value without first obtaining required approvals from our stockholders and our independent directors. If our common stock trades at a discount to net asset value, those restrictions could adversely affect our ability to raise equity capital. Except in connection with the exercise of warrants or the conversion of convertible securities, in any such case the price at which our securities are to be issued and sold may not be less than a price, that in the determination of our board of directors, closely approximates the market value of such securities at the relevant time. We may also make rights offerings to our stockholders at prices per share less than the net asset value per share, subject to the requirements of the 1940 Act. 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 such stockholders may experience dilution.

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We may only issue senior securities up to the maximum amount permitted by the 1940 Act. The 1940 Act permits us to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% after such issuance or incurrence. If our assets decline in value and we fail to satisfy this test or any stricter test under the terms of our leverage instruments, we may be required to liquidate a portion of our investments and repay a portion of our indebtedness at a time when such sales or repayment may be disadvantageous, which could have a material adverse impact on our liquidity, financial condition and results of operations.

Changes in the laws or regulations governing our business or the business of our portfolio companies, or changes in the interpretations thereof or newly enacted legislation and regulations, and any failure by us or our portfolio companies to comply with these laws or regulations, could have a material adverse effect on our business, results of operations or financial condition of us or our portfolio companies.

We are subject to changing rules and regulations of federal and state governments, as well as the stock exchange in which our common stock is listed. These entities, including the Public Company Accounting Oversight Board, the SEC and The Nasdaq Global Select Market, have issued a significant number of new and increasingly complex requirements and regulations over the course of the last several years and continue to develop additional regulations.

Changes in the laws or regulations or the interpretations of the laws and regulations that govern BDCs, RICs or non-depository commercial lenders could significantly affect our operations and our cost of doing business. We are subject to federal, state and local laws and regulations and are subject to judicial and administrative decisions that affect our operations, including our loan originations, maximum interest rates, fees and other charges, disclosures to portfolio companies, the terms of secured transactions, collection and foreclosure procedures and other trade practices. If these laws, regulations or decisions change, or if we expand our business into jurisdictions that have adopted more stringent requirements than those in which we currently conduct business, we may have to incur significant expenses in order to comply, or we might have to restrict our operations. In addition, if we do not comply with applicable laws, regulations and decisions, we may lose licenses needed for the conduct of our business and may be subject to civil fines and criminal penalties, any of which could have a material adverse effect upon our business, results of operations of financial condition.

If we do not invest a sufficient portion of our assets in qualifying assets, we could be precluded from investing in certain assets or could be required to dispose of certain assets, which could have a material adverse effect on our business, financial condition and results of operations.

As a BDC, we are prohibited from acquiring any assets other than “qualifying assets” unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets are qualifying assets. As of December 31, 2016, approximately $224.0 million, or approximately 16.4%, of our adjusted total assets were not “qualifying assets.” If we do not invest a sufficient portion of our assets in qualifying assets, we will be prohibited from investing in additional non-qualifying assets, which could have a material adverse effect on our business, financial condition and results of operations. Similarly, these rules could prevent us from making follow-on investments in existing portfolio companies (which could result in the dilution of our position) or could require us to dispose of investments at inopportune times in order to come into compliance with the 1940 Act. If we need to dispose of these investments quickly, it may be difficult to dispose of such investments on favorable terms. For example, we may have difficulty in finding a buyer and, even if a buyer is found, we may have to sell the investments at a substantial loss.

We will be subject to corporate-level U.S. federal income tax on all of our income if we are unable to qualify as a RIC under the Code, which would have a material adverse effect on our financial performance.

Although we are currently qualified as a RIC, no assurance can be given that we will be able to maintain RIC status. To maintain RIC status and be relieved of U.S. federal income taxes on income and gains distributed to its stockholders, we generally must meet the annual distribution, source-of-income and asset diversification requirements described below. In addition, our Leverage Program prohibits us from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or the Leverage Program.

To qualify as a RIC under the Code, we generally must meet certain source-of-income, asset diversification and annual distribution requirements. The annual distribution requirement for a RIC is satisfied if we distribute at least 90% of our ordinary income and net short-term capital gain in excess of net long-term capital loss, if any,

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to our stockholders. Since we use debt financing, we are subject to certain asset coverage ratio requirements and other financial covenants under the terms of the Leverage Program, and we are, in some circumstances, also subject to similar requirements under the 1940 Act. The requirements could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC. If we are unable to obtain cash from other sources, we may fail to qualify as a RIC and, thus, may be subject to corporate-level income tax. To qualify as a RIC, we generally must also meet certain asset diversification requirements at the end of each calendar quarter. Failure to meet these tests may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because we anticipate that most of our investments will be in private companies, any such dispositions could be made at disadvantageous prices and may result in substantial losses.

If we fail to qualify as a RIC for any reason and become subject to corporate-level income tax, the resulting corporate-level income taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.

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

For U.S. federal income tax purposes, we may include in income certain amounts that we have not yet received in cash, such as original issue discount, which may arise if we receive warrants in connection with the making of a loan or possibly in other circumstances, or PIK interest, which represents contractual interest added to the loan balance and due in the future, often only at the end of the loan. Such original issue discount, which could be significant relative to our overall investment activities, or increases in loan balances as a result of PIK arrangements are generally included in our taxable income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we do not receive in cash.

Since we may recognize taxable income before or without receiving cash representing such income, if we invest to a substantial extent in non-cash paying debt instruments we may have difficulty meeting the tax requirement to distribute at least 90% of our ordinary income and net short-term capital gain in excess of net long-term capital loss, if any, to maintain our status as a RIC. Accordingly, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements.

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

We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this filing. Due to the asset coverage test applicable to us under the 1940 Act as a BDC, we may be limited in our ability to make distributions. Additionally, a portion of such distributions may include a return of stockholder capital. Distributions in excess of our current and accumulated earnings and profits are considered nontaxable distributions and serve to reduce the basis of our shares in the hands of the common stockholders rather than being currently taxable. As a result of the reduction of the basis of our shares, common stockholders may incur additional capital gains taxes or may have lower capital losses.

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

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm (when undertaken, as noted below), may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated

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financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors and lenders to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

We may experience cyber-security incidents and are subject to cyber-security risks.

Our business operations rely upon secure information technology systems for data processing, storage and reporting. Despite careful security and controls design, implementation and updating, our information technology systems could become subject to cyber-attacks. Cyber-attacks include, but are not limited to, gaining unauthorized access to digital systems (e.g., through “hacking” or malicious software coding) for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites (i.e., efforts to make network services unavailable to intended users). Network, system, application and data breaches could result in operational disruptions or information misappropriation, which could have a material adverse effect on our business, results of operations and financial condition.

Cyber-security failures or breaches by the Advisor, any sub-adviser(s) and other service providers (including, but not limited to, accountants, custodians, transfer agents and administrators), and the issuers of securities in which we invest, have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with our ability to calculate our net asset value, impediments to trading, the inability of our stockholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While we have established a business continuity plan in the event of, and risk management systems to prevent, such cyberattacks, there are inherent limitations in such plans and systems including the possibility that certain risks have not been identified. Furthermore, we cannot control the cyber security plans and systems put in place by our service providers and issuers in which we invest. We and our stockholders could be negatively impacted as a result.

The failure in cyber-security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.

The occurrence of a disaster such as a cyber-attack, a natural catastrophe, an industrial accident, a terrorist attack or war, events unanticipated in our disaster recovery systems, or a support failure from external providers, could have an adverse effect on our ability to conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. If a significant number of our managers were unavailable in the event of a disaster, our ability to effectively conduct our business could be severely compromised.

We depend heavily upon computer systems to perform necessary business functions. Despite our implementation of a variety of security measures, our computer systems could be subject to cyber-attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering. Like other companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss.

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We are 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 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. 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:

• sudden electrical or telecommunications outages;

• natural disasters such as earthquakes, tornadoes and hurricanes;

• disease pandemics;

• events arising from local or larger scale political or social matters, including terrorist acts; and

• cyber-attacks.

These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders.

Risks related to our common stock

Shares of our common stock may trade at a discount to our net asset value per share.

Common stock of BDCs, like that of closed-end investment companies, frequently trades at a discount to current net asset value, which could adversely affect the ability to raise capital. In the past, shares of our common stock have traded at a discount to our net asset value. The risk that shares of our common stock may continue to trade at a discount to our net asset value is separate and distinct from the risk that our net asset value per share may decline.

If we sell shares of our common stock at a discount to our net asset value per share, stockholders who do not participate in such sale will experience immediate dilution in an amount that may be material.

The issuance or sale by us of shares of our common stock at a discount to net asset value poses a risk of dilution to our stockholders. In particular, stockholders who do not purchase additional shares of common stock at or below the discounted price in proportion to their current ownership will experience an immediate decrease in net asset value per share (as well as in the aggregate net asset value of their shares of common stock if they do not participate at all). 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 experience in our assets, potential earning power and voting interests from such issuance or sale. In addition, such sales may adversely affect the price at which our common stock trades.

Your interest in us may be diluted if you do not fully acquire your proportionate share of any warrants, options or other rights to subscribe for, convert to, or purchase our common stock that we sell. In addition, in such circumstances, if the price at which we sell such warrants, options or other rights to subscribe for, convert to, or purchase our common stock, together with the exercise price, is less than our net asset value per share, then you will experience dilution of the net asset value of your shares.

We received authority from our stockholders at our 2013 annual meeting to issue warrants, options or other rights to subscribe for, convert to, or purchase shares of our common stock, which may include convertible preferred stock and convertible debentures. In the event we issue warrants, options or other rights to subscribe for, convert into, or purchase our common stock, stockholders who do not exercise such rights will own a smaller proportional interest in us than would otherwise be the case, thereby diluting the proportionate ownership interest and voting power of such stockholder. We cannot state precisely the amount of any such dilution in share ownership or voting power because we have no current intention of making any such offering and do not know at this time the terms or amount of such rights. The amount of dilution that a stockholder will experience could be substantial and the market price and net asset value per share of our common stock could be adversely affected. Our common stockholders will also indirectly bear the expenses associated with any rights offering we may conduct, regardless of whether they elect to exercise any rights.

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In addition, if the price at which we sell such warrants, options or other rights to subscribe for, convert to, or purchase our common stock, together with the exercise price, is less than the net asset value per share of our common stock, then our stockholders who do not acquire their proportionate share of such rights will experience dilution of the aggregate net asset value of their shares as a result of the offering. The amount of any such decrease in net asset value is not predictable because it is not known at this time what the price of the warrants, options or other rights to subscribe for, convert into, or purchase our common stock and net asset value per share will be.

Our common stock price may be volatile and may fluctuate substantially.

As with any stock, the price of our common stock will fluctuate with market conditions and other factors. If you sell shares, the price received may be more or less than the original investment. Net asset value will be reduced immediately following our offering by the amount of the sales load and selling expenses paid by us. At our 2016 annual meeting of stockholders held on May 19, 2016, our stockholders approved our ability, subject to the condition that the maximum number of shares salable below net asset value pursuant to this authority in any particular offering that could result in such dilution is limited to 25% of our then outstanding common stock immediately prior to each such offering, to sell shares of our common stock at any level of discount from net asset value per share during the 12 month period following the date of the meeting. It should be noted that, theoretically, we may offer up to 25% of our then outstanding common stock each day. We intend to seek stockholder approval at our 2017 annual meeting to continue for an additional year our ability to issue shares of common stock below net asset value, subject to the condition that the maximum number of shares salable below net asset value pursuant to this authority in any particular offering that could result in such dilution is limited to 25% of our then outstanding common stock immediately prior to each such offering. Our common stock is intended for long-term investors and should not be treated as a trading vehicle. Shares of BDCs and closed-end management investment companies, which are structured similarly to us, frequently trade at a discount from their net asset value. This characteristic of closed-end investment companies is separate and distinct from the risk that our net asset value per share of common stock may decline. We cannot predict whether our common stock will trade at, above or below net asset value. This risk of loss associated with this characteristic of BDCs and closed-end management investment companies may be greater for investors who sell their shares in a relatively short period of time after completion of an offering.

The market price of our common stock may fluctuate significantly.

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

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

• price and volume fluctuations in the overall stock market from time to time;

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

• our loss of RIC status or the SBIC's loss of SBIC status;

• changes in earnings or variations in operating results;

• changes in the value of our portfolio of investments;

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

• departure of key personnel from the Advisor;

• operating performance of companies comparable to us;

• short-selling pressure with respect to shares of our common stock or BDCs generally;

• future sales of our securities convertible into or exchangeable or exercisable for our common stock or the conversion of such securities;

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• uncertainty surrounding the strength of the U.S. economic recovery;

• general economic trends and other external factors; and

• loss of a major funding source.

Your interest in us may be diluted if you do not fully exercise your subscription rights in any rights offering we may conduct. In addition, if the subscription price is less than our net asset value per share, then you will experience an immediate dilution of the aggregate net asset value of your shares.

In the event we issue subscription rights, stockholders who do not fully exercise their subscription rights should expect that they will, at the completion of a rights offering, own a smaller proportional interest in us than would otherwise be the case if they fully exercised their rights. We cannot state precisely the amount of any such dilution in share ownership because we do not know at this time what proportion of the shares will be purchased as a result of such rights offering.

In addition, if the subscription price is less than the net asset value per share of our common stock, then our stockholders would experience an immediate dilution of the aggregate net asset value of their shares as a result of the offering. The amount of any decrease in net asset value is not predictable because it is not known at this time what the subscription price and net asset value per share will be on the expiration date of a rights offering or what proportion of the shares will be purchased as a result of such rights offering. Such dilution could be substantial.

Terms relating to redemption may materially adversely affect your return on any debt securities that we may issue.

If your debt securities are redeemable at our option, we may choose to redeem your debt securities at times when prevailing interest rates are lower than the interest rate paid on your debt securities. In addition, if your debt securities are subject to mandatory redemption, we may be required to redeem your debt securities also at times when prevailing interest rates are lower than the interest rate paid on your debt securities. In this circumstance, you may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as your debt securities being redeemed.

Our credit ratings may not reflect all risks of an investment in our debt securities.

Our credit ratings are an assessment by third parties of our ability to pay our obligations. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of our debt securities. Our credit ratings, however, may not reflect the potential impact of risks related to market conditions generally or other factors discussed above on the market value of or trading market for the publicly issued debt securities.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

We do not own any real estate or other physical properties materially important to our operation. Our executive offices are located at 2951 28^th Street Suite 1000, Santa Monica, CA 90405, and are provided by the Advisor in accordance with the terms of the Administration Agreement. We believe that our office facilities are suitable and adequate for our business as it is contemplated to be conducted.

Item 3. Legal Proceedings

We and the Advisor are not currently subject to any material pending or threatened legal proceedings against us. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition or results of operations.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

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

Price Range of Common Stock

Our common stock began trading on April 5, 2012 and is currently traded on The Nasdaq Global Select Market under the symbol “TCPC.” The following table lists the high and low closing sale price for our common stock, the closing sale price as a percentage of net asset value, or NAV, and quarterly distributions per share in each fiscal quarter for the years ended December 31, 2016 and 2015. Our common stock historically has traded at prices both above and below its net asset value. There can be no assurance, however, that such premium or discount, as applicable, to net asset value will be maintained.

			Stock Price				Premium/ (Discount) of High Sales Price to NAV(3)			Premium/ (Discount) of Low Sales Price to NAV(3)			Declared Dividends
	NAV(1)		High(2)		Low(2)
Fiscal year ended December 31, 2016
First Quarter	$	14.66	$	14.91	$	12.36		1.7	%		(15.7	)%	$	0.36
Second Quarter		14.74		15.28		14.21		3.7	%		(3.6	)%		0.36
Third Quarter		14.84		16.68		15.35		12.4	%		3.4	%		0.36
Fourth Quarter		14.91		17.11		15.49		14.8	%		3.9	%		0.36
Fiscal year ended December 31, 2015
First Quarter		15.03		16.91		15.22		12.5	%		1.3	%		0.36
Second Quarter		15.10		16.49		15.29		9.2	%		1.3	%		0.36
Third Quarter		15.10		15.87		13.50		5.1	%		(10.6	)%		0.36
Fourth Quarter		14.78		15.40		13.80		4.2	%		(6.6	)%		0.36

(1) NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The NAVs shown are based on outstanding shares at the end of each period.

(2) The High/Low Stock Price is calculated as of the closing price on a given day in the applicable quarter.

(3) Calculated as the respective High/Low Stock Price minus the quarter end NAV, divided by the quarter end NAV.

As of February 27, 2017, we had approximately 32,000 beneficial owners whose shares are held in the names of the brokers, dealers and clearing agencies, and we had 29 stockholders of record. On February 27, 2017, the last reported sales price of our common stock was $17.11 per share.

The table below sets forth each class of our outstanding securities as of February 27, 2017.

Title of Class	Amount Authorized		Amount Held by Registrant or for its Account		Amount Outstanding
Common Stock		200,000,000		—		53,041,900

Distributions

Our quarterly dividends and distributions to common stockholders are recorded on the ex-dividend date and are determined by our board of directors. Distributions are declared considering our estimate of annual taxable income available for distribution to stockholders and the amount of taxable income carried over from the prior year for distribution in the current year. We do not have a policy to pay distributions at a specific level and

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expect to continue to distribute substantially all of our taxable income. Changes in investment results or focus, expense levels and other factors may have an effect on the amount of distributions we pay in the future. We cannot assure stockholders that they will receive any distributions or distributions at a particular level.

The following table summarizes the Company’s dividends declared and paid for the year ended December 31, 2016:

Date Declared	Record Date	Payment Date	Type	Amount Per Share		Total Amount
February 24, 2016	March 17, 2016	March 31, 2016	Regular	$	0.36	$	17,530,963
May 10, 2016	June 16, 2016	June 30, 2016	Regular		0.36		18,254,229
August 9, 2016	September 16, 2016	September 30, 2016	Regular		0.36		19,094,976
November 8, 2016	December 16, 2016	December 30, 2016	Regular		0.36		19,095,030
				$	1.44	$	73,975,198

The following table summarizes the Company’s dividends declared and paid for the year ended December 31, 2015:

Date Declared	Record Date	Payment Date	Type	Amount Per Share		Total Amount
March 10, 2015	March 19, 2015	March 31, 2015	Regular	$	0.36	$	17,535,826
May 7, 2015	June 16, 2015	June 30, 2015	Regular		0.36		17,625,370
August 6, 2015	September 16, 2015	September 30, 2015	Regular		0.36		17,625,310
November 5, 2015	December 17, 2015	December 31, 2015	Regular		0.36		17,590,638
				$	1.44	$	70,377,144

Tax characteristics of all dividends are reported to stockholders on Form 1099-DIV or Form 1042-S after the end of the calendar year.

We have elected to be taxed as a RIC under Subchapter M of the Code. In order to maintain favorable RIC tax treatment, we must distribute annually to our stockholders at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In order to avoid certain excise taxes imposed on RICs, we must distribute during each calendar year an amount at least equal to the sum of:

• 98% of our ordinary income (not taking into account any capital gains or losses) for the calendar year;

• 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for the one-year period generally ending on October 31 of the calendar year; and

• certain undistributed amounts from previous years on which we paid no U.S. federal income tax.

We may, at our discretion, carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. If we choose to do so, all other things being equal, this would increase expenses and reduce the amounts available to be distributed to our stockholders. We will accrue excise tax on estimated taxable income as required. In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment.

We have adopted an “opt in” dividend reinvestment plan for our common stockholders. As a result, if we declare a dividend or other distribution payable in cash, each stockholder that has not “opted in” to our dividend reinvestment plan will receive such dividends in cash, rather than having their dividends automatically reinvested in additional shares of our common stock.

We may not be able to achieve operating results that will allow us to make dividends and distributions at a specific level or to increase the amount of these dividends and distributions from time to time. Also, we may be limited in our ability to make dividends and distributions due to the asset coverage test applicable to us as a BDC under the 1940 Act and due to provisions in our existing and future credit facilities. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of

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favorable RIC tax treatment. In addition, in accordance with U.S. generally accepted accounting principles and tax regulations, we include in income certain amounts that we have not yet received in cash, such as PIK interest, which represents contractual interest added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a RIC and may be subject to an excise tax.

In order to satisfy the annual distribution requirement applicable to RICs, we have the ability to declare a large portion of a dividend in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion can be as low as 10% for dividends paid with respect to any taxable year) and certain requirements are met, the entire distribution would be treated as a dividend for U.S. federal income tax purposes.

COMPARISON OF CUMULATIVE TOTAL RETURN AMONG TCP CAPITAL CORP.,
S&P 500 TOTAL RETURN INDEX AND WELLS FARGO BUSINESS DEVELOPMENT COMPANY INDEX

Total Return Performance

 

NOTES: Assumes $100 invested April 4, 2012 in TCP Capital Corp., the S&P 500 Total Return Index and the Wells Fargo Business Development Company Index. Assumes all dividends are reinvested on the respective dividend payment dates without commissions.

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Item 6. Selected Financial Data

The selected consolidated financial and other data below reflects the consolidated historical operations of the Company.

The selected consolidated financial data below for the years ended December 31, 2016, 2015, 2014, 2013, and 2012 have been derived from the consolidated financial statements that were audited by our independent registered public accounting firm. The following selected financial data should be read in conjunction with our financial statements and related notes thereto.

	Fiscal Year Ended December 31,
	2016			2015			2014			2013			2012
Performance Data:
Interest income	$	145,018,414		$	142,012,553		$	100,923,265		$	66,979,064		$	49,243,332
Dividend income		—			—			1,968,748			—			1,811,189
Lease income		1,571,280			1,352,797			1,334,330			1,121,614			823,030
Other income		1,591,071			3,502,875			2,355,105			1,508,368			315,208
Total investment income		148,180,765			146,868,225			106,581,448			69,609,046			52,192,759
Interest and other debt expenses		25,192,990			18,895,977			9,821,751			2,339,447			857,757
Management and advisory fees		18,881,786			18,593,660			13,646,064			8,820,229			6,908,942
Other expenses		8,283,156			7,999,070			5,012,257			3,141,484			2,625,722
Total expenses		52,357,932			45,488,707			28,480,072			14,301,160			10,392,421
Net investment income before taxes		95,822,833			101,379,518			78,101,376			55,307,886			41,800,338
Excise tax expense		569,511			876,706			808,813			977,624			1,479,978
Net investment income		95,253,322			100,502,812			77,292,563			54,330,262			40,320,360
Net realized and unrealized gains (losses)		114,502			(22,405,111	)		(27,304,578	)		9071361			(12,784,251	)
Gain on repurchase of Series A preferred interests		—			1,675,000			—			—			—
Dividends to preferred interest holders		—			(754,140	)		(1,438,172	)		(1,494,552	)		(1,602,799	)
Incentive allocation		(19,050,665	)		(19,949,734	)		(14,002,294	)		(12,381,416	)		—
Net increase in net assets applicable to common shareholders resulting from operations	$	76,317,159		$	59,068,827		$	34,547,519		$	49,525,655		$	25,933,310
Per Share Data (at the end of the period):*
Net increase in net assets from operations	$	1.50		$	1.21		$	0.88		$	1.91		$	1.21
Distributions declared per share		(1.44	)		(1.44	)		(1.54	)		(1.53	)		(1.43	)
Average weighted shares outstanding for the period		50,948,035			48,863,188			39,395,671			25,926,493			21,475,847
Assets and Liabilities Data:
Investments	$	1,314,969,870		$	1,182,919,725		$	1,146,535,886		$	766,262,959		$	517,683,087
Other assets		72,628,591			56,193,226			54,892,712			37,066,243			31,559,015
Total assets		1,387,598,461			1,239,112,951			1,201,428,598			803,329,202			549,242,102
Debt, net of unamortized issuance costs		571,658,862			498,205,471			324,258,631			95,000,000			74,000,000
Other liabilities		25,003,608			18,930,463			11,543,149			23,045,112			24,728,267
Total liabilities		596,662,470			517,135,934			335,801,780			118,045,112			98,728,267
Preferred limited partnership interest		—			—			134,497,790			134,504,252			134,526,285
Non-controlling interest		—			—			—			1,168,583			—
Net assets	$	790,935,991		$	721,977,017		$	731,129,028		$	549,611,255		$	315,987,550
Investment Activity Data:
No. of portfolio companies at period end		90			88			84			67			54
Acquisitions	$	587,219,129		$	500,928,009		$	669,515,626		$	471,087,319		$	359,020,926
Sales, repayments, and other disposals	$	473,457,512		$	456,059,137		$	266,008,974		$	235,641,665		$	211,216,033
Weighted-average effective yield at end of period		10.9	%		11.0	%		10.9	%		10.9	%		11.3	%

* Per share amounts prior to 2012 were calculated based on 418,986 pre-Conversion shares outstanding. Per share amounts starting in 2012 are calculated on weighted-average shares outstanding for each period.

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

The information contained in this section should be read in conjunction with our unaudited consolidated financial statements and related notes thereto appearing elsewhere in this annual report on Form 10-K. Some of the statements in this report (including in the following discussion) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or the future performance or financial condition of TCP Capital Corp. (the “Holding Company”). For simplicity, this report uses the terms “Company,” “we,” “us” and “our” to include the Holding Company and, where appropriate in the context, Special Value Continuation Partners, LP (the “Operating Company”), on a consolidated basis. The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:

• our, or our portfolio companies’, future business, operations, operating results or prospects;

• the return or impact of current and future investments;

• the impact of a protracted decline in the liquidity of credit markets on our business;

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

• the impact of changes in laws or regulations governing our operations or the operations of our portfolio companies;

• our contractual arrangements and relationships with third parties;

• the general economy and its impact on the industries in which we invest;

• the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives;

• our expected financings and investments;

• the adequacy of our financing resources and working capital;

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

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

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

• our ability to maintain our qualification as a regulated investment company and as a business development company.

We use words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “could,” “may,” “plan” and similar words to identify forward-looking statements. The forward looking statements contained in this annual report 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 as “Risk Factors” in this report.

We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. 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 or through reports that we have filed or in the future may file with the SEC, including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.

Overview

The Holding Company is a Delaware corporation formed on April 2, 2012 and is an externally managed, closed-end, non-diversified management investment company. The Holding Company was formed through the conversion of a pre-existing closed-end investment company. The Holding Company elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to seek to achieve high total returns through current income and capital

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appreciation, with an emphasis on principal protection. We invest primarily in the debt of middle-market companies as well as small businesses, including senior secured loans, junior loans, mezzanine debt and bonds. Such investments may include an equity component, and, to a lesser extent, we may make equity investments directly. Investment operations are conducted either in Special Value Continuation Partners, LP, a Delaware Limited Partnership (the “Operating Company”), of which the Holding Company owns 100% of the common limited partner interests, or in one of the Operating Company’s wholly-owned subsidiaries, TCPC Funding I, LLC (“TCPC Funding”) and TCPC SBIC, LP (the “SBIC”). The Operating Company has also elected to be treated as a BDC under the 1940 Act. The General Partner of the Operating Company is Series H of SVOF/MM, LLC (“SVOF/MM”), which also serves as the administrator (the “Administrator”) of the Holding Company and the Operating Company. The managing member of SVOF/MM is Tennenbaum Capital Partners, LLC (the “Advisor”), which serves as the investment manager to the Holding Company, the Operating Company, TCPC Funding, and the SBIC. The equity interests in the General Partner are owned directly by the Advisor. The SBIC was organized as a Delaware limited partnership in June 2013. On April 22, 2014, the SBIC received a license from the United States Small Business Administration (the “SBA”) to operate as a small business investment company under the provisions of Section 301(c) of the Small Business Investment Act of 1958.

The Holding Company has elected to be treated as a regulated investment company (“RIC”) for U.S. federal income tax purposes. As a RIC, the Holding Company will not be taxed on its income to the extent that it distributes such income each year and satisfies other applicable income tax requirements. The Operating Company, TCPC Funding, and the SBIC have elected to be treated as partnerships for U.S. federal income tax purposes.

Our leverage program is comprised of $116.0 million in available debt under a senior secured revolving credit facility issued by the Operating Company (the “SVCP Revolver”), a $100.5 million term loan issued by the Operating Company (the “Term Loan” and together with the SVCP Revolver, the “SVCP Facility”), $350.0 million in available debt under a senior secured revolving credit facility issued by TCPC Funding (the “TCPC Funding Facility”), $108.0 million in convertible senior unsecured notes issued by the Holding Company maturing in 2019 (the “2019 Convertible Notes”), $140.0 million in convertible senior unsecured notes issued by the Holding Company maturing in 2022 (the “2022 Convertible Notes”) and $150.0 million in committed leverage from the SBA (the “SBA Program” and, together with the SVCP Facility, the TCPC Funding Facility, the 2019 Convertible Notes and the 2022 Convertible Notes, the “Leverage Program”). Prior to the repurchase and retirement of the remaining preferred interests on September 3, 2015, the Leverage Program also included amounts outstanding under a preferred equity facility issued by the Operating Company (the “Preferred Interests”).

To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and timely distribute to our stockholders generally at least 90% of our investment company taxable income, as defined by the Internal Revenue Code of 1986, as amended, for each year. Pursuant to this election, we generally will not have to pay corporate level taxes on any income that we distribute to our stockholders provided that we satisfy those requirements.

Investments

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

As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities and indebtedness of private U.S. companies, public U.S. operating companies whose securities are not listed on a national securities exchange or registered under the Securities Exchange Act of 1934, as amended, public domestic operating companies having a market capitalization of less than $250.0 million, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. We are also permitted to make certain follow-on investments in companies that were eligible portfolio companies at the time of initial investment but that no longer meet the definition. As of December 31, 2016, 83.6% of our total assets were invested in qualifying assets.

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Revenues

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

Expenses

Our primary operating expenses include the payment of a base management fee and, depending on our operating results, incentive compensation, expenses reimbursable under the management agreement, administration fees and the allocable portion of overhead under the administration agreement. The base management fee and incentive compensation remunerates the Advisor for work in identifying, evaluating, negotiating, closing and monitoring our investments. Our administration agreement with Series H of SVOF/MM, LLC (the “Administrator”) provides that the Administrator may be reimbursed for costs and expenses incurred by the Administrator for office space rental, office equipment and utilities allocable to us under the administration agreement, as well as any costs and expenses incurred by the Administrator or its affiliates relating to any non-investment advisory, administrative or operating services provided by the Administrator or its affiliates to us. We also bear all other costs and expenses of our operations and transactions (and the Holding Company’s common stockholders indirectly bear all of the costs and expenses of the Holding Company, the Operating Company, TCPC Funding and the SBIC), which may include those relating to:

• our organization;

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

• interest payable on debt, if any, incurred to finance our investments;

• costs of future offerings of our common stock and other securities, if any;

• the base management fee and any incentive compensation;

• dividends and distributions on our preferred shares, if any, and common shares;

• administration fees payable under the administration agreement;

• fees payable to third parties relating to, or associated with, making investments;

• transfer agent and custodial fees;

• registration fees;

• listing fees;

• taxes;

• director fees and expenses;

• costs of preparing and filing reports or other documents with the SEC;

• costs of any reports, proxy statements or other notices to our stockholders, including printing costs;

• our fidelity bond;

• directors and officers/errors and omissions liability insurance, and any other insurance premiums;

• indemnification payments;

• direct costs and expenses of administration, including audit and legal costs; and

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• all other expenses reasonably incurred by us and the Administrator in connection with administering our business, such as the allocable portion of overhead under the administration agreement, including rent and other allocable portions of the cost of certain of our officers and their respective staffs.

The investment management agreement provides that the base management fee be calculated at an annual rate of 1.5% of our total assets (excluding cash and cash equivalents) payable quarterly in arrears. For purposes of calculating the base management fee, “total assets” is determined without deduction for any borrowings or other liabilities. The base management fee is calculated based on the value of our total assets (excluding cash and cash equivalents) at the end of the most recently completed calendar quarter.

Additionally, the investment management agreement and the Amended and Restated Limited Partnership Agreement provide that the Advisor or its affiliates may be entitled to incentive compensation under certain circumstances. According to the terms of such agreements, no incentive compensation was incurred prior to January 1, 2013. Beginning January 1, 2013, the incentive compensation equals the sum of (1) 20% of all ordinary income since January 1, 2013 and (2) 20% of all net realized capital gains (net of any net unrealized capital depreciation) since January 1, 2013, with each component being subject to a total return requirement of 8% of contributed common equity annually. The incentive compensation is payable to the General Partner by the Operating Company pursuant to the Amended and Restated Limited Partnership Agreement. If the Operating Company is terminated or for any other reason incentive compensation is not paid by the Operating Company, it would be paid pursuant to the investment management agreement between us and the Advisor. The determination of incentive compensation is subject to limitations under the 1940 Act and the Advisers Act.

Critical accounting policies

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

Valuation of portfolio investments

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

Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. We generally obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker-dealers or market makers. However, short term debt investments with remaining maturities within 90 days are generally valued at amortized cost, which approximates fair value. Debt and equity securities for which market quotations are not readily available, which is the case for many of our investments, or for which market quotations are deemed not to represent fair value, are valued at fair value using a consistently applied valuation process in accordance with our documented valuation policy that has been reviewed and approved by our board of directors, who also approve in good faith the valuation of such securities as of the end of each quarter. Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that we may ultimately realize. In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of our investments than on the fair values of our investments for which market quotations are not readily available. Market quotations may be deemed not to

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represent fair value in certain circumstances where we believe that facts and circumstances applicable to an issuer, a seller or purchaser, or the market for a particular security cause current market quotations to not reflect the fair value of the security. Examples of these events could include cases where a security trades infrequently causing a quoted purchase or sale price to become stale, where there is a “forced” sale by a distressed seller, where market quotations vary substantially among market makers, or where there is a wide bid-ask spread or significant increase in the bid-ask spread.

The valuation process approved by our board of directors with respect to investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value is as follows:

• The investment professionals of the Advisor provide recent portfolio company financial statements and other reporting materials to independent valuation firms approved by our board of directors.

• Such firms evaluate this information along with relevant observable market data to conduct independent appraisals each quarter, and their preliminary valuation conclusions are documented and discussed with senior management of the Advisor.

• The fair value of smaller investments comprising in the aggregate less than 5% of our total capitalization may be determined by the Advisor in good faith in accordance with our valuation policy without the employment of an independent valuation firm.

• The audit committee of the board of directors discusses the valuations, and the board of directors approves the fair value of the investments in our portfolio in good faith based on the input of the Advisor, the respective independent valuation firms (to the extent applicable) and the audit committee of the board of directors.

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

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

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

Level 1 — Investments valued using unadjusted quoted prices in active markets for identical assets.

Level 2 — Investments valued using other unadjusted observable market inputs, e.g. quoted prices in markets that are not active or quotes for comparable instruments.

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Level 3 — Investments that are valued using quotes and other observable market data to the extent available, but which also take into consideration one or more unobservable inputs that are significant to the valuation taken as a whole.

As of December 31, 2016, none of our investments were categorized as Level 1, 8.4% were categorized as Level 2, 91.5% were Level 3 investments valued based on valuations by independent third party sources, and 0.1% were Level 3 investments valued based on valuations by the Advisor.

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

Revenue recognition

Interest and dividend income, including income paid in kind, is recorded on an accrual basis. Origination, structuring, closing, commitment and other upfront fees, including original issue discounts, earned with respect to capital commitments are generally amortized or accreted into interest income over the life of the respective debt investment, as are end-of-term or exit fees receivable upon repayment of a debt investment. Other fees, including certain amendment fees, prepayment fees and commitment fees on broken deals, are recognized as earned. Prepayment fees and similar income due upon the early repayment of a loan or debt security are recognized when earned and are included in interest income.

Certain of our debt investments are purchased at a discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general market factors that influence the financial markets as a whole. Discounts on the acquisition of corporate bonds are generally amortized using the effective-interest or constant-yield method assuming there are no questions as to collectability. When principal payments on a loan are received in an amount in excess of the loan’s amortized cost, the excess principal payments are recorded as interest income.

Net realized gains or losses and net change in unrealized appreciation or depreciation

We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Realized gains and losses are computed using the specific identification method. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Portfolio and investment activity

During the year ended December 31, 2016, we invested approximately $587.2 million, comprised of new investments in 28 new and 19 existing portfolio companies, as well as draws made on existing commitments and PIK received on prior investments. Of these investments, 95.6% were in senior secured debt comprised of senior loans ($506.1 million, or 86.2% of total acquisitions) and senior secured notes ($55.0 million, or 9.4% of total acquisitions). The remaining $26.1 million (4.4% of total acquisitions) were comprised of $23.5 million in equity interests in two portfolios of debt and lease assets, as well as $2.6 million in two warrant positions and two preferred stock positions received in connection with debt investments. Additionally, we received approximately $473.5 million in proceeds from sales or repayments of investments during the year ended December 31, 2016.

During the year ended December 31, 2015, we invested approximately $500.9 million, comprised of new investments in 23 new and 26 existing portfolio companies, as well as draws made on existing commitments and PIK received on prior investments. Of these investments, 97.7% were in senior secured debt comprised of senior loans ($437.9 million, or 87.4% of the total) and senior secured notes ($51.6 million, or 10.3% of the total). The remaining $11.4 million (2.3% of the total) were comprised of nine equity investments which were received in connection with debt investments made during the period. Additionally, we received approximately $456.1 million in proceeds from sales or repayments of investments during the year ended December 31, 2015.

At December 31, 2016, our investment portfolio of $1,315.0 million (at fair value) consisted of 90 portfolio companies and was invested 95.0% in debt investments, substantially all of which was in senior secured debt. In aggregate, our investment portfolio was invested 83.7% in senior secured loans, 11.3% in senior secured notes

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and 5.0% in equity investments. Our average portfolio company investment at fair value was approximately $14.6 million. Our largest portfolio company investment by value was approximately $46.2 million and our five largest portfolio company investments by value comprised approximately 14.1% of our portfolio at December 31, 2016.

At December 31, 2015, our investment portfolio of $1,182.9 million (at fair value) consisted of 88 portfolio companies and was invested 95.5% in debt investments, of which 99.9% was in senior secured debt and 0.1% in unsecured and subordinated debt. In aggregate, our investment portfolio was invested 81.5% in senior secured loans, 14.0% in senior secured notes, 0.1% in unsecured and subordinated debt, and 4.4% in equity investments. Our average portfolio company investment at fair value was approximately $13.4 million. Our largest portfolio company investment by value was approximately $43.3 million and our five largest portfolio company investments by value comprised approximately 15.7% of our portfolio at December 31, 2015.

The industry composition of our portfolio at fair value at December 31, 2016 was as follows:

Industry	Percent of Total Investments
Software Publishing		16.5	%
Nondepository Credit Intermediation		9.3	%
Computer Systems Design and Related Services		6.3	%
Other Information Services		5.7	%
Business Support Services		4.3	%
Retail		4.0	%
Wired Telecommunications Carriers		3.1	%
Air Transportation		3.0	%
Chemicals		2.9	%
Equipment Leasing		2.9	%
Insurance		2.7	%
Scientific Research and Development Services		2.7	%
Financial Investment Activities		2.4	%
Textile Furnishings Mills		2.3	%
Utility System Construction		2.0	%
Activities Related to Credit Intermediation		1.9	%
Other Manufacturing		1.9	%
Hospitals		1.8	%
Management, Scientific, and Technical Consulting Services		1.8	%
Amusement and Recreation		1.7	%
Apparel Manufacturing		1.7	%
Communications Equipment Manufacturing		1.6	%
Other Publishing		1.6	%
Radio and Television Broadcasting		1.6	%
Wholesalers		1.6	%
Lessors of Nonfinancial Licenses		1.5	%
Electronic Component Manufacturing		1.3	%
Restaurants		1.3	%
Advertising and Public Relations Services		1.1	%
Building Equipment Contractors		1.1	%
Activities Related to Real Estate		1.0	%
Other		5.4	%
Total		100.0	%

The weighted average effective yield of the debt securities in our portfolio was 10.92% at December 31, 2016 and 10.95% at December 31, 2015. At December 31, 2016, 80.5% of debt investments in our portfolio bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate, and 19.5% bore interest at fixed rates. The percentage of floating rate debt investments in our portfolio that bore

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interest based on an interest rate floor was 77.0% at December 31, 2016. At December 31, 2015, 80.4% of debt investments in our portfolio bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate, and 19.6% bore interest at fixed rates. The percentage of floating rate debt investments in our portfolio that bore interest based on an interest rate floor was 77.9% at December 31, 2015.

Results of operations

Investment income

Investment income totaled $148.2 million, $146.9 million and $106.6 million, respectively, for the years ended December 31, 2016, 2015 and 2014, of which $145.0 million, $142.0 million and $100.9 million were attributable to interest and fees on our debt investments, $0.0 million, $0.0 million and $2.0 million to dividends from equity securities, $1.6 million, $1.4 million and $1.3 million to lease income and $1.6 million, $3.5 million and $2.4 million to other income, respectively. Other income is primarily comprised of fee income earned in respect of amendments to various debt investments. Included in interest and fees on our debt investments were $10.6 million, $12.5 million and $3.1 million of non-recurring income related to prepayments for the years ended December 31, 2016, 2015 and 2014, respectively. The increase in investment income in the year ended December 31, 2016 compared to the year ended December 31, 2015 reflects an increase in interest income due to the larger portfolio size and an increase in lease income in the year ended December 31, 2016 compared to the year ended December 31, 2015, partially offset by a decrease in other income. The increase in investment income in the year ended December 31, 2015 compared to the year ended December 31, 2014 reflects an increase in interest income due to the larger investment portfolio during the year ended December 31, 2015 compared to the year ended December 31, 2014 and an increase in other income primarily due to higher amendment, restructuring and commitment fees received during the year ended December 31, 2015, partially offset by a decrease in dividend income.

Expenses

Total operating expenses for the years ended December 31, 2016, 2015 and 2014 were $52.3 million, $45.5 million and $28.5 million, respectively, comprised of $25.2 million, $18.9 million and $9.8 million in interest expense and related fees, $18.9 million, $18.6 million and $13.6 million in base management fees, $2.3 million, $2.8 million $1.4 million in legal and professional fees, $1.7 million, $1.6 million and $1.4 million in administrative expenses, and $4.2 million, $3.6 million and $2.3 million in other expenses, respectively. The increase in expenses in the year ended December 31, 2016 compared to the year ended December 31, 2015 primarily reflects the increase in interest expense and other costs related to the increase in available and outstanding debt, including the conversion of the Preferred Interests to term debt, as well as the higher average interest rate following the issuance of the 2022 Convertible Notes and the increase in LIBOR rates, as well as $1.3 million in non-recurring legal costs incurred in 2016. The increase in expenses in the year ended December 31, 2015 compared to the year ended December 31, 2014 primarily reflects the increase in management fees due to the larger portfolio and the increase in interest and other debt expenses related to the increase in available and outstanding debt.

Net investment income

Net investment income was $95.3 million, $100.5 million and $77.3 million, respectively, for the years ended December 31, 2016, 2015 and 2014. The decrease in net investment income in the year ended December 31, 2016 compared to the year ended December 31, 2015 primarily reflects the increase in expenses, partially offset by the increase in investment income in the year ended December 31, 2016. The increase in net investment income in the year ended December 31, 2015 compared to the year ended December 31, 2014 primarily reflects the increased interest income in the year ended December 31, 2015, partially offset by the increase in expenses.

Net realized and unrealized gain or loss

Net realized losses for the years ended December 31, 2016, 2015 and 2014 were $15.0 million, $17.7 million and $21.1 million, respectively. Net realized losses during the year ended December 31, 2016 were comprised primarily of a $12.6 million realization on the restructuring of our loan to CORE Entertainment, Inc. and a $3.0 million loss due to the taxable reorganization of our investment in Boomerang Tube, LLC. Substantially all of the loss on CORE Entertainment, Inc. had been recognized on an unrealized basis in prior years.

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Net realized losses during the year ended December 31, 2015 were comprised primarily of $10.6 million in losses due the restructure of our loan to Edmentum, in which we received debt and equity in a de-levered company, and a $12.4 million loss on our loan to Marsico Capital Management which was part of our pre-IPO legacy distressed debt strategy and generated substantial cash interest income. These losses were partially offset by a $5.9 million gain on the partial disposition of our investment in NEXTracker.

Net realized losses during the year ended December 31, 2014 were primarily due the exit of two investments. We realized a loss of $11.5 million from Doral Financial Corp, an investment acquired as part of our legacy strategy. The loss recognition had a de minimis impact on net asset value as the loss was previously included in unrealized losses at the beginning of the year. Additionally, we realized a $5.2 million loss on Real Mex Holdco, LLC. This investment was initially acquired as part of our legacy distressed debt strategy. The overall Real Mex investment has generated substantial cash interest income.

For the years ended December 31, 2016, 2015 and 2014, the change in net unrealized appreciation/depreciation was $15.1 million, $(4.7) million and $(6.2) million, respectively. The change in net unrealized appreciation for the year ended December 31, 2016 was comprised primarily of realization of the previously recognized unrealized losses on CORE Entertainment, Inc., plus a $5.9 million gain on Securus Technologies, Inc. and a $4.7 million gain on Soasta, Inc. These gains were partially offset by a $(5.1) million unrealized loss on Iracore.

The change in net unrealized depreciation for the year ended December 31, 2015 was comprised primarily of $(9.7) million in CORE Entertainment, Inc., $(5.9) million in Securus Technologies, Inc. and $(2.7) million in RM OpCo, LLC as well as other mark to market adjustments resulting from market yield spreads during the period. These losses were partially offset by a $6.2 million gain from AGY Holding Corp. and a $2.3 million gain from NEXTracker and reversals of prior period net unrealized depreciation for the year ended December 31, 2015.

The change in net unrealized depreciation for the year ended December 31, 2014 was primarily a result of unrealized losses on two investments which performed below expectations, Edmentum ($10.4 million) and Iracore ($6.2 million), partially offset by a $10.9 million reversal of the prior unrealized loss on the Doral investment.

Income tax expense, including excise tax

The Holding Company has elected to be treated as a RIC under Subchapter M of the Internal Revenue Code (“the Code”) and operates in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Holding Company must, among other things, timely distribute to its stockholders generally at least 90% of its investment company taxable income, as defined by the Code, for each year. The Company has made and intends to continue to make the requisite distributions to its stockholders which will generally relieve the Company from U.S. federal income taxes.

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 dividend distributions from such current year taxable income into the next tax year and pay a 4% excise tax on such income. Any excise tax expense is recorded at year end as such amounts are known. For the years ended December 31, 2016, 2015, and 2014, excise tax expenses of $0.6 million, $0.9 million and $0.8 million were recorded, respectively, based on the amount of tax basis ordinary income carried forward at the respective yearend.

Gain on repurchase of Series A preferred interests

Gains on the repurchase of Series A preferred interests for the years ended December 31, 2016, 2015 and 2014 were $0.0 million, $1.7 million and $0.0 million, respectively. The gain on repurchase of Series A preferred interests during the year ended December 31, 2015 was due to the repurchase of 1,675 Preferred Interests on June 30, 2015 at a price of $31.8 million.

Dividends to preferred equity holders

Dividends on the Preferred Interests for the years ended December 31, 2016, 2015 and 2014 were $0.0 million, $0.8 million and $1.4 million, respectively. The decrease in dividends on Preferred Interests during the year ended December 31, 2016 compared to the year ended December 31, 2015 was due to the repurchase

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and retirement of all remaining Preferred Interests during 2015. The decrease in dividends on Preferred Interests for the year ended December 31, 2015 compared to the year ended December 31, 2014 was due to the repurchase of the 1,675 Preferred Interests on June 30, 2015 and the repurchase and retirement of all remaining Preferred Interests on September 3, 2015.

Incentive compensation

Incentive compensation distributable to the General Partner for the years ended December 31, 2016, 2015 and 2014 was $19.1 million, $19.9 million and $15.2 million, respectively. Incentive compensation for the years ended December 31, 2016, 2015 and 2014 was distributable due to our performance exceeding the total return threshold. The change in reserve for incentive compensation to the General Partner for the years ended December 31, 2016, 2015 and 2014 was $0.0 million, $0.0 million and $(1.2) million, respectively. The change in reserve for incentive compensation represents the change in the amount of additional incentive compensation which would have been distributed to the General Partner had we liquidated at net asset value at the respective period end.

Net increase in net assets applicable to common shareholders resulting from operations

The net increase in net assets resulting from operations was $76.3 million, $59.1 million and $34.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. The higher net increase in net assets applicable to common shareholders resulting from operations during the year ended December 31, 2016 is primarily due to the net realized and unrealized gains during the year ended December 31, 2016 compared to the net realized and unrealized losses during the year ended December 31, 2015. The higher net increase in net assets resulting from operations during the year ended December 31, 2015 compared to the year ended December 31, 2014 is primarily due to the higher net investment income and the smaller net realized and unrealized loss during the year ended December 31, 2015 compared to the year ended December 31, 2014.

Liquidity and capital resources

Since our inception, our liquidity and capital resources have been generated primarily through the initial private placement of common shares of SVCF (the predecessor entity) which were subsequently converted to common stock of the Holding Company, the net proceeds from the initial and secondary public offerings of our common stock, amounts outstanding under our Leverage Program, and cash flows from operations, including investments sales and repayments and income earned from investments and cash equivalents. The primary uses of cash have been investments in portfolio companies, cash distributions to our equity holders, payments to service our Leverage Program and other general corporate purposes.

The following table summarizes the total shares issued and proceeds received in offerings of the Company’s common stock net of underwriting discounts and offering costs as well as shares issued in connection with the Company’s dividend reinvestment plan for the year ended December 31, 2016.

	Shares Issued		Price Per Share			Net Proceeds
Shares issued from dividend reinvestment plan		610	$	15.83	*	$	9,657
Shares issued from conversion of convertible debt †		2,011,900		15.02			—
July 13, 2016 registered direct public offering		2,336,552		15.09			34,958,570

* Weighted-average price per share.

† On April 18, 2016, the Company issued $30.0 million in aggregate principal amount of a 5.25% convertible senior unsecured note due 2021 to CNO Financial Investments Corp. (the “CNO Note”). On June 7, 2016, the Company issued 2,011,900 shares of its common stock pursuant to the full conversion, at the holder’s option, of the $30.0 million in aggregate principal amount (plus accrued interest) of the CNO Note. The CNO Note was converted at a price of $15.02 per share of common stock. No placement agent or underwriting fees were incurred in connection with the issuance or the conversion of the CNO Note.

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The following table summarizes the total shares issued and proceeds received in offerings of the Company’s common stock net of underwriting discounts and offering costs as well as shares issued in connection with the Company’s dividend reinvestment plan for the year ended December 31, 2015.

	Shares Issued		Price Per Share			Net Proceeds
At-the-market offerings		248,614	$	15.87	*	$	3,946,066
Shares issued from dividend reinvestment plan		555		14.62	*		8,116

* Weighted-average price per share.

On October 3, 2014, we entered into an at-the-market equity offering program (the “ATM Program”) with Raymond James & Associates Inc. through which we may offer and sell, by means of at-the-market offerings from time to time, shares of our common stock having an aggregate offering price of up to $100,000,000.

On February 24, 2015, the Company’s board of directors approved a stock repurchase plan (the “Company Repurchase Plan”) to acquire up to $50.0 million in the aggregate of the Company’s common stock at prices at certain thresholds below the Company’s net asset value per share, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. The Company Repurchase Plan is designed to allow the Company to repurchase its common stock at times when it otherwise might be prevented from doing so under insider trading laws. The Company Repurchase Plan requires an agent selected by the Company to repurchase shares of common stock on the Company’s behalf if and when the market price per share is at certain thresholds below the most recently reported net asset value per share. Under the plan, the agent will increase the volume of purchases made if the price of the Company’s common stock declines, subject to volume restrictions. The timing and amount of any stock repurchased depends on the terms and conditions of the Company Repurchase Plan, the market price of the common stock and trading volumes, and no assurance can be given that any particular amount of common stock will be repurchased. The Company Repurchase Plan was re-approved on November 2, 2016, to be in effect through the earlier of two trading days after our fourth quarter 2016 earnings release, unless further extended or terminated by our board of directors, or such time as the approved $50.0 million repurchase amount has been fully utilized, subject to certain conditions. The following table summarizes the total shares repurchased and amounts paid by the Company under the Company Repurchase Plan, including broker fees, for the year ended December 31, 2016:

	Shares Repurchased		Price Per Share			Total Cost
Company Repurchase Plan		141,896	$	13.25	*	$	1,879,548

* Weighted-average price per share

Total leverage outstanding and available under the combined Leverage Program at December 31, 2016 were as follows:

	Maturity	Rate			Carrying Value*			Available		Total Capacity
SVCP Facility
SVCP Revolver	2018		L+2.50	%†	$	—		$	116,000,000	$	116,000,000
Term Loan	2018		L+2.50	%†		100,500,000			—		100,500,000
2019 Convertible Notes ($108 million par)	2019		5.25	%		106,547,929			—		106,547,929
2022 Convertible Notes ($140 million par)	2022		4.625	%		136,858,359			—		136,858,359
TCPC Funding Facility	2020		L+2.50	%‡		175,000,000			175,000,000		350,000,000
SBA Debentures	2024-2026		2.58	%§		61,000,000			89,000,000		150,000,000
Total leverage						579,906,288		$	380,000,000	$	959,906,288
Unamortized issuance costs						(8,247,426	)
Debt, net of unamortized issuance costs					$	571,658,862

* Except for the convertible notes, all carrying values are the same as the principal amounts outstanding.

† Based on either LIBOR or the lender’s cost of funds, subject to certain limitations

‡ Or L+2.25% subject to certain funding requirements

§ Weighted-average interest rate, excluding fees of 0.36%

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On July 13, 2015, we obtained exemptive relief from the SEC to permit us to exclude debt outstanding under the SBA Program from our 200% asset coverage test under the 1940 Act. The exemptive relief provides us with increased flexibility under the 200% asset coverage test by permitting the SBIC to borrow up to $150.0 million more than it would otherwise be able to absent the receipt of this exemptive relief.

Net cash used in operating activities during the year ended December 31, 2016 was $46.1 million. Our primary use of cash in operating activities during this period consisted of the settlement of acquisitions of investments (net of dispositions) of $107.4 million, partially offset by net investment income less incentive allocation (net of non-cash income and expenses) of approximately $61.3 million.

Net cash provided by financing activities was $64.0 million during the year ended December 31, 2016, consisting primarily of $140.0 million from the issuance of the 2022 Convertible Notes, $35.0 million of net proceeds from the registered direct public offering of our common stock on July 13, 2016, $30.0 million from proceeds from the issuance of the CNO Note (which was subsequently converted to common equity), reduced by the $74.0 million in regular dividends on common equity, $59.8 million of net repayments of debt, payment of $5.3 million in debt issuance costs, and $1.9 million in common shares repurchases.

At December 31, 2016, we had $53.6 million in cash and cash equivalents.

The SVCP Facility and the TCPC Funding Facility are secured by substantially all of the assets in our portfolio, including cash and cash equivalents, and are subject to compliance with customary affirmative and negative covenants, including the maintenance of a minimum shareholders’ equity, the maintenance of a ratio of not less than 200% of total assets (less total liabilities other than indebtedness) to total indebtedness, and restrictions on certain payments and issuance of debt. Unfavorable economic conditions may result in a decrease in the value of our investments, which would affect both the asset coverage ratios and the value of the collateral securing the SVCP Facility and the TCPC Funding Facility, and may therefore impact our ability to borrow under the SVCP Facility and the TCPC Funding Facility. In addition to regulatory restrictions that restrict our ability to raise capital, the Leverage Program contains various covenants which, if not complied with, could accelerate repayment of debt, thereby materially and adversely affecting our liquidity, financial condition and results of operations. At December 31, 2016, we were in compliance with all financial and operational covenants required by the Leverage Program.

Unfavorable economic conditions, while potentially creating attractive opportunities for us, may decrease liquidity and raise the cost of capital generally, which could limit our ability to renew, extend or replace the Leverage Program on terms as favorable as are currently included therein. If we are unable to renew, extend or replace the Leverage Program upon the various dates of maturity, we expect to have sufficient funds to repay the outstanding balances in full from our net investment income and sales of, and repayments of principal from, our portfolio company investments, as well as from anticipated debt and equity capital raises, among other sources. Unfavorable economic conditions may limit our ability to raise capital or the ability of the companies in which we invest to repay our loans or engage in a liquidity event, such as a sale, recapitalization or initial public offering. The SVCP Facility, the 2019 Convertible Notes, the 2022 Convertible Notes and the TCPC Funding Facility mature in July 2018, December 2019, March 2022 and March 2020, respectively. Any inability to renew, extend or replace the Leverage Program could adversely impact our liquidity and ability to find new investments or maintain distributions to our stockholders.

Challenges in the market are intensified for us by certain regulatory limitations under the Code and the 1940 Act. To maintain our qualification as a RIC, we must satisfy, among other requirements, an annual distribution requirement to pay out at least 90% of our ordinary income and short-term capital gains to our stockholders. Because we are required to distribute our income in this manner, and because the illiquidity of many of our investments may make it difficult for us to finance new investments through the sale of current investments, our ability to make new investments is highly dependent upon external financing. While we anticipate being able to continue to satisfy all covenants and repay the outstanding balances under the Leverage Program when due, there can be no assurance that we will be able to do so, which could lead to an event of default.

Contractual obligations

In addition to obligations under our Leverage Program, we have entered into several contracts under which we have future commitments. Pursuant to an investment management agreement, the Advisor manages our day-to-day operations and provides investment advisory services to us. Payments under the investment

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management agreement are equal to a percentage of the value of our gross assets (excluding cash and cash equivalents) and an incentive compensation, plus reimbursement of certain expenses incurred by the Advisor. Under our administration agreement, the Administrator provides us with administrative services, facilities and personnel. Payments under the administration agreement are equal to an allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to us, and may include rent and our allocable portion of the cost of certain of our officers and their respective staffs. We are responsible for reimbursing the Advisor for due diligence and negotiation expenses, fees and expenses of custodians, administrators, transfer and distribution agents, counsel and directors, insurance, filings and registrations, proxy expenses, expenses of communications to investors, compliance expenses, interest, taxes, portfolio transaction expenses, costs of responding to regulatory inquiries and reporting to regulatory authorities, costs and expenses of preparing and maintaining our books and records, indemnification, litigation and other extraordinary expenses and such other expenses as are approved by the directors as being reasonably related to our organization, offering, capitalization, operation or administration and any portfolio investments, as applicable. The Advisor is not responsible for any of the foregoing expenses and such services are not investment advisory services under the 1940 Act. Either party may terminate each of the investment management agreement and administration agreement without penalty upon not less than 60 days’ written notice to the other.

Distributions

Our quarterly dividends and distributions to common stockholders are recorded on the ex-dividend date. Distributions are declared considering our estimate of annual taxable income available for distribution to stockholders and the amount of taxable income carried over from the prior year for distribution in the current year. We do not have a policy to pay distributions at a specific level and expect to continue to distribute substantially all of our taxable income. We cannot assure stockholders that they will receive any distributions or distributions at a particular level.

The following tables summarize dividends declared for the years ended December 31, 2016 and 2015:

Date Declared	Record Date	Payment Date	Type	Amount Per Share		Total Amount
February 24, 2016	March 17, 2016	March 31, 2016	Regular	$	0.36	$	17,530,963
May 10, 2016	June 16, 2016	June 30, 2016	Regular		0.36		18,254,229
August 9, 2016	September 16, 2016	September 30, 2016	Regular		0.36		19,094,976
November 8, 2016	December 16, 2016	December 30, 2016	Regular		0.36		19,095,030
				$	1.44	$	73,975,198

Date Declared	Record Date	Payment Date	Type	Amount Per Share		Total Amount
March 10, 2015	March 19, 2015	March 31, 2015	Regular	$	0.36	$	17,535,826
May 7, 2015	June 16, 2015	June 30, 2015	Regular		0.36		17,625,370
August 6, 2015	September 16, 2015	September 30, 2015	Regular		0.36		17,625,310
November 5, 2015	December 17, 2015	December 31, 2015	Regular		0.36		17,590,638
				$	1.44	$	70,377,144

The following table summarizes the total shares issued in connection with our dividend reinvestment plan for the years ended December 31, 2016 and 2015:

	2016		2015
Shares Issued		610		555
Average Price Per Share	$	15.83	$	14.62
Proceeds	$	9,657	$	8,116

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We have elected to be taxed as a RIC under Subchapter M of the Code. In order to maintain favorable RIC tax treatment, we must distribute annually to our stockholders at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In order to avoid certain excise taxes imposed on RICs, we must distribute during each calendar year an amount at least equal to the sum of:

• 98% of our ordinary income (not taking into account any capital gains or losses) for the calendar year;

• 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for the one-year period generally ending on October 31 of the calendar year; and

• certain undistributed amounts from previous years on which we paid no U.S. federal income tax.

We may, at our discretion, carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. If we choose to do so, all other things being equal, this would increase expenses and reduce the amounts available to be distributed to our stockholders. We will accrue excise tax on estimated taxable income as required. In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment.

We have adopted an “opt in” dividend reinvestment plan for our common stockholders. As a result, if we declare a dividend or other distribution payable in cash, each stockholder that has not “opted in” to our dividend reinvestment plan will receive such dividends in cash, rather than having their dividends automatically reinvested in additional shares of our common stock.

We may not be able to achieve operating results that will allow us to make dividends and distributions at a specific level or to increase the amount of these dividends and distributions from time to time. Also, we may be limited in our ability to make dividends and distributions due to the asset coverage test applicable to us as a BDC under the 1940 Act and due to provisions in our existing and future credit facilities. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of favorable RIC tax treatment. In addition, in accordance with U.S. generally accepted accounting principles and tax regulations, we include in income certain amounts that we have not yet received in cash, such as PIK interest, which represents contractual interest added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a RIC and may be subject to an excise tax.

In order to satisfy the annual distribution requirement applicable to RICs, we have the ability to declare a large portion of a dividend in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash and certain requirements are met, the entire distribution would be treated as a dividend for U.S. federal income tax purposes.

Related Parties

We have entered into a number of business relationships with affiliated or related parties, including the following:

• Each of the Holding Company, the Operating Company, TCPC Funding, and the SBIC has entered into an investment management agreement with the Advisor.

• The Administrator provides us with administrative services necessary to conduct our day-to-day operations. For providing these services, facilities and personnel, the Administrator may be reimbursed by us for expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our officers and the Administrator’s administrative staff and providing, at our request and on our behalf, significant managerial assistance to our portfolio companies to which we are required to provide such assistance.

• We have entered into a royalty-free license agreement with the Advisor, pursuant to which the Advisor has agreed to grant us a non-exclusive, royalty-free license to use the name “TCP.”

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• Pursuant to its limited partnership agreement, the general partner of the Operating Company is Series H of SVOF/MM, LLC. SVOF/MM, LLC is an affiliate of the Advisor and certain other series and classes of SVOF/MM, LLC serve as the general partner or managing member of certain other funds managed by the Advisor.

The Advisor and its affiliates, employees and associates currently do and in the future may manage other funds and accounts. The Advisor and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds or accounts. Accordingly, conflicts may arise regarding the allocation of investments or opportunities among us and those accounts. In general, the Advisor will allocate investment opportunities pro rata among us and the other funds and accounts (assuming the investment satisfies the objectives of each) based on the amount of committed capital each then has available. The allocation of certain investment opportunities in private placements is subject to independent director approval pursuant to the terms of the co-investment exemptive order applicable to us. In certain cases, investment opportunities may be made other than on a pro rata basis. For example, we may desire to retain an asset at the same time that one or more other funds or accounts desire to sell it or we may not have additional capital to invest at a time the other funds or accounts do. If the Advisor is unable to manage our investments effectively, we may be unable to achieve our investment objective. In addition, the Advisor may face conflicts in allocating investment opportunities between us and certain other entities that could impact our investment returns. While our ability to enter into transactions with our affiliates is restricted under the 1940 Act, we have received an exemptive order from the SEC permitting certain affiliated investments subject to certain conditions. As a result, we may face conflict of interests and investments made pursuant to the exemptive order conditions which could in certain circumstances affect adversely the price paid or received by us or the availability or size of the position purchased or sold by us.

Recent Developments

From January 1, 2017 through February 24, 2017, the Operating Company has invested approximately $90.8 million primarily in five senior secured loans, as well as investments in two portfolios of debt and lease assets, with a combined effective yield of approximately 10.2%.

On February 22, 2017, our board of directors re-approved the Company Repurchase Plan, to be in effect through the earlier of two trading days after our first quarter 2017 earnings release or such time as the approved $50.0 million repurchase amount has been fully utilized, subject to certain conditions.

On February 28, 2017, our board of directors declared a first quarter regular dividend of $0.36 per share payable on March 31, 2017 to stockholders of record as of the close of business on March 17, 2017.

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Item 7A: Quantitative and qualitative disclosure about market risk

We are subject to financial market risks, including changes in interest rates. At December 31, 2016, 80.5% of debt investments in our portfolio bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to six months. At December 31, 2016, the percentage of floating rate debt investments in our portfolio that bore interest based on an interest rate floor was 77.0%. Floating rate investments subject to a floor generally reset by reference to the current market index after one to six months only if the index exceeds the floor.

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. We assess our portfolio companies periodically to determine whether such companies will be able to continue making interest payments in the event that interest rates increase. There can be no assurances that the portfolio companies will be able to meet their contractual obligations at any or all levels of increases in interest rates.

Based on our December 31, 2016 balance sheet, the following table shows the annual impact on net income (excluding the related incentive compensation impact) of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure:

Basis Point Change	Interest income			Interest Expense			Net Income
Up 300 basis points	$	32,720,925		$	(10,095,000	)	$	22,625,925
Up 200 basis points		21,938,241			(6,730,000	)		15,208,241
Up 100 basis points		11,158,015			(3,365,000	)		7,793,015
Down 100 basis points		(2,488,377	)		3,288,615			800,237
Down 200 basis points		(2,488,377	)		3,288,615			800,237
Down 300 basis points		(2,488,377	)		3,288,615			800,237

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Item 8.   Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Reports of Independent Registered Public Accounting Firm		69
Consolidated Statements of Assets and Liabilities as of December 31, 2016 and 2015		72
Consolidated Schedule of Investments as of December 31, 2016 and 2015		73
Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014		91
Consolidated Statements of Changes in Net Assets for the years ended December 31, 2016, 2015 and 2014		92
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014		93
Notes to Consolidated Financial Statements		94
Consolidated Schedules of Changes in Investments in Affiliates as of December 31, 2016 and 2015		118
Consolidated Schedules of Restricted Securities of Unaffiliated Issuers as of December 31, 2016 and 2015		122
Consolidating Statements of Assets and Liabilities as of December 31, 2016 and 2015		124
Consolidating Statements of Operations for the years ended December 31, 2016, 2015 and 2014		126

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
TCP Capital Corp.
Los Angeles, California

We have audited the accompanying consolidated statements of assets and liabilities of TCP Capital Corp. (the “Company”), including the consolidated schedule of investments, as of December 31, 2016 and 2015, and the related consolidated statements of operations, changes in net assets, and cash flows for each of the two years in the period ended December 31, 2016. Our audit also included the 2016 and 2015 financial statement schedules listed in the Index at Item 15(a). These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of TCP Capital Corp. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We have also 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, 2016, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2017 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Los Angeles, California
February 28, 2017

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of

TCP Capital Corp.

We have audited the accompanying consolidated statements of operations, changes in net assets and cash flows of TCP Capital Corp. (the Company) for the year ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements of TCP Capital Corp. referred to above present fairly, in all material respects, the consolidated results of its operations, changes in its net assets and its cash flows for the year ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidating statement of operations for the year ended December 31, 2014, has been subjected to audit procedures performed in conjunction with the audit of Company’s consolidated financial statements. Such information is the responsibility of the Company’s management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ Ernst & Young LLP
   
Los Angeles, California
March 9, 2015

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
TCP Capital Corp.
Los Angeles, California

We have audited the internal control over financial reporting of TCP Capital Corp. (the “Company”) as of December 31, 2016, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2016 of the Company and our report dated February 28, 2017 expressed an unqualified opinion on those financial statements and financial statement schedules.

/s/ DELOITTE & TOUCHE LLP

Los Angeles, California
February 28, 2017

71

TCP Capital Corp.
   
Consolidated Statements of Assets and Liabilities

	December 31, 2016			December 31, 2015
Assets
Investments, at fair value:
Companies less than 5% owned (cost of $1,174,421,611 and $1,123,682,687, respectively)	$	1,175,097,468		$	1,099,208,475
Companies 5% to 25% owned (cost of $75,508,585 and $68,862,518, respectively)		69,355,808			69,008,931
Companies more than 25% owned (cost of $96,135,623 and $39,162,221, respectively)		70,516,594			14,702,319
Total investments (cost of $1,346,065,819 and $1,231,707,426, respectively)		1,314,969,870			1,182,919,725
Cash and cash equivalents		53,579,868			35,629,435
Accrued interest income:
Companies less than 5% owned		12,713,025			8,842,528
Companies 5% to 25% owned		953,561			741,306
Companies more than 25% owned		25,608			29,230
Deferred debt issuance costs		3,828,784			5,390,241
Unrealized appreciation on swaps		—			3,229,442
Options (cost of $51,750 at December 31, 2015)		—			—
Prepaid expenses and other assets		1,527,745			2,331,044
Total assets		1,387,598,461			1,239,112,951
Liabilities
Debt, net of unamortized issuance costs		571,658,862			498,205,471
Payable for investments purchased		12,348,925			6,425,414
Interest payable		5,013,713			2,911,257
Incentive allocation payable		4,716,834			5,207,606
Payable to the Advisor		325,790			508,334
Accrued expenses and other liabilities		2,598,346			3,877,852
Total liabilities		596,662,470			517,135,934
Commitments and contingencies (Note 5)
Net assets applicable to common shareholders	$	790,935,991		$	721,977,017
Composition of net assets applicable to common shareholders
Common stock, $0.001 par value; 200,000,000 shares authorized, 53,041,900 and 48,834,734 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively	$	53,042		$	48,834
Paid-in capital in excess of par		944,426,650			878,383,356
Accumulated net investment income		12,533,289			22,261,793
Accumulated net realized losses		(134,960,267	)		(132,483,593	)
Accumulated net unrealized depreciation		(31,116,723	)		(46,233,373	)
Net assets applicable to common shareholders	$	790,935,991		$	721,977,017
Net assets per share	$	14.91		$	14.78

72

TCP Capital Corp.
   
Consolidated Schedule of Investments
   
December 31, 2016

Issuer	Instrument	Ref	Floor			Spread	Total Coupon	Maturity		Principal		Cost			Fair Value			% of Total Cash and Investments			Notes
Debt Investments (A)
Activities Related to Credit Intermediation
Pegasus Business Intelligence, LP (Onyx Centersource)	First Lien Term Loan	LIBOR (Q)		1.00	%	6.75%	7.75%		12/20/2021	$	14,769,821	$	14,623,499		$	14,622,123			1.07	%
Pegasus Business Intelligence, LP (Onyx Centersource)	Revolver	LIBOR (Q)		1.00	%	6.75%	N/A		12/20/2021	$	—		(6,669	)		(6,713	)		—		J
iPayment, Inc.	First Lien Term Loan B2	LIBOR (Q)		1.50	%	5.25%	6.75%		5/8/2017	$	11,289,051		11,134,310			10,893,934			0.80	%
													25,751,140			25,509,344			1.87	%
Activities Related to Real Estate
Associations, Inc.	First Lien FILO Term Loan	LIBOR (Q)		1.00	%	8.96%	9.96%		12/23/2019	$	12,891,845		12,773,127			12,898,291			0.94	%
Advertising and Public Relations Services
InMobi, Inc. (Singapore)	First Lien Delayed Draw Tranche 1 Term Loan (1.25% Exit Fee)	LIBOR (M)		0.33	%	10.17%	10.98%		9/1/2018	$	15,000,000		14,772,946			14,704,508			1.07	%	H/K
InMobi, Inc. (Singapore)	First Lien Delayed Draw Tranche 2 Term Loan	LIBOR (M)		0.33	%	10.17%	N/A		9/1/2018	$	—		—			—			—		H
InMobi, Inc. (Singapore)	First Lien Delayed Draw Tranche 3 Term Loan	LIBOR (M)		0.33	%	10.17%	N/A		9/1/2018	$	—		—			—			—		H
													14,772,946			14,704,508			1.07	%
Air Transportation
Mesa Air Group, Inc.	Acquisition Loan	LIBOR (M)		—		7.25%	8.00%		7/15/2022	$	14,042,971		13,839,296			14,323,830			1.05	%
Mesa Airlines, Inc.	Engine Acquisition Delayed Draw Term Loan A	LIBOR (M)		—		7.25%	8.00%		12/14/2021	$	16,546,652		16,259,013			16,257,105			1.19	%
Mesa Airlines, Inc.	Engine Acquisition Delayed Draw Term Loan B	LIBOR (M)		—		7.25%	N/A		2/28/2022	$	—		—			—			—
Mesa Airlines, Inc.	Engine Acquisition Delayed Draw Term Loan C	LIBOR (M)		—		7.25%	N/A		12/31/2022	$	—		—			—			—
													30,098,309			30,580,935			2.24	%
Amusement and Recreation
AP Gaming I, LLC	First Lien Revolver	LIBOR (M)		—		8.25%	N/A		12/20/2018	$	—		(1,655,756	)		(937,500	)		(0.07	%)	J
VSS-Southern Holdings, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%	6.5% Cash + 2% PIK	9.50%		11/3/2020	$	24,220,291		23,755,180			23,735,885			1.73	%
VSS-Southern Holdings, LLC	Sr Secured Revolver	LIBOR (Q)		1.00	%	6.5% Cash + 2% PIK	N/A		11/3/2020	$	—		(16,444	)		(17,123	)		—		J
													22,082,980			22,781,262			1.66	%
Apparel Manufacturing
Broder Bros., Co.	First Lien Term Loan (First Out)	LIBOR (Q)		1.25	%	5.75%	7.00%		6/3/2021	$	9,700,000		9,541,402			9,700,000			0.71	%
Broder Bros., Co.	First Lien Term Loan B (Last Out)	LIBOR (Q)		1.25	%	12.25%	13.50%		6/3/2021	$	9,800,000		9,646,339			9,800,000			0.72	%
JH Apparel Holdings, LLC	First Lien FILO Term Loan	LIBOR (M)		1.00	%	9.60%	10.60%		4/8/2019	$	2,714,632		2,705,143			2,741,779			0.20	%
													21,892,884			22,241,779			1.63	%
Building Equipment Contractors
Hylan Datacom & Electrical, LLC	First Lien Delayed Draw Term Loan	LIBOR (Q)		1.00	%	7.50%	8.50%		7/25/2021	$	—		—			—			—
Hylan Datacom & Electrical, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%	7.50%	8.50%		7/25/2021	$	14,295,589		14,092,734			14,188,374			1.04	%
													14,092,734			14,188,374			1.04	%
Business Support Services
Enerwise Global Technologies, Inc.	Sr Secured Revolving Loan	LIBOR (Q)		0.23	%	8.52%	N/A		11/30/2018	$	—		(17,798	)		70,000			0.01	%	J
Enerwise Global Technologies, Inc.	Sr Secured Term Loan (1.0% Exit Fee)	LIBOR (Q)		0.23	%	9.27%	10.12%		11/30/2019	$	23,937,500		23,867,666			24,356,406			1.78	%	K
STG-Fairway Acquisitions, Inc. (First Advantage)	Second Lien Term Loan	LIBOR (Q)		1.00	%	9.25%	10.25%		6/30/2023	$	31,000,000		30,588,757			30,336,600			2.22	%
													54,438,625			54,763,006			4.01	%

73

TCP Capital Corp.
   
Consolidated Schedule of Investments (Continued)
   
December 31, 2016

Issuer	Instrument	Ref	Floor			Spread	Total Coupon	Maturity		Principal		Cost			Fair Value		% of Total Cash and Investments			Notes
Debt Investments (continued)
Chemicals
Anuvia Plant Nutrients Holdings, LLC	Sr Secured Term Loan (8.0% Exit Fee)	LIBOR (Q)		—		10.63%	11.63%		2/1/2018	$	7,563,676	$	7,995,360		$	8,250,457		0.60	%	K
Green Biologics, Inc.	Sr Secured Delayed Draw Term Loan (12.4% Exit Fee)	Prime Rate		—		7.75%	11.50%		6/30/2019	$	15,000,000		15,468,439			14,905,500		1.09	%	K
iGM RFE1 B.V. (Netherlands)	First Lien Delayed Draw Term Loan	LIBOR (Q)		—		8.00%	9.00%		10/12/2021	$	253,581		245,565			251,684		0.02	%	H
iGM RFE1 B.V. (Netherlands)	First Lien Term Loan	LIBOR (Q)		—		8.00%	9.00%		10/12/2021	$	3,864,583		3,836,083			3,835,599		0.28	%	H
Nanosys, Inc.	First Lien Delayed Draw Term Loan (3.5% Exit Fees)	LIBOR (Q)		—		9.81%	10.75%		4/1/2019	$	10,000,000		9,526,456			9,712,000		0.71	%	K
													37,071,903			36,955,240		2.70	%
Communications Equipment Manufacturing
Globecomm Systems, Inc.	First Lien Term Loan	LIBOR (Q)		1.25	%	7.63%	8.88%		12/11/2018	$	14,480,001		14,335,200			14,480,002		1.06	%	B
Triangle Acquisition Co. (Polycom)	First Lien Term Loan	LIBOR (Q)		1.00	%	6.50%	7.50%		9/27/2023	$	4,835,417		4,646,389			4,877,727		0.36	%
													18,981,589			19,357,729		1.42	%
Computer Systems Design and Related Services
Aptos Inc. (Canada)	First Lien Term Loan	LIBOR (Q)		1.00	%	6.75%	7.75%		9/1/2022	$	9,975,000		9,784,353			9,875,250		0.72	%	H
Dealersocket, Inc.	Senior Secured 1st Lien Term Loan	LIBOR (M)		1.00	%	10.00%	11.00%		2/10/2021	$	17,500,000		16,884,459			17,291,750		1.26	%
MSC Software Corporation	Second Lien Term Loan	LIBOR (M)		1.00	%	7.50%	8.50%		5/29/2021	$	6,993,035		6,953,617			7,001,777		0.51	%
Marketo, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	9.50%	10.50%		8/16/2021	$	23,295,455		22,630,922			22,887,784		1.67	%
Marketo, Inc.	Senior Secured Revolver	LIBOR (Q)		1.00	%	9.50%	10.50%		8/16/2021	$	—		(47,341	)		21,307		—		J
OnX Enterprise Solutions, Ltd. (Canada)	First Lien Term Loan B	LIBOR (Q)		—		8.00%	8.90%		9/3/2018	$	2,314,000		2,314,000			2,314,000		0.17	%	H
OnX Enterprise Solutions, Ltd. (Canada)	First Lien Term Loan	LIBOR (Q)		—		8.00%	8.90%		9/3/2018	$	10,320,000		10,268,787			10,320,000		0.75	%	H
OnX USA, LLC	First Lien Term Loan B	LIBOR (Q)		—		8.00%	8.90%		9/3/2018	$	3,738,000		3,738,000			3,738,000		0.27	%
OnX USA, LLC	First Lien Term Loan	LIBOR (Q)		—		8.00%	8.90%		9/3/2018	$	3,160,000		3,151,013			3,160,000		0.23	%
Waterfall International, Inc.	First Lien Delayed Draw Term Loan (3.0% Exit Fee)	LIBOR (Q)		—		11.67%	12.48%		9/1/2018	$	4,800,000		4,827,231			4,970,640		0.36	%	K
													80,505,041			81,580,508		5.94	%
Data Processing and Hosting Services
IO Data Centers, USA, LLC	First Lien Term Loan	Fixed		—		9.00%	9.00%		1/15/2020	$	6,876,756		6,876,756			6,876,756		0.50	%
Electric Power Generation, Transmission and Distribution
Holocene Renewable Energy Fund 3, LLC (Conergy)	First Lien Term Loan	Fixed		—		9% Cash + 1% PIK	10.00%		9/10/2017	$	7,518,173		7,491,471			7,442,991		0.54	%
Electronic Component Manufacturing
Soraa, Inc.	Tranche A Term Loan (3.0% Exit Fee)	LIBOR (Q)		0.44	%	9.33%	10.15%		3/1/2018	$	15,666,296		15,483,478			15,471,251		1.13	%	K
Soraa, Inc.	Tranche B Term Loan	LIBOR (Q)		0.44	%	9.33%	10.15%		9/1/2017	$	1,603,779		1,556,152			1,563,204		0.11	%
													17,039,630			17,034,455		1.24	%
Equipment Leasing
36th Street Capital Partners Holdings, LLC	Senior Note	Fixed		—		12.00%	12.00%		11/1/2020	$	29,203,304		29,203,304			29,203,304		2.13	%	E/F
Essex Ocean, LLC (Solexel)	Sr Secured Term Loan	Fixed		—		8.00%	8.00%		8/15/2018	$	1,685,289		1,685,289			1,718,994		0.13	%
													30,888,593			30,922,298		2.26	%
Facilities Support Services
NANA Development Corp.	First Lien Term Loan B	LIBOR (M)		1.25	%	6.75%	8.00%		3/15/2018	$	879,513		834,963			853,128		0.06	%
Financial Investment Activities
Magnolia Finance V plc (Cayman Islands)	Asset-Backed Credit Linked Notes	Fixed		—		13.13%	13.13%		8/2/2021	$	15,000,000		15,000,000			14,994,000		1.10	%	E/H
Grocery Stores
Bashas, Inc.	First Lien FILO Term Loan	LIBOR (M)		1.50	%	8.80%	10.30%		10/8/2019	$	9,333,235		9,297,529			9,426,567		0.69	%

74

TCP Capital Corp.
   
Consolidated Schedule of Investments (Continued)
   
December 31, 2016

Issuer	Instrument	Ref	Floor			Spread	Total Coupon	Maturity		Principal		Cost			Fair Value		% of Total Cash and Investments			Notes
Debt Investments (continued)
Hospitals
KPC Healthcare, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	9.25%	10.51%		8/28/2020	$	12,071,083	$	11,857,665		$	12,375,878		0.90	%
Pacific Coast Holdings Investment, LLC	Senior Secured 1st Lien Delayed Draw Term Loan	LIBOR (M)		2.00	%	9.70%	11.70%		10/23/2019	$	10,828,233		10,806,929			10,828,233		0.79	%
													22,664,594			23,204,111		1.69	%
Insurance
Alera Group Intermediate Holdings, Inc.	First Lien Delayed Draw Term Loan	Prime		—		4.50%	8.25%		12/30/2022	$	—		(8,333	)		—		—		J
Alera Group Intermediate Holdings, Inc.	First Lien Revolver	Prime		—		4.50%	8.25%		12/30/2021	$	—		(7,595	)		—		—		J
Alera Group Intermediate Holdings, Inc.	First Lien Term Loan	Prime		—		4.50%	8.25%		12/30/2022	$	3,407,121		3,373,050			3,373,050		0.25	%
Association Member Benefits Advisors, LLC	Second Lien Term Loan	LIBOR (M)		1.00	%	8.75%	9.75%		6/8/2023	$	8,277,983		8,112,882			8,112,423		0.59	%
JSS Holdings, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	6.50%	7.50%		8/31/2021	$	3,750,000		3,689,740			3,731,250		0.27	%
US Apple Holdco, LLC (Ventiv Technology)	First Lien Term Loan	LIBOR (Q)		0.50	%	13.62%	14.49%		8/29/2019	$	20,015,152		19,533,393			20,015,152		1.46	%
													34,693,137			35,231,875		2.57	%
Lessors of Nonfinancial Licenses
ABG Intermediate Holdings 2, LLC	Second Lien Term Loan	LIBOR (Q)		1.00	%	8.50%	9.50%		5/27/2022	$	16,573,588		16,434,441			16,739,324		1.22	%
ABG Intermediate Holdings 2, LLC	Second Lien Incremental Term Loan	LIBOR (Q)		1.00	%	8.50%	9.50%		5/27/2022	$	3,426,412		3,396,918			3,460,676		0.25	%
													19,831,359			20,200,000		1.47	%
Management, Scientific, and Technical Consulting Services
Dodge Data & Analytics, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%	8.75%	9.75%		10/31/2019	$	23,995,511		23,613,049			23,699,166		1.73	%
Motion Picture and Video Industries
NEG Holdings, LLC (CORE Entertainment)	First Lien Term Loan	LIBOR (Q)		1.00	%	8.0% PIK	9.00%		10/17/2022	$	1,445,592		1,445,592			1,387,712		0.10	%
Nondepository Credit Intermediation
Auto Trakk SPV, LLC	First Lien Delayed Draw Term Loan	LIBOR (M)		0.50	%	9.50%	10.24%		12/21/2021	$	32,392,942		31,888,166			31,939,467		2.33	%
Caliber Home Loans, Inc.	First Lien Delayed Draw Term Loan	LIBOR (M)		1.00	%	6.50%	7.50%		6/30/2020	$	13,333,333		13,136,017			13,133,333		0.96	%
Caribbean Financial Group (Cayman Islands)	Sr Secured Notes	Fixed		—		11.50%	11.50%		11/15/2019	$	28,678,000		28,568,148			29,108,170		2.13	%	E/G/H
Daymark Financial Acceptance, LLC	First Lien Delayed Draw Term Loan	LIBOR (M)		—		9.50%	10.27%		1/12/2020	$	17,500,000		17,300,337			16,992,500		1.24	%
Greystone Select Holdings, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%	8.00%	9.00%		3/26/2021	$	16,062,731		15,912,928			16,207,296		1.18	%
Trade Finance Funding I, Ltd. (Cayman Islands)	Secured Class B Notes	Fixed		—		10.75%	10.75%		11/13/2018	$	15,084,000		15,084,000			14,857,740		1.09	%	E/H
													121,889,596			122,238,506		8.93	%
Other Information Services
Asset International, Inc.	Delayed Draw Term Loan	LIBOR (M)		1.00	%	8.50%	9.50%		7/31/2020	$	1,251,626		1,227,886			1,231,183		0.09	%
Asset International, Inc.	Revolver Loan	LIBOR (M)		1.00	%	8.50%	9.50%		7/31/2020	$	491,303		480,225			481,674		0.04	%
Asset International, Inc.	First Lien Term Loan	LIBOR (M)		1.00	%	8.50%	9.50%		7/31/2020	$	15,408,563		15,204,465			15,257,559		1.11	%
Simmons Research, LLC	First Lien Term Loan	LIBOR (Q)		0.50	%	10.50%	11.38%		12/11/2020	$	4,936,601		4,853,985			4,973,625		0.36	%
SoundCloud Ltd. (United Kingdom)	Sr Secured Term Loan (2.0% Exit Fee)	LIBOR (M)		0.28	%	10.72%	11.60%		10/1/2018	$	31,550,000		31,632,236			32,510,698		2.38	%	H/K
TCH-2 Holdings, LLC (TravelClick)	Second Lien Term Loan	LIBOR (M)		1.00	%	7.75%	8.75%		11/6/2021	$	19,988,392		19,769,829			19,663,581		1.44	%	G
													73,168,626			74,118,320		5.42	%

75

TCP Capital Corp.
   
Consolidated Schedule of Investments (Continued)
   
December 31, 2016

Issuer	Instrument	Ref	Floor			Spread	Total Coupon	Maturity		Principal		Cost			Fair Value		% of Total Cash and Investments			Notes
Debt Investments (continued)
Other Manufacturing
AGY Holding Corp.	Sr Secured Term Loan	Fixed		—		12.00%	12.00%		9/15/2018	$	4,869,577	$	4,869,577		$	4,869,710		0.36	%	B
AGY Holding Corp.	Second Lien Notes	Fixed		—		11.00%	11.00%		11/15/2018	$	9,268,000		7,586,317			9,268,000		0.68	%	B/E
AGY Holding Corp.	Delayed Draw Term Loan	Fixed		—		12.00%	12.00%		9/15/2018	$	1,049,146		1,049,146			1,049,147		0.08	%	B
Bioventus, LLC	Second Lien Term Loan	LIBOR (M)		1.00	%	6.25%	7.25%		11/15/2021	$	5,000,000		4,900,613			5,000,000		0.37	%
Boomerang Tube, LLC	Subordinated Notes	LIBOR (M)		—		17.50%	N/A		2/1/2021	$	1,030,741		1,030,740			107,200		0.01	%	C
													19,436,393			20,294,057		1.50	%
Other Publishing
Bisnow, LLC	First Lien Revolver	LIBOR (Q)		—		9.00%	N/A		4/29/2021	$	—		(24,000	)		15,000		—		J
Bisnow, LLC	First Lien Term Loan	LIBOR (Q)		—		9.00%	9.88%		4/29/2021	$	8,614,356		8,459,058			8,549,749		0.62	%
Contextmedia Health, LLC	First Lien Term Loan B	LIBOR (M)		1.00	%	6.50%	7.50%		12/23/2021	$	13,636,364		12,272,727			12,477,273		0.91	%
													20,707,785			21,042,022		1.53	%
Other Telecommunications
Securus Technologies, Inc.	Second Lien Term Loan	LIBOR (Q)		1.25	%	7.75%	9.00%		4/30/2021	$	4,516,129		4,470,968			4,407,177		0.32	%
Pharmaceuticals
Lantheus Medical Imaging, Inc.	First Lien Term Loan	LIBOR (M)		1.00	%	6.00%	7.00%		6/30/2022	$	8,642,604		8,199,514			8,664,210		0.63	%
Plastics Manufacturing
Iracore International, Inc.	Sr Secured Notes	Fixed		—		9.50%	9.50%		6/1/2018	$	13,600,000		14,246,000			4,503,640		0.33	%	C/E/G
Radio and Television Broadcasting
Fuse, LLC	Sr Secured Notes	Fixed		—		10.38%	10.38%		7/1/2019	$	7,312,000		7,312,000			4,435,972		0.32	%	E/G
NEP/NCP Holdco, Inc.	Second Lien Term Loan	LIBOR (M)		1.25	%	8.75%	10.00%		7/22/2020	$	15,981,496		15,727,220			16,141,311		1.18	%
													23,039,220			20,577,283		1.50	%
Real Estate Leasing
Home Partners of America, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	7.00%	8.00%		10/13/2022	$	5,000,000		4,902,332			5,000,000		0.37	%
Restaurants
RM OpCo, LLC (Real Mex)	Convertible Second Lien Term Loan Tranche B-1	Fixed		—		8.50%	8.50%		3/30/2018	$	1,943,371		1,943,371			1,943,371		0.14	%	B
RM OpCo, LLC (Real Mex)	First Lien Term Loan Tranche A	Fixed		—		7.00%	7.00%		3/30/2018	$	4,871,284		4,587,898			4,871,284		0.36	%	B
RM OpCo, LLC (Real Mex)	Second Lien Term Loan Tranche B	Fixed		—		8.50%	8.50%		3/30/2018	$	9,683,150		9,683,150			3,154,770		0.23	%	B
RM OpCo, LLC (Real Mex)	Second Lien Term Loan Tranche B-1	Fixed		—		8.50%	8.50%		3/30/2018	$	3,049,554		3,034,132			3,049,555		0.22	%	B
RM OpCo, LLC (Real Mex)	Sr Convertible Second Lien Term Loan B	Fixed		—		8.50%	8.50%		3/30/2018	$	4,251,368		4,251,368			4,251,368		0.31	%	B
													23,499,919			17,270,348		1.26	%
Retail
Bon-Ton, Inc.	First Lien Tranche A-1 Revolver	LIBOR (Q)		1.00	%	9.50%	10.50%		3/15/2021	$	4,432,934		4,348,162			4,388,605		0.32	%
Gander Mountain Company	Second Lien Term Loan	LIBOR (M)		—		9.50%	10.44%		6/15/2018	$	14,740,910		14,618,096			14,749,754		1.08	%
The Gymboree Corporation	First Lien Term Loan	LIBOR (Q)		—		10.25%	11.18%		9/24/2020	$	12,857,349		12,618,039			13,050,209		0.95	%
Kenneth Cole Productions, Inc.	First Lien FILO Term Loan	LIBOR (M)		1.00	%	8.50%	9.50%		9/25/2020	$	20,672,789		20,491,699			20,879,517		1.53	%
													52,075,996			53,068,085		3.88	%
Satellite Telecommunications
Avanti Communications Group, PLC (United Kingdom)	Sr Secured Notes	Fixed		—		10.00%	10.00%		10/1/2019	$	9,393,000		9,393,000			5,665,153		0.41	%	E/G/H
Scientific Research and Development Services
Envigo Holdings, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	8.50%	9.50%		11/3/2021	$	35,192,124		34,499,517			34,796,212		2.54	%

76

TCP Capital Corp.
   
Consolidated Schedule of Investments (Continued)
   
December 31, 2016

Issuer	Instrument	Ref	Floor			Spread	Total Coupon	Maturity		Principal		Cost		Fair Value		% of Total Cash and Investments			Notes
Debt Investments (continued)
Software Publishing
Acronis International GmbH (Switzerland)	First Lien Term Loan	LIBOR (Q)		1.00	%	11.50%	12.50%		6/9/2017	$	28,336,513	$	28,329,478	$	28,165,077		2.06	%	H
ArcServe (USA), LLC	Second Lien Term Loan	LIBOR (Q)		0.50	%	8.5% Cash + 1.25% PIK	10.75%		1/31/2020	$	30,222,833		29,851,330		28,893,029		2.11	%
Autoalert, LLC	First Lien Term Loan	LIBOR (Q)		0.25	%	5.75% Cash + 3% PIK	9.63%		3/31/2019	$	35,627,947		35,263,561		35,538,877		2.60	%
Mapp Digital US, LLC	First Lien Term Loan	LIBOR (Q)		—		9.50%	10.35%		12/31/2017	$	5,837,798		5,754,455		5,823,203		0.43	%
Edmentum, Inc.	Jr Revolving Facility	Fixed		—		5.00%	5.00%		6/9/2020	$	—		—		—		—		B
Edmentum Ultimate Holdings, LLC	Sr PIK Notes	Fixed		—		8.50%	8.50%		6/9/2020	$	2,846,243		2,846,243		2,846,246		0.21	%	B
Edmentum Ultimate Holdings, LLC	Jr PIK Notes	Fixed		—		10.00%	10.00%		6/9/2020	$	13,040,391		12,539,980		12,101,483		0.88	%	B
Fidelis Acquisitionco, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%	6.0% Cash + 2.0% PIK	9.00%		11/4/2019	$	42,565,572		41,986,034		42,991,228		3.14	%
Fidelis Acquisitionco, LLC	Sr Secured Revolver	LIBOR (Q)		1.00	%	8.00%	9.00%		11/4/2019	$	3,182,143		3,182,143		3,213,964		0.24	%
Newscycle Solutions, Inc.	Second Lien Term Loan	LIBOR (Q)		—		13.00%	13.95%		9/10/2021	$	11,513,361		11,196,782		11,334,905		0.83	%
Newscycle Solutions AB (Sweden)	Second Lien Term Loan B	LIBOR (Q)		—		13.00%	13.95%		9/10/2021	$	11,513,362		11,196,782		11,334,905		0.83	%	H
Soasta, Inc.	Senior Secured 1st Lien Term Loan (4.0% Exit Fee)	LIBOR (M)		—		9.56%	10.50%		4/1/2019	$	17,880,435		17,783,558		19,037,299		1.39	%	K
Soasta, Inc.	Convertible Promissory Note	Fixed		—		10.00%	10.00%		12/16/2017	$	2,282,609		2,282,609		5,504,054		0.40	%
Utilidata, Inc.	First Lien Delayed Draw Term Loan (1.0% Exit Fee)	LIBOR (M)		0.62	%	9.88%	10.69%		1/1/2019	$	3,200,000		3,135,670		3,080,000		0.23	%	K
													205,348,625		209,864,270		15.35	%
Textile Furnishings Mills
Lexmark Carpet Mills, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	10.00%	11.00%		12/19/2019	$	22,804,525		22,804,525		22,827,329		1.67	%
Lexmark Carpet Mills, Inc.	First Lien Term Loan B	LIBOR (Q)		1.00	%	10.00%	11.00%		12/19/2019	$	7,822,482		7,681,925		7,830,304		0.57	%
													30,486,450		30,657,633		2.24	%
Utility System Construction
Kawa Solar Holdings Limited (Cayman Islands)	Bank Guarantee Credit Facility	Fixed		—		8.2% Cash + 3.5% PIK	11.70%		7/2/2017	$	21,276,420		21,276,420		21,276,653		1.56	%	F/H
Kawa Solar Holdings Limited (Cayman Islands)	Revolving Credit Facility	Fixed		—		8.20%	8.20%		7/2/2017	$	4,000,000		4,000,000		4,000,000		0.29	%	F/H
													25,276,420		25,276,653		1.85	%
Wholesalers
NILCO, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%	9.50%	10.50%		9/1/2021	$	21,023,109		20,424,799		21,601,245		1.58	%
Wired Telecommunications Carriers
Alpheus Communications, LLC	First Lien Delayed Draw FILO Term Loan	LIBOR (M)		1.00	%	7.42%	8.53%		5/31/2018	$	332,044		328,743		326,682		0.02	%
Alpheus Communications, LLC	First Lien Delayed Draw FILO Term Loan	LIBOR (M)		1.00	%	7.42%	8.66%		5/31/2018	$	1,355,968		1,346,859		1,328,296		0.10	%
Alpheus Communications, LLC	First Lien FILO Term Loan	LIBOR (M)		1.00	%	7.42%	8.42%		5/31/2018	$	7,255,721		7,183,589		7,139,992		0.52	%
Integra Telecom Holdings, Inc.	Second Lien Term Loan	LIBOR (Q)		1.25	%	8.50%	9.75%		2/22/2020	$	13,231,193		13,084,285		13,313,989		0.97	%	G
U.S. TelePacific Corp.	First Lien Notes	LIBOR (Q)		1.00	%	8.50%	9.50%		2/24/2021	$	10,000,000		9,715,362		10,000,000		0.73	%
													31,658,838		32,108,959		2.34	%
Wireless Telecommunications Carriers
Gogo, LLC	Sr Secured Notes	Fixed		—		12.50%	12.50%		7/1/2022	$	10,000,000		10,000,000		10,900,000		0.80	%	E/G
Total Debt Investments													1,254,861,949		1,248,887,808		91.25	%

77

TCP Capital Corp.
   
Consolidated Schedule of Investments (Continued)
   
December 31, 2016

Issuer	Instrument	Ref	Floor	Spread	Total Coupon	Maturity	Principal		Cost		Fair Value		% of Total Cash and Investments			Notes
Equity Securities
Advertising and Public Relations Services
InMobi, Inc. (Singapore)	Warrants to Purchase Stock							562,496	$	230,569	$	87,356		0.01	%	C/E/H
Air Transportation
Aircraft Leased to United Airlines, Inc.
United N659UA-767, LLC (N659UA)	Trust Beneficial Interests							683		3,250,956		3,191,938		0.23	%	E/F
United N661UA-767, LLC (N661UA)	Trust Beneficial Interests							688		3,376,251		3,266,101		0.24	%	E/F
Epic Aero, Inc. (One Sky)	Warrants to Purchase Common Stock							1,843		855,313		1,909,600		0.14	%	C/E
										7,482,520		8,367,639		0.61	%
Business Support Services
Findly Talent, LLC	Membership Units							708,229		230,938		143,133		0.01	%	C/E
STG-Fairway Holdings, LLC (First Advantage)	Class A Units							841,479		325,432		1,112,351		0.08	%	C/E
										556,370		1,255,484		0.09	%
Chemicals
Green Biologics, Inc.	Warrants to Purchase Stock							909,300		274,213		875		—		C/E
Nanosys, Inc.	Warrants to Purchase Common Stock							800,000		605,266		611,920		0.05	%	C/E
										879,479		612,795		0.05	%
Communications Equipment Manufacturing
Wasserstein Cosmos Co-Invest, L.P. (Globecomm)	Limited Partnership Units							5,000,000		5,000,000		1,530,000		0.11	%	B/C/E
Computer Systems Design and Related Services
Waterfall International, Inc.	Series B Preferred Stock							1,428,571		1,000,000		1,145,286		0.08	%	C/E
Waterfall International, Inc.	Warrants to Purchase Stock							920,000		89,847		175,168		0.01	%	C/E
										1,089,847		1,320,454		0.09	%
Data Processing and Hosting Services
Anacomp, Inc.	Class A Common Stock							1,255,527		26,711,048		1,205,306		0.09	%	C/E/F
Rightside Group, Ltd.	Warrants							498,855		2,778,622		366,489		0.03	%	C/E
										29,489,670		1,571,795		0.12	%
Electrical Equipment Manufacturing
NEXTracker, Inc.	Series B Preferred Stock							558,884		—		1,727,622		0.13	%	E
NEXTracker, Inc.	Series C Preferred Stock							17,640		—		54,525		—		E
										—		1,782,147		0.13	%
Electronic Component Manufacturing
Soraa, Inc.	Warrants to Purchase Common Stock							3,071,860		478,899		5,222		—		C/E
Equipment Leasing
36th Street Capital Partners Holdings, LLC	Membership Units							6,818,897		6,818,897		6,818,897		0.50	%	C/E/F
Essex Ocean II, LLC	Membership Units							199,430		103,398		159,045		0.01	%	C/E/F
										6,922,295		6,977,942		0.51	%

78

TCP Capital Corp.
   
Consolidated Schedule of Investments (Continued)
   
December 31, 2016

Issuer	Instrument	Ref	Floor	Spread	Total Coupon	Maturity	Principal		Cost		Fair Value		% of Total Cash and Investments			Notes
Equity Securities (continued)
Financial Investment Activities
GACP I, LP	Membership Units							16,615,951	$	16,735,088	$	16,866,903		1.23	%	C/E/I
Marsico Holdings, LLC	Common Interest Units							168,698		172,694		1,687		—		C/E/I
										16,907,782		16,868,590		1.23	%
Metal and Mineral Mining
EPMC HoldCo, LLC	Membership Units							1,312,720		—		210,035		0.02	%	B/E
Motion Picture and Video Industries
NEG Parent, LLC	Class A Units							1,182,779		1,235,194		1,292,023		0.09	%	C/E
NEG Parent, LLC	Class P Units							1,537,613		1,537,613		1,551,056		0.11	%	C/E
NEG Parent, LLC	Class A Warrants to Purchase Class A Units							343,387		196,086		196,086		0.01	%	C/E
NEG Parent, LLC	Class B Warrants to Purchase Class A Units							346,794		198,032		198,032		0.02	%	C/E
										3,166,925		3,237,197		0.23	%
Other Information Services
SoundCloud, Ltd. (United Kingdom)	Warrants to Purchase Preferred Stock							946,498		79,082		95,502		0.01	%	C/E/H
Other Manufacturing
AGY Holding Corp.	Common Stock							1,333,527		—		—		—		B/C/E
Boomerang Tube Holdings, Inc.	Common Stock							24,288		243		—		—		C/E
KAGY Holding Company, Inc.	Series A Preferred Stock							9,778		1,091,200		4,607,246		0.34	%	B/C/E
										1,091,443		4,607,246		0.34	%
Radio and Television Broadcasting
Fuse Media, LLC	Warrants to Purchase Common Stock							233,470		300,322		—		—		C/E
Restaurants
RM Holdco, LLC (Real Mex)	Equity Participation							24		—		—		—		B/C/E
RM Holdco, LLC (Real Mex)	Membership Units							13,161,000		2,010,777		—		—		B/C/E
										2,010,777		—		—
Retail
Shop Holding, LLC (Connexity)	Class A Units							507,167		480,049		—		—		C/E
Software Publishing
Blackline Intermediate, Inc.	Warrants to Purchase Common Stock							246,546		522,678		5,300,373		0.39	%	C/E
Edmentum Ultimate Holdings, LLC	Class A Common Units							159,515		680,226		1,123,591		0.08	%	B/C/E
Soasta, Inc.	Warrants to Purchase Series F Preferred Stock							1,251,630		533,192		794,535		0.06	%	C/E
Utilidata, Inc.	Warrants to Purchase Stock							719,998		216,336		204,983		0.01	%	C/E
										1,952,432		7,423,482		0.54	%
Utility System Construction
Kawa Solar Holdings Limited (Cayman Islands)	Ordinary Shares							2,332,594		—		—		—		C/E/F/H
Kawa Solar Holdings Limited (Cayman Islands)	Series B Preferred Shares							93,023		1,395,349		1,395,350		0.10	%	C/E/F/H
										1,395,349		1,395,350		0.10	%

79

TCP Capital Corp.
   
Consolidated Schedule of Investments (Continued)
   
December 31, 2016

Issuer	Instrument	Ref	Floor	Spread	Total Coupon	Maturity	Principal		Cost		Fair Value		% of Total Cash and Investments			Notes
Equity Securities (continued)
Wired Telecommunications Carriers
Integra Telecom, Inc.	Common Stock							1,274,522	$	8,433,884	$	6,533,964		0.48	%	C/E
Integra Telecom, Inc.	Warrants							346,939		19,920		—		—		C/E
V Telecom Investment S.C.A. (Vivacom) (Luxembourg)	Common Shares							1,393		3,236,256		2,199,862		0.16	%	C/D/E/H
										11,690,060		8,733,826		0.64	%
Total Equity Securities										91,203,870		66,082,062		4.83	%
Total Investments									$	1,346,065,819	$	1,314,969,870
Cash and Cash Equivalents
Cash Held on Account at Various Institutions												53,579,868		3.92	%
Cash and Cash Equivalents												53,579,868		3.92	%
Total Cash and Investments											$	1,368,549,738		100.00	%	L

Notes to Consolidated Schedule of Investments:

(A) Investments in bank debt generally are bought and sold among institutional investors in transactions not subject to registration under the Securities Act of 1933. Such transactions are generally subject to contractual restrictions, such as approval of the agent or borrower.

(B) Non-controlled affiliate – as defined under the Investment Company Act of 1940 (ownership of between 5% and 25% of the outstanding voting securities of this issuer). See Consolidated Schedule of Changes in Investments in Affiliates.

(C) Non-income producing security.

(D) Investment denominated in foreign currency. Amortized cost and fair value converted from foreign currency to US dollars. Foreign currency denominated investments are generally hedged for currency exposure.

(E) Restricted security. (See Note 2)

(F) Controlled issuer – as defined under the Investment Company Act of 1940 (ownership of 25% or more of the outstanding voting securities of this issuer). Investment is not more than 50% of the outstanding voting securities of the issuer nor deemed to be a significant subsidiary. See Consolidated Schedule of Changes in Investments in Affiliates.

(G) Investment has been segregated to collateralize certain unfunded commitments.

(H) Non-U.S. company or principal place of business outside the U.S. and as a result the investment is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(I) Deemed an investment company under Section 3(c) of the Investment Company Act and as a result the investment is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(J) Negative balances relate to an unfunded commitment that was acquired and/or valued at a discount.

(K) In addition to the stated coupon, investment has an exit fee payable upon repayment of the loan in an amount equal to the percentage of the original principal amount shown.

80

TCP Capital Corp.
   
Consolidated Schedule of Investments (Continued)
   
December 31, 2016

(L) All cash and investments, except those referenced in Notes G above, are pledged as collateral under certain debt as described in Note 4 to the Consolidated Financial Statements.

LIBOR or EURIBOR resets monthly (M), quarterly (Q), semiannually (S), or annually (A).

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $587,219,129 and $473,457,512 respectively, for the year ended December 31, 2016. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments. The total value of restricted securities and bank debt as of December 31, 2016 was $1,311,625,473 or 96.1% of total cash and investments of the Company. As of December 31, 2016 approximately 16.4% of the total assets of the Company were not qualifying assets under Section 55(a) of the 1940 Act.

81

TCP Capital Corp.
   
Consolidated Schedule of Investments
   
December 31, 2015

Issuer	Instrument	Ref	Floor			Spread	Total Coupon	Maturity		Principal		Cost			Fair Value			% of Total Cash and Investments			Notes
Debt Investments (A)
Accounting, Tax and Payroll Services
EGS Holdings, Inc. (Expert Global Solutions)	Holdco PIK Notes	LIBOR (A)		3.00	%	10.00%	13.00%		10/3/2018	$	64,783	$	64,783		$	64,783			0.01	%
Expert Global Solutions, LLC	Second Lien Term Loan	LIBOR (Q)		1.50	%	11.00%	12.50%		10/3/2018	$	15,249,675		15,041,186			15,249,675			1.25	%
													15,105,969			15,314,458			1.26	%
Advertising and Public Relations Services
Doubleplay III Limited (Exterion Media) (United Kingdom)	First Lien Facility A1 Term Loan	EURIBOR (Q)		1.25	%	5.75%	7.00%		3/18/2018	€	12,249,157		15,931,220			13,171,984			1.08	%	D/H
InMobi, Inc. (Singapore)	First Lien Delayed Draw Tranche 1 Term Loan (1.25% Exit Fee)	LIBOR (M)		0.33	%	10.17%	10.50%		9/1/2018	$	13,145,041		12,695,719			12,776,341			1.05	%	H/L
InMobi, Inc. (Singapore)	First Lien Delayed Draw Tranche 1 Term Loan (1.25% Exit Fee)	LIBOR (M)		0.33	%	10.17%	N/A		9/1/2018	$	—		—			—			—		H/L
InMobi, Inc. (Singapore)	First Lien Delayed Draw Tranche 1 Term Loan (1.25% Exit Fee)	LIBOR (M)		0.33	%	10.17%	N/A		9/1/2018	$	—		—			—			—		H/L
													28,626,939			25,948,325			2.13	%
Air Transportation
Aircraft Leased to Delta Air Lines, Inc.
N913DL	Aircraft Secured Mortgage	Fixed		—		8.00%	8.00%		3/15/2017	$	114,196		114,196			115,617			0.01	%	F
N918DL	Aircraft Secured Mortgage	Fixed		—		8.00%	8.00%		8/15/2018	$	233,219		233,219			237,494			0.02	%	F
N954DL	Aircraft Secured Mortgage	Fixed		—		8.00%	8.00%		3/20/2019	$	336,554		336,554			342,734			0.03	%	F
N955DL	Aircraft Secured Mortgage	Fixed		—		8.00%	8.00%		6/20/2019	$	362,232		362,232			369,162			0.03	%	F
N956DL	Aircraft Secured Mortgage	Fixed		—		8.00%	8.00%		5/20/2019	$	358,380		358,380			365,197			0.03	%	F
N957DL	Aircraft Secured Mortgage	Fixed		—		8.00%	8.00%		6/20/2019	$	365,401		365,401			372,392			0.03	%	F
N959DL	Aircraft Secured Mortgage	Fixed		—		8.00%	8.00%		7/20/2019	$	372,361		372,361			379,522			0.03	%	F
N960DL	Aircraft Secured Mortgage	Fixed		—		8.00%	8.00%		10/20/2019	$	396,169		396,169			403,869			0.03	%	F
N961DL	Aircraft Secured Mortgage	Fixed		—		8.00%	8.00%		8/20/2019	$	385,667		385,667			393,115			0.03	%	F
N976DL	Aircraft Secured Mortgage	Fixed		—		8.00%	8.00%		2/15/2018	$	214,686		214,686			218,321			0.02	%	F
Aircraft Leased to United Airlines, Inc.
N659UA	Aircraft Secured Mortgage	Fixed		—		12.00%	12.00%		2/28/2016	$	313,315		313,315			318,980			0.03	%	F
N661UA	Aircraft Secured Mortgage	Fixed		—		12.00%	12.00%		5/4/2016	$	557,684		557,684			570,303			0.05	%	F
Cargojet Airways LTD. (Canada)	Aircraft Acquisition Loan A	LIBOR (M)		—		8.50%	8.75%		1/31/2023	$	14,250,773		13,982,969			14,252,198			1.17	%	H
Cargojet Airways LTD. (Canada)	Aircraft Acquisition Loan A1	LIBOR (M)		—		8.50%	N/A		1/31/2023	$	—		—			—			—		H
Mesa Air Group, Inc.	Acquisition Delayed Draw Loan	LIBOR (M)		—		7.25%	N/A		6/17/2019	$	—		—			278,288			0.02	%
Mesa Air Group, Inc.	Acquisition Loan	LIBOR (M)		—		7.25%	7.62%		7/15/2022	$	15,997,019		15,724,234			16,324,958			1.34	%
													33,717,067			34,942,150			2.87	%
Apparel Manufacturing
Broder Bros., Co.	First Lien Term Loan A (First Out)	LIBOR (Q)		1.25	%	5.75%	7.00%		6/3/2021	$	9,940,000		9,743,116			9,741,200			0.80	%
Broder Bros., Co.	First Lien Term Loan B (Last Out)	LIBOR (Q)		1.25	%	12.25%	13.50%		6/3/2021	$	9,960,000		9,762,553			9,760,800			0.80	%
JH Apparel Holdings, LLC	First Lien FILO Term Loan	LIBOR (M)		1.00	%	9.60%	10.60%		4/8/2019	$	3,669,926		3,645,226			3,669,926			0.30	%
													23,150,895			23,171,926			1.90	%
Business Support Services
Enerwise Global Technologies, Inc.	Sr Secured Revolving Loan	LIBOR (Q)		0.23	%	8.52%	8.75%		11/30/2017	$	—		(69,938	)		(123,750	)		(0.01	%)	K
Enerwise Global Technologies, Inc.	Sr Secured Term Loan (1.0% Exit Fee)	LIBOR (Q)		0.23	%	9.27%	9.50%		11/30/2019	$	17,281,250		17,043,402			16,996,109			1.39	%	L
STG-Fairway Acquisitions, Inc. (First Advantage)	Second Lien Term Loan	LIBOR (Q)		1.00	%	9.25%	10.25%		6/30/2023	$	31,000,000		30,546,700			31,883,500			2.62	%
													47,520,164			48,755,859			4.00	%

82

TCP Capital Corp.
   
Consolidated Schedule of Investments
   
December 31, 2015

Issuer	Instrument	Ref	Floor			Spread	Total Coupon	Maturity		Principal		Cost			Fair Value		% of Total Cash and Investments			Notes
Debt Investments (continued)
Chemicals
Anuvia Plant Nutrients Holdings, LLC	Sr Secured Term Loan (8.0 % Exit Fee)	LIBOR (M)		0.23	%	10.27%	10.50%		2/1/2018	$	7,700,000	$	7,993,675		$	8,059,280		0.66	%	L
BioAmber, Inc.	Sr Secured Term Loan (8.25% Exit Fee)	LIBOR (M)		0.23	%	9.27%	9.50%		12/1/2017	$	10,000,000		10,226,245			10,509,000		0.86	%	L
Green Biologics, Inc.	Sr Secured Delayed Draw Term Loan (10.0% Exit Fee)	Prime Rate		—		7.75%	11.25%		5/1/2018	$	15,000,000		14,927,838			15,175,500		1.25	%	L
													33,147,758			33,743,780		2.77	%
Communications Equipment Manufacturing
Globecomm Systems, Inc.	First Lien Term Loan	LIBOR (Q)		1.25	%	7.63%	8.88%		12/11/2018	$	14,629,280		14,482,987			14,256,233		1.17	%	B
Computer Equipment Manufacturing
Silicon Graphics International Corp.	First Lien Term Loan	LIBOR (Q)		1.00	%	9.00%	10.00%		7/27/2018	$	18,432,723		18,157,715			18,570,968		1.52	%	J
Computer Systems Design and Related Services
Autoalert, LLC	First Lien Term Loan	LIBOR (Q)		0.25	%	4.75% Cash + 4% PIK	9.00%		3/31/2019	$	34,564,922		34,069,278			34,459,499		2.83	%
MSC Software Corporation	Second Lien Term Loan	LIBOR (M)		1.00	%	7.50%	8.50%		5/29/2021	$	6,993,035		6,938,605			6,153,871		0.51	%
OnX Enterprise Solutions, Ltd. (Canada)	First Lien Term Loan B	LIBOR (Q)		—		8.00%	8.32%		9/3/2018	$	2,337,733		2,337,733			2,355,266		0.19	%	H
OnX Enterprise Solutions, Ltd. (Canada)	First Lien Term Loan	LIBOR (Q)		—		7.00%	7.32%		9/3/2018	$	10,426,667		10,343,578			10,322,400		0.85	%	H
OnX USA, LLC	First Lien Term Loan B	LIBOR (Q)		—		8.00%	8.32%		9/3/2018	$	4,675,467		4,675,467			4,710,533		0.39	%
OnX USA, LLC	First Lien Term Loan	LIBOR (Q)		—		7.00%	7.32%		9/3/2018	$	5,213,333		5,175,467			5,161,200		0.42	%
Vistronix, LLC	First Lien Revolver	LIBOR (Q)		0.50	%	8.50%	9.00%		12/4/2018	$	365,437		361,329			365,437		0.03	%
Vistronix, LLC	First Lien Term Loan	LIBOR (M)		0.50	%	8.50%	9.00%		12/4/2018	$	6,205,583		6,155,701			6,050,443		0.50	%
Waterfall International, Inc.	First Lien Delayed Draw Term Loan	LIBOR (Q)		—		11.67%	12.00%		9/1/2018	$	4,800,000		4,678,943			4,733,280		0.39	%
													74,736,101			74,311,929		6.11	%
Data Processing and Hosting Services
Asset International, Inc.	Delayed Draw Term Loan	LIBOR (M)		1.00	%	7.00%	8.00%		7/31/2020	$	3,430,383		3,396,023			3,404,827		0.28	%
Asset International, Inc.	Revolver Loan	LIBOR (M)		1.00	%	7.00%	8.00%		7/31/2020	$	242,376		234,663			242,376		0.02	%
Asset International, Inc.	First Lien Term Loan	LIBOR (M)		1.00	%	7.00%	8.00%		7/31/2020	$	8,109,426		7,979,611			8,050,389		0.66	%
Rightside Group, Ltd.	Second Lien Term Loan	LIBOR (Q)		0.50	%	8.75%	9.38%		8/6/2019	$	4,750,000		3,991,890			4,828,375		0.40	%
United TLD Holdco, Ltd. (Rightside) (Cayman Islands)	Second Lien Term Loan	LIBOR (Q)		0.50	%	8.75%	9.38%		8/6/2019	$	9,500,000		7,983,779			9,656,750		0.79	%	H
													23,585,966			26,182,717		2.15	%
Electric Power Generation, Transmission and Distribution
Holocene Renewable Energy Fund 3, LLC (Conergy)	First Lien Term Loan	Fixed		—		9% Cash + 1% PIK	10.00%		9/10/2017	$	7,461,240		7,397,199			7,386,628		0.61	%
Electrical Equipment Manufacturing
API Technologies Corp.	First Lien Term Loan	LIBOR (Q)		1.50	%	8.50%	10.00%		2/6/2018	$	6,165,986		6,130,433			6,058,081		0.50	%
API Technologies Corp.	First Lien Term Loan	LIBOR (Q)		1.50	%	8.50%	10.00%		2/6/2018	$	3,991,338		3,921,387			3,921,490		0.32	%
													10,051,820			9,979,571		0.82	%
Electronic Component Manufacturing
Central MN Renewables, LLC (Green Biologics)	Sr Secured Revolver (3.0% Exit Fee)	Fixed		—		8.25%	N/A		1/1/2016	$	—		—			—		—		L
Redaptive, Inc.	First Lien Delayed Draw Term Loan	LIBOR (Q)		—		10.72%	N/A		7/1/2018	$	—		(121,106	)		—		—		K
Soraa, Inc.	Tranche A Term Loan (3.0% Exit Fee)	LIBOR (M)		0.44	%	9.33%	9.77%		3/1/2018	$	22,500,000		21,452,673			21,411,000		1.76	%	L
Soraa, Inc.	Tranche B Term Loan	LIBOR (M)		0.44	%	9.33%	9.77%		9/1/2017	$	1,687,500		1,571,025			1,567,434		0.13	%
													22,902,592			22,978,434		1.89	%

83

TCP Capital Corp.
   
Consolidated Schedule of Investments
   
December 31, 2015

Issuer	Instrument	Ref	Floor			Spread	Total Coupon	Maturity		Principal		Cost			Fair Value			% of Total Cash and Investments			Notes
Debt Investments (continued)
Equipment Leasing
36th Street Capital Partners Holdings, LLC	Senior Note	Fixed		—		12.00%	12.00%		11/1/2020	$	900,000	$	900,000		$	900,000			0.07	%	E/F
Essex Ocean, LLC	Sr Secured Term Loan	Fixed		—		8.00%	8.00%		3/25/2019	$	—		—			—			—
Essex Ocean, LLC (Solexel)	Sr Secured Term Loan	Fixed		—		8.00%	8.00%		8/15/2018	$	2,631,033		2,631,033			2,641,294			0.22	%
													3,531,033			3,541,294			0.29	%
Financial Investment Activities
Institutional Shareholder Services, Inc.	Second Lien Term Loan	LIBOR (Q)		1.00	%	7.50%	8.50%		4/30/2022	$	4,471,492		4,437,802			4,270,275			0.35	%
iPayment, Inc.	First Lien Term Loan B2	LIBOR (Q)		1.50	%	5.25%	6.75%		5/8/2017	$	6,763,751		6,425,563			6,502,839			0.53	%
Magnolia Finance V plc (Cayman Islands)	Asset-Backed Credit Linked Notes	Fixed		—		13.13%	13.13%		8/2/2021	$	15,000,000		15,000,000			14,881,500			1.22	%	E/H
													25,863,365			25,654,614			2.10	%
Gaming
AP Gaming I, LLC	First Lien Revolver	LIBOR (M)		—		8.25%	N/A		12/20/2018	$	—		(1,862,302	)		(1,250,000	)		(0.10	%)	K
Grocery Stores
Bashas, Inc.	First Lien FILO Term Loan	LIBOR (M)		1.50	%	7.00%	8.50%		10/8/2019	$	10,033,866		9,995,480			10,111,127			0.83	%
Hospitals
Evidera, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	9.00%	10.00%		7/1/2018	$	3,907,686		3,888,148			3,912,571			0.32	%
KPC Healthcare, Inc.	First Lien Term Loan	Prime Rate		—		8.25%	11.75%		8/28/2020	$	17,157,214		16,790,143			17,043,118			1.40	%
RegionalCare Hospital Partners, Inc.	Second Lien Term Loan	LIBOR (M)		1.00	%	10.25%	11.25%		10/23/2019	$	21,017,525		20,777,746			20,807,350			1.71	%	G
													41,456,037			41,763,039			3.43	%
Insurance Carriers
Acrisure, LLC	Second Lien Incremental Notes	LIBOR (Q)		1.00	%	9.00%	10.00%		11/19/2022	$	7,080,555		6,944,926			7,063,562			0.58	%
Acrisure, LLC	Second Lien Notes	LIBOR (Q)		1.00	%	9.00%	10.00%		11/19/2022	$	12,720,998		12,542,859			12,690,468			1.04	%
Acrisure, LLC	Second Lien Incremental Notes	LIBOR (Q)		1.00	%	9.00%	10.00%		11/19/2022	$	3,846,850		3,795,306			3,837,597			0.31	%
JSS Holdings, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	6.25%	7.25%		8/31/2021	$	3,950,000		3,874,773			3,732,750			0.31	%
US Apple Holdco, LLC (Ventiv Technology)	First Lien Term Loan	LIBOR (Q)		0.50	%	11.50%	12.00%		8/29/2019	$	20,000,000		19,375,352			19,936,000			1.64	%
													46,533,216			47,260,377			3.88	%
Insurance Related Activities
Confie Seguros Holding II Co.	Second Lien Term Loan	LIBOR (M)		1.25	%	9.00%	10.25%		5/8/2019	$	11,061,809		10,950,946			10,951,191			0.90	%	G
Lessors of Nonfinancial Licenses
ABG Intermediate Holdings 2, LLC	Second Lien Term Loan	LIBOR (Q)		1.00	%	8.50%	9.50%		5/27/2022	$	15,990,714		15,853,293			15,690,888			1.29	%
ABG Intermediate Holdings 2, LLC	Second Lien Incremental Term Loan	LIBOR (Q)		1.00	%	8.50%	9.50%		5/27/2022	$	3,474,715		3,440,934			3,409,564			0.28	%
													19,294,227			19,100,452			1.57	%
Management, Scientific, and Technical Consulting Services
Dodge Data & Analytics, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%	8.75%	9.75%		10/31/2019	$	24,693,587		24,159,891			24,267,623			1.99	%
Medical Equipment and Supplies Manufacturing
Bioventus, LLC	Second Lien Term Loan	LIBOR (Q)		1.00	%	10.00%	11.00%		4/10/2020	$	11,000,000		10,819,241			10,835,000			0.89	%
Motion Picture and Video Industries
CORE Entertainment, Inc.	First Lien Term Loan	Fixed		—		11.00%	11.00%		6/21/2017	$	9,462,231		9,425,030			4,667,719			0.38	%
CORE Entertainment, Inc.	Second Lien Term Loan	Fixed		—		15.50%	15.50%		6/21/2018	$	7,569,785		7,700,187			291,058			0.02	%	C
													17,125,217			4,958,777			0.40	%

84

TCP Capital Corp.
   
Consolidated Schedule of Investments
   
December 31, 2015

Issuer	Instrument	Ref	Floor			Spread	Total Coupon	Maturity		Principal		Cost		Fair Value		% of Total Cash and Investments			Notes
Debt Investments (continued)
Nondepository Credit Intermediation
Caribbean Financial Group (Cayman Islands)	Sr Secured Notes	Fixed		—		11.50%	11.50%		11/15/2019	$	26,975,000	$	26,829,614	$	26,705,250		2.19	%	E/G/H
Daymark Financial Acceptance, LLC	First Lien Delayed Draw Term Loan	LIBOR (Q)		—		9.50%	9.92%		1/12/2020	$	5,000,000		4,621,333		4,919,250		0.40	%
Greystone Select Holdings, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%	8.00%	9.00%		3/26/2021	$	16,305,999		16,125,251		16,133,156		1.32	%
Trade Finance Funding I, Ltd. (Cayman Islands)	Secured Class B Notes	Fixed		—		10.75%	10.75%		11/13/2018	$	15,084,000		15,084,000		14,857,740		1.22	%	E/H
													62,660,198		62,615,396		5.13	%
Oil and Gas Extraction
Jefferson Gulf Coast Energy Partners, LLC	First Lien Term Loan B	Prime Rate		—		7.50%	11.00%		2/27/2018	$	14,812,500		14,714,767		13,479,375		1.11	%
MD America Energy, LLC	Second Lien Term Loan	LIBOR (Q)		1.00	%	8.50%	9.50%		8/4/2019	$	8,095,238		7,784,717		6,773,043		0.56	%
													22,499,484		20,252,418		1.67	%
Other Information Services
Simmons Research, LLC	First Lien Term Loan	LIBOR (Q)		0.50	%	10.50%	11.13%		12/11/2020	$	5,128,936		5,026,844		5,026,357		0.41	%
TCH-2 Holdings, LLC (TravelClick)	Second Lien Term Loan	LIBOR (M)		1.00	%	7.75%	8.75%		11/6/2021	$	19,988,392		19,735,864		18,789,089		1.54	%	G
													24,762,708		23,815,446		1.95	%
Other Manufacturing
AGY Holding Corp.	Sr Secured Term Loan	Fixed		—		12.00%	12.00%		9/15/2016	$	4,869,577		4,869,577		4,869,577		0.40	%	B
AGY Holding Corp.	Second Lien Notes	Fixed		—		11.00%	11.00%		11/15/2016	$	9,268,000		7,586,317		9,268,000		0.76	%	B/E
Boomerang Tube, LLC	Second Lien Term Loan	LIBOR (Q)		1.50	%	9.50%	11.00%		10/11/2017	$	3,825,453		4,010,758		1,759,709		0.14	%	C
Boomerang Tube, LLC	Super Priority Debtor-in-Possession	Prime Rate		—		10.00%	13.50%		11/30/2015	$	1,124,444		1,124,444		1,124,444		0.09	%
													17,591,096		17,021,730		1.39	%
Other Telecommunications
Securus Technologies, Inc.	Second Lien Term Loan	LIBOR (Q)		1.25	%	7.75%	9.00%		4/30/2021	$	14,000,000		13,860,000		7,924,000		0.65	%
Other Publishing
MediMedia USA, Inc.	First Lien Revolver	LIBOR (M)		—		6.75%	7.18%		5/20/2018	$	3,456,500		2,886,378		3,003,668		0.25	%
MediMedia USA, Inc.	First Lien Term Loan	LIBOR (Q)		1.25	%	6.75%	8.00%		11/20/2018	$	5,681,239		5,582,994		5,425,584		0.45	%	G
													8,469,372		8,429,252		0.70	%
Pharmaceuticals
Lantheus Medical Imaging, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	6.00%	7.00%		6/30/2022	$	5,970,000		5,879,117		5,492,400		0.45	%
Plastics Manufacturing
Iracore International, Inc.	Sr Secured Notes	Fixed		—		9.50%	9.50%		6/1/2018	$	13,600,000		13,600,000		8,918,010		0.73	%	E/G
Radio and Television Broadcasting
Fuse, LLC	Sr Secured Notes	Fixed		—		10.38%	10.38%		7/1/2019	$	7,312,000		7,312,000		5,776,480		0.47	%	E/G
NEP/NCP Holdco, Inc.	Second Lien Term Loan	LIBOR (M)		1.25	%	8.75%	10.00%		7/22/2020	$	10,000,000		10,019,257		9,450,000		0.78	%
The Tennis Channel, Inc.	First Lien Term Loan	LIBOR (Q)		—		8.50%	8.88%		5/29/2017	$	32,520,727		32,351,929		32,675,201		2.68	%
													49,683,186		47,901,681		3.93	%
Restaurants
RM OpCo, LLC (Real Mex)	Convertible Second Lien Term Loan Tranche B-1	Fixed		—		8.50%	8.50%		3/30/2018	$	1,783,036		1,779,352		1,783,036		0.15	%	B
RM OpCo, LLC (Real Mex)	First Lien Term Loan Tranche A	Fixed		—		7.00%	7.00%		3/21/2016	$	3,719,155		3,717,664		3,719,155		0.31	%	B
RM OpCo, LLC (Real Mex)	Second Lien Term Loan Tranche B	Fixed		—		8.50%	8.50%		3/30/2018	$	8,884,258		8,884,258		4,490,993		0.37	%	B
RM OpCo, LLC (Real Mex)	Second Lien Term Loan Tranche B-1	Fixed		—		8.50%	8.50%		3/30/2018	$	2,797,956		2,782,534		2,797,956		0.23	%	B
RM OpCo, LLC (Real Mex)	Sr Convertible Second Lien Term Loan B	Fixed		—		8.50%	8.50%		3/30/2018	$	2,188,233		2,188,233		2,188,233		0.18	%	B
													19,352,041		14,979,373		1.24	%
Retail
Kenneth Cole Productions, Inc.	First Lien FILO Term Loan	LIBOR (M)		1.00	%	8.50%	9.50%		9/25/2020	$	13,185,494		13,049,991		13,317,349		1.09	%
Connexity, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	10.00%	11.00%		2/13/2020	$	6,354,563		6,354,563		6,237,956		0.51	%
													19,404,554		19,555,305		1.60	%

85

TCP Capital Corp.
   
Consolidated Schedule of Investments
   
December 31, 2015

Issuer	Instrument	Ref	Floor			Spread	Total Coupon	Maturity		Principal		Cost		Fair Value		% of Total Cash and Investments			Notes
Debt Investments (continued)
Satellite Telecommunications
Avanti Communications Group, PLC (United Kingdom)	Sr Secured Notes	Fixed		—		10.00%	10.00%		10/1/2019	$	9,393,000	$	9,393,000	$	7,336,027		0.60	%	E/G/H
Scientific Research and Development Services
BPA Laboratories, Inc.	Senior Secured Notes	Fixed		—		12.25%	12.25%		4/1/2017	$	38,932,000		39,001,750		40,489,280		3.32	%	E/G
Software Publishing
Acronis International GmbH (Switzerland)	First Lien Term Loan	LIBOR (Q)		1.00	%	9.50%	10.50%		2/21/2017	$	29,485,290		29,375,415		28,170,246		2.31	%	H
ArcServe (USA), LLC	Second Lien Term Loan	LIBOR (Q)		0.50	%	8.50%	9.00%		1/31/2020	$	30,000,000		29,529,480		28,023,000		2.30	%
BlackLine Systems, Inc.	First Lien Term Loan	LIBOR (Q)		1.50	%	0.4% Cash + 7.6% PIK	9.50%		9/25/2018	$	14,619,396		13,946,601		14,765,590		1.21	%
Bluehornet Networks, Inc.	First Lien Term Loan	LIBOR (Q)		—		9.50%	10.11%		12/3/2020	$	6,062,304		5,881,725		5,880,435		0.48	%
Edmentum, Inc.	Jr Revolving Facility	Fixed		—		5.00%	5.00%		6/9/2020	$	—		—		—		—		B
Edmentum Ultimate Holdings, LLC	Sr PIK Notes	Fixed		—		8.50%	8.50%		6/9/2020	$	2,612,408		2,612,408		2,612,408		0.21	%	B
Edmentum Ultimate Holdings, LLC	Jr PIK Notes	Fixed		—		10.00%	10.00%		6/9/2020	$	11,791,569		11,176,985		11,343,490		0.93	%	B
Fidelis Acquisitionco, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%	8.00%	9.00%		11/4/2019	$	41,924,150		41,178,969		42,029,025		3.45	%
Fidelis Acquisitionco, LLC	Sr Secured Revolver	LIBOR (Q)		1.00	%	8.00%	9.00%		11/4/2019	$	1,272,857		1,272,857		1,276,039		0.10	%
SoundCloud Ltd. (United Kingdom)	Sr Secured Term Loan (2.0% Exit Fees)	LIBOR (Q)		0.28	%	10.72%	11.00%		10/1/2018	$	31,550,000		31,341,229		31,395,405		2.58	%	H/L
Utilidata, Inc.	First Lien Delayed Draw Term Loan (1.0% Exit Fee)	LIBOR (Q)		0.62	%	9.88%	10.50%		1/1/2019	$	3,200,000		2,906,672		2,903,680		0.24	%	L
Virgin Pulse Inc.	First Lien Term Loan	LIBOR (Q)		—		8.00%	8.63%		5/21/2020	$	7,500,000		7,398,976		7,471,875		0.61	%
													176,621,317		175,871,193		14.42	%
Textile Furnishings Mills
Lexmark Carpet Mills, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%	10.00%	11.00%		12/19/2019	$	25,000,000		25,000,000		24,785,000		2.03	%
Lexmark Carpet Mills, Inc.	First Lien Term Loan B	LIBOR (Q)		1.00	%	10.00%	11.00%		12/19/2019	$	8,575,581		8,378,569		8,501,831		0.70	%
													33,378,569		33,286,831		2.73	%
Utility System Construction
Kawa Solar Holdings Limited	Revolving Credit Facility	Fixed		—		8.20%	8.20%		7/2/2017	$	25,000,000		25,000,000		25,000,000		2.05	%
Wired Telecommunications Carriers
Alpheus Communications, LLC	First Lien Delayed Draw FILO Term Loan	LIBOR (Q)		1.00	%	6.92%	7.92%		5/31/2018	$	1,064,676		1,046,166		1,058,812		0.09	%
Alpheus Communications, LLC	First Lien FILO Term Loan	LIBOR (Q)		1.00	%	6.92%	7.92%		5/31/2018	$	7,938,819		7,859,897		7,895,156		0.65	%
Integra Telecom Holdings, Inc.	Second Lien Term Loan	LIBOR (Q)		1.25	%	8.50%	9.75%		2/22/2020	$	13,231,193		13,039,047		12,883,874		1.06	%
Oxford County Telephone and Telegraph Company	First Lien Term Loan	LIBOR (Q)		1.00	%	7.13%	8.13%		8/31/2020	$	4,000,000		3,943,631		3,922,000		0.32	%
													25,888,741		25,759,842		2.12	%
Wireless Telecommunications Carriers
Gogo, LLC	First Lien Term Loan	LIBOR (Q)		1.50	%	9.75%	11.25%		3/21/2018	$	32,822,506		32,877,865		33,150,731		2.72	%	G
Total Debt Investments													1,160,372,521		1,130,535,387		92.78	%

86

TCP Capital Corp.
   
Consolidated Schedule of Investments
   
December 31, 2015

Issuer	Instrument	Ref	Floor	Spread	Total Coupon	Maturity	Shares		Cost		Fair Value		% of Total Cash and Investments			Notes
Equity Securities
Advertising and Public Relations Services
InMobi, Inc. (Singapore)	Warrants to Purchase Stock							17,578	$	230,569	$	233,543		0.02	%	C/E/H
Air Transportation
Aircraft Leased to Delta Air Lines, Inc.
N913DL	Trust Beneficial Interests							1,316		84,164		107,501		0.01	%	E/F
N918DL	Trust Beneficial Interests							1,053		86,044		127,662		0.01	%	E/F
N954DL	Trust Beneficial Interests							975		95,345		77,850		0.01	%	E/F
N955DL	Trust Beneficial Interests							937		92,045		108,100		0.01	%	E/F
N956DL	Trust Beneficial Interests							946		91,995		104,478		0.01	%	E/F
N957DL	Trust Beneficial Interests							937		92,417		105,329		0.01	%	E/F
N959DL	Trust Beneficial Interests							928		92,840		106,203		0.01	%	E/F
N960DL	Trust Beneficial Interests							902		94,503		105,937		0.01	%	E/F
N961DL	Trust Beneficial Interests							919		94,018		101,487		0.01	%	E/F
N976DL	Trust Beneficial Interests							1,130		87,968		100,793		0.01	%	E/F
Aircraft Leased to United Airlines, Inc.
United N659UA-767, LLC (N659UA)	Trust Beneficial Interests							652		3,143,045		3,368,599		0.28	%	E/F
United N661UA-767, LLC (N661UA)	Trust Beneficial Interests							632		3,062,496		3,294,024		0.27	%	E/F
Epic Aero, Inc. (One Sky)	Warrants to Purchase Common Stock							1,843		855,313		3,173,450		0.26	%	C/E
										7,972,193		10,881,413		0.91	%
Business Support Services
Findly Talent, LLC	Membership Units							708,229		230,938		162,184		0.01	%	C/E
STG-Fairway Holdings, LLC (First Advantage)	Class A Units							841,479		325,432		2,616,916		0.21	%	C/E
										556,370		2,779,100		0.22	%
Chemicals
Green Biologics, Inc.	Warrants to Purchase Stock							376,147		272,594		236,634		0.02	%	C/E
Communications Equipment Manufacturing
Wasserstein Cosmos Co-Invest, L.P. (Globecomm)	Limited Partnership Units							5,000,000		5,000,000		4,198,500		0.34	%	B/C/E
Computer Systems Design and Related Services
Waterfall International, Inc.	Series B Preferred Stock							1,428,571		1,000,000		999,714		0.08	%	C/E
Waterfall International, Inc.	Warrants to Purchase Stock							857,143		57,026		57,686		—		C/E
										1,057,026		1,057,400		0.08	%
Data Processing and Hosting Services
Anacomp, Inc.	Class A Common Stock							1,255,527		26,711,048		1,581,964		0.13	%	C/E/F
Rightside Group, Ltd.	Warrants							498,855		2,778,622		919,030		0.07	%	C/E
										29,489,670		2,500,994		0.20	%
Electrical Equipment Manufacturing
NEXTracker, Inc.	Series B Preferred Stock							558,884		—		2,929,279		0.24	%	C/E
NEXTracker, Inc.	Series C Preferred Stock							17,640		—		92,460		0.01	%	C/E
										—		3,021,739		0.25	%
Electronic Component Manufacturing
Soraa, Inc.	Warrants to Purchase Common Stock							630,000		499,189		180,432		0.01	%	C/E

87

TCP Capital Corp.
   
Consolidated Schedule of Investments
   
December 31, 2015

Issuer	Instrument	Ref	Floor	Spread	Total Coupon	Maturity	Shares		Cost		Fair Value		% of Total Cash and Investments			Notes
Equity Securities (continued)
Equipment Leasing
36th Street Capital Partners Holdings, LLC	Membership Units							225,000	$	225,000	$	225,000		0.02	%	C/E/F
Essex Ocean II, LLC	Membership Units							199,430		199,429		200,686		0.02	%	C/F
										424,429		425,686		0.04	%
Financial Investment Activities
GACP I, LP	Membership Units							8,470,305		8,589,442		8,589,760		0.70	%	C/E/I
Marsico Holdings, LLC	Common Interest Units							168,698		172,694		5,061		—		C/E/I
										8,762,136		8,594,821		0.70	%
Metal and Mineral Mining
EPMC HoldCo, LLC	Membership Units							1,312,720		—		682,614		0.06	%	B/E
Other Manufacturing
KAGY Holding Company, Inc.	Series A Preferred Stock							9,778		1,091,200		6,118,515		0.50	%	B/C/E
Precision Holdings, LLC	Class C Membership Interest							33		—		1,431		—		C/E
										1,091,200		6,119,946		0.50	%
Radio and Television Broadcasting
Fuse Media, LLC	Warrants to Purchase Common Stock							233,470		300,322		—		—		C/E
Restaurants
RM Holdco, LLC (Real Mex)	Equity Participation							24		—		—		—		B/C/E
RM Holdco, LLC (Real Mex)	Membership Units							13,161,000		2,010,777		—		—		B/C/E
										2,010,777		—		—
Retail
Shop Holding, LLC (Connexity)	Class A Units							507,167		480,049		320,682		0.03	%	C/E
Shop Holding, LLC (Connexity)	Warrants to Purchase Class A Units							326,691		—		8,079		—		C/E
										480,049		328,761		0.03	%
Software Publishing
Blackline Intermediate, Inc.	Warrants to Purchase Common Stock							1,232,731		522,678	$	1,290,175		0.11	%	C/E
Edmentum Ultimate Holdings, LLC	Class A Common Units							159,515		680,226		680,218		0.05	%	B/C/E
SoundCloud, Ltd. (United Kingdom)	Warrants to Purchase Preferred Stock							946,498		79,082		75,247		0.01	%	C/E/H
Utilidata, Inc.	Warrants to Purchase Stock							29,593		216,336		216,337		0.02	%	C/E
										1,498,322		2,261,977		0.19	%
Wired Telecommunications Carriers
Integra Telecom, Inc.	Common Stock							1,274,522		8,433,884		5,269,511		0.43	%	C/E
Integra Telecom, Inc.	Warrants							346,939		19,919		221,174		0.02	%	C/E
V Telecom Investment S.C.A. (Vivacom) (Luxembourg)	Common Shares							1,393		3,236,256		3,390,093		0.28	%	C/D/E/H
										11,690,059		8,880,778		0.73	%
Total Equity Securities										71,334,905		52,384,338		4.30	%
Total Investments									$	1,231,707,426	$	1,182,919,725

88

TCP Capital Corp.
   
Consolidated Schedule of Investments
   
December 31, 2015

Issuer	Instrument	Ref	Floor	Spread	Total Coupon	Maturity	Shares	Cost	Fair Value		% of Total Cash and Investments			Notes
Cash and Cash Equivalents
Cash Denominated in Foreign Currencies										130,081		0.01	%
Cash Held on Account at Various Institutions										35,499,354		2.91	%
Cash and Cash Equivalents										35,629,435		2.92	%
Total Cash and Investments									$	1,218,549,160		100.00	%	M

Notes to Consolidated Schedule of Investments:

(A) Investments in bank debt generally are bought and sold among institutional investors in transactions not subject to registration under the Securities Act of 1933. Such transactions are generally subject to contractual restrictions, such as approval of the agent or borrower.

(B) Non-controlled affiliate – as defined under the Investment Company Act of 1940 (ownership of between 5% and 25% of the outstanding voting securities of this issuer). See Consolidated Schedule of Changes in Investments in Affiliates.

(C) Non-income producing security.

(D) Investment denominated in foreign currency. Amortized cost and fair value converted from foreign currency to US dollars. Foreign currency denominated investments are generally hedged for currency exposure. At December 31, 2015, such hedging activities included the derivatives listed at the end of the Consolidated Schedule of Investments. (See Note 2)

(E) Restricted security. (See Note 2)

(F) Controlled issuer – as defined under the Investment Company Act of 1940 (ownership of 25% or more of the outstanding voting securities of this issuer). Investment is not more than 50% of the outstanding voting securities of the issuer nor deemed to be a significant subsidiary. See Consolidated Schedule of Changes in Investments in Affiliates.

(G) Investment has been segregated to collateralize certain unfunded commitments.

(H) Non-U.S. company or principal place of business outside the U.S. and as a result the investment is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(I) Deemed an investment company under Section 3(c) of the Investment Company Act and as a result the investment is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(J) Publicly traded company with a market capitalization greater than $250 million and as a result the investment is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(K) Negative balances relate to an unfunded commitment that was acquired and/or valued at a discount.

(L) In addition to the stated coupon, investment has an exit fee payable upon repayment of the loan in an amount equal to the percentage of the original principal amount shown.

89

TCP Capital Corp.
   
Consolidated Schedule of Investments
   
December 31, 2015

(M) All cash and investments, except those referenced in Notes G above, are pledged as collateral under certain debt as described in Note 4 to the Consolidated Financial Statements.

LIBOR or EURIBOR resets monthly (M), quarterly (Q), semiannually (S), or annually (A).

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $500,928,009 and $456,059,137 respectively, for the twelve months ended December 31, 2015. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments. The total value of restricted securities and bank debt as of December 31, 2015 was $1,182,719,039, or 97.1% of total cash and investments of the Company. As of December 31, 2015, approximately 18.0% of the total assets of the Company were not qualifying assets under Section 55(a) of the 1940 Act.

Options and swaps at December 31, 2015 were as follows:

Investment	Notional Amount		Fair Value
Interest Rate Cap with Deutsche Bank AG, 4%, expires 5/15/2016	$	25,000,000	$	—
Euro/US Dollar Cross-Currency Basis Swap with Wells Fargo Bank, N.A., Pay Euros/Receive USD, Expires 3/31/2017	$	16,401,467	$	3,229,442

See accompanying notes to the consolidated financial statements.

90

TCP Capital Corp.
   
Consolidated Statements of Operations

	Year Ended December 31,
	2016			2015			2014
Investment income
Interest income:
Companies less than 5% owned	$	133,915,069		$	135,518,703		$	94,632,495
Companies 5% to 25% owned		6,672,486			5,932,861			5,394,075
Companies more than 25% owned		4,430,859			560,989			896,695
Dividend income:
Companies 5% to 25% owned		—			—			1,968,748
Lease income:
Companies 5% to 25% owned		—			—			320,277
Companies more than 25% owned		1,571,280			1,352,797			1,014,053
Other income:
Companies less than 5% owned		1,442,096			3,502,875			2,328,980
Companies 5% to 25% owned		—			—			26,125
Companies more than 25% owned		148,975			—			—
Total investment income		148,180,765			146,868,225			106,581,448
Operating expenses
Interest and other debt expenses		25,192,990			18,895,977			9,821,751
Management and advisory fees		18,881,786			18,593,660			13,646,064
Legal fees, professional fees and due diligence expenses		2,320,959			2,840,839			1,355,370
Administrative expenses		1,693,304			1,600,477			1,421,863
Director fees		423,904			318,317			357,050
Insurance expense		382,152			374,720			288,156
Custody fees		313,073			300,055			229,254
Other operating expenses		3,149,764			2,564,662			1,360,564
Total operating expenses		52,357,932			45,488,707			28,480,072
Net investment income before taxes		95,822,833			101,379,518			78,101,376
Excise tax expense		569,511			876,706			808,813
Net investment income		95,253,322			100,502,812			77,292,563
Net realized and unrealized gain (loss) on investments and foreign currency
Net realized gain (loss):
Investments in companies less than 5% owned		(15,499,336	)		(7,077,393	)		(16,370,638	)
Investments in companies 5% to 25% owned		417,446			(10,613,422	)		(4,748,229	)
Investments in companies more than 25% owned		79,742			19,167			—
Net realized gain (loss)		(15,002,148	)		(17,671,648	)		(21,118,867	)
Change in net unrealized appreciation/depreciation		15,116,650			(4,733,463	)		(6,185,711	)
Net realized and unrealized gain (loss)		114,502			(22,405,111	)		(27,304,578	)
Net increase in net assets from operations		95,367,824			78,097,701			49,987,985
Gain on repurchase of Series A preferred interests		—			1,675,000			—
Dividends on Series A preferred equity facility		—			(1,251,930	)		(1,444,634	)
Net change in accumulated dividends on Series A preferred equity facility		—			497,790			6,462
Distributions of incentive allocation to the General Partner from:
Net investment income		(19,050,665	)		(19,949,734	)		(15,170,877	)
Net change in reserve for incentive allocation		—			—			1,168,583
Net increase in net assets applicable to common shareholders resulting from operations	$	76,317,159		$	59,068,827		$	34,547,519
Basic and diluted earnings per common share	$	1.50		$	1.21		$	0.88
Basic and diluted weighted average common shares outstanding		50,948,035			48,863,188			39,395,671

See accompanying notes to the consolidated financial statements.

91

TCP Capital Corp.

Consolidated Statements of Changes in Net Assets

	Common Stock						Paid in Capital in Excess of Par			Accumulated Net Investment Income			Accumulated Net Realized Losses			Accumulated Net Unrealized Depreciation			Total Net Assets
	Shares			Par Amount
Balance at December 31, 2013		36,199,916		$	36,200		$	667,842,020		$	24,016,095		$	(105,800,278	)	$	(35,314,199	)	$	549,611,255
Issuance of common stock in public offering, net		12,110,000			12,110			201,127,367			—			—			—			201,139,477
Issuance of common stock from at the market offerings, net		400,255			400			6,420,026			—			—			—			6,420,426
Issuance of common stock from dividend reinvestment plan		456			—			7,687			—			—			—			7,687
Equity component of issuance of convertible debt		—			—			2,515,594			—			—			—			2,515,594
Net investment income		—			—			—			77,292,563			—			—			77,292,563
Net realized and unrealized loss		—			—			—			—			(21,118,867	)		(6,185,711	)		(27,304,578	)
Dividends on Series A preferred equity facility		—			—			—			(1,438,172	)		—			—			(1,438,172	)
General Partner incentive allocation		—			—			—			(15,170,877	)		—			—			(14,002,294	)
Regular dividends paid to common shareholders		—			—			—			(58,867,403	)		—			—			(58,867,403	)
Special dividends paid to common shareholders		—			—			—			(4,245,526	)		—			—			(4,245,526	)
Tax reclassification of stockholders' equity in accordance with generally accepted accounting principles		—			—			(808,813	)		297,701			511,112			—			—
Balance at December 31, 2014		48,710,627		$	48,710		$	877,103,880		$	21,884,381		$	(126,408,033	)	$	(41,499,910	)	$	731,129,028
Issuance of common stock from at the market offerings, net		248,614			249			3,945,817			—			—			—			3,946,066
Issuance of common stock from dividend reinvestment plan		555			—			8,116			—			—			—			8,116
Repurchase of common stock		(125,062	)		(125	)		(1,797,751	)		—			—			—			(1,797,876	)
Gain on repurchase of Series A preferred interests		—			—			—			—			1,675,000			—			1,675,000
Net investment income		—			—			—			100,502,812			—			—			100,502,812
Net realized and unrealized loss		—			—			—			—			(17,671,648	)		(4,733,463	)		(22,405,111	)
Dividends on Series A preferred equity facility		—			—			—			(754,140	)		—			—			(754,140	)
General Partner incentive allocation		—			—			—			(19,949,734	)		—			—			(19,949,734	)
Regular dividends paid to common shareholders		—			—			—			(70,377,144	)		—			—			(70,377,144	)
Tax reclassification of stockholders' equity in accordance with generally accepted accounting principles		—			—			(876,706	)		(9,044,382	)		9,921,088			—			—
Balance at December 31, 2015		48,834,734		$	48,834		$	878,383,356		$	22,261,793		$	(132,483,593	)	$	(46,233,373	)	$	721,977,017
Issuance of common stock in public offering, net		2,336,552			2,337			34,956,233			—			—			—			34,958,570
Issuance of common stock from conversion of convertible debt		2,011,900			2,012			30,216,726			—			—			—			30,218,738
Issuance of common stock from dividend reinvestment plan		610			—			9,657			—			—			—			9,657
Equity component of issuance of convertible debt		—			—			3,309,596			—			—			—			3,309,596
Repurchase of common stock		(141,896	)		(141	)		(1,879,407	)		—			—			—			(1,879,548	)
Net investment income		—			—			—			95,253,322			—			—			95,253,322
Net realized and unrealized loss		—			—			—			—			(15,002,148	)		15,116,650			114,502
General Partner incentive allocation		—			—			—			(19,050,665	)		—			—			(19,050,665	)
Regular dividends paid to common shareholders		—			—			—			(73,975,198	)		—			—			(73,975,198	)
Tax reclassification of stockholders' equity in accordance with generally accepted accounting principles		—			—			(569,511	)		(11,955,963	)		12,525,474			—			—
Balance at December 31, 2016		53,041,900		$	53,042		$	944,426,650		$	12,533,289		$	(134,960,267	)	$	(31,116,723	)	$	790,935,991

See accompanying notes to the consolidated financial statements.

92

TCP Capital Corp.
   
Consolidated Statements of Cash Flows

	Year Ended December 31,
	2016			2015			2014
Operating activities
Net increase in net assets applicable to common shareholders resulting from operations	$	76,317,159		$	59,068,827		$	34,547,519
Adjustments to reconcile net increase in net assets applicable to common shareholders resulting from operations to net cash provided by (used in) operating activities:
Net realized loss		15,002,148			17,671,648			21,118,867
Change in net unrealized appreciation/depreciation of investments		(14,514,060	)		4,329,371			6,085,664
Gain on repurchase of Series A preferred interests		—			(1,675,000	)		—
Dividends paid on Series A preferred equity facility		—			1,251,930			1,444,634
Net change in accumulated dividends on Series A preferred equity facility		—			(497,790	)		(6,462	)
Net change in reserve for incentive allocation		—			—			(1,168,583	)
Net amortization of investment discounts and premiums		(15,547,174	)		(15,027,321	)		(6,005,957	)
Amortization of original issue discount on convertible debt		605,563			413,491			212,424
Interest and dividend income paid in kind		(6,381,145	)		(6,810,980	)		(6,045,878	)
Amortization of deferred debt issuance costs		2,798,231			2,236,311			1,926,040
Accrued interest on convertible debt at conversion		218,738			—			—
Changes in assets and liabilities:
Purchases of investment securities		(580,837,984	)		(494,117,029	)		(663,469,748	)
Proceeds from sales, maturities and pay downs of investments		473,457,512			456,059,137			266,008,974
Decrease (increase) in accrued interest income - companies less than 5% owned		(3,870,497	)		379,473			(2,939,648	)
Decrease (increase) in accrued interest income - companies 5% to 25% owned		(212,255	)		(487,319	)		161,074
Decrease (increase) in accrued interest income - companies more than 25% owned		3,622			(780	)		13,241
Decrease (increase) in receivable for investments sold		—			10,961,369			(7,355,405	)
Decrease (increase) in prepaid expenses and other assets		803,299			(153,827	)		(1,423,449	)
Increase (decrease) in payable for investments purchased		5,923,511			4,375,896			(12,657,424	)
Increase (decrease) in incentive allocation payable		(490,772	)		904,566			984,140
Increase in interest payable		2,102,456			1,400,276			1,080,012
Increase (decrease) in payable to the Advisor		(182,544	)		48,507			(661,281	)
Increase (decrease) in accrued expenses and other liabilities		(1,279,506	)		658,069			83,773
Net cash provided by (used in) operating activities		(46,083,698	)		40,988,825			(368,067,473	)
Financing activities
Borrowings		538,700,000			511,300,000			671,500,000
Repayments of debt		(598,500,000	)		(338,000,000	)		(435,500,000	)
Payments of debt issuance costs		(5,279,350	)		(4,130,414	)		(6,657,943	)
Repurchase of Series A preferred interests		—			(132,325,000	)		—
Dividends paid on Series A preferred equity facility		—			(1,251,930	)		(1,444,634	)
Regular dividends paid to common shareholders		(73,975,198	)		(70,377,144	)		(58,867,403	)
Special dividends paid to common shareholders		—			—			(4,245,526	)
Repurchase of common shares		(1,879,548	)		(1,797,876	)		—
Proceeds from issuances of convertible debt		170,000,000			—			—
Proceeds from shares issued in connection with dividend reinvestment plan		9,657			8,116			7,687
Proceeds from common shares sold, net of underwriting and offering costs		34,958,570			3,946,066			207,559,903
Net cash provided by (used in) financing activities		64,034,131			(32,628,182	)		372,352,084
Net increase in cash and cash equivalents		17,950,433			8,360,643			4,284,610
Cash and cash equivalents at beginning of year		35,629,435			27,268,792			22,984,182
Cash and cash equivalents at end of year	$	53,579,868		$	35,629,435		$	27,268,792
Supplemental cash flow information
Interest payments	$	18,397,410		$	13,690,803		$	5,717,779
Excise tax payments	$	877,879		$	877,879		$	938,460
Non-cash transactions
Conversion of convertible debt	$	30,218,738		$	—		$	—

See accompanying notes to the consolidated financial statements.

93

TCP Capital Corp.
   
Notes to Consolidated Financial Statements
   
December 31, 2016

1. Organization and Nature of Operations

TCP Capital Corp. (the “Company”) is a Delaware corporation formed on April 2, 2012 as an externally managed, closed-end, non-diversified management investment company. The Company elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company’s investment objective is to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. The Company invests primarily in the debt of middle-market companies as well as small businesses, including senior secured loans, junior loans, mezzanine debt and bonds. Such investments may include an equity component, and, to a lesser extent, the Company may make equity investments directly. The Company was formed through the conversion on April 2, 2012 of the Company’s predecessor, Special Value Continuation Fund, LLC, from a limited liability company to a corporation in a non-taxable transaction, leaving the Company as the surviving entity (the “Conversion”). On April 3, 2012, the Company completed its initial public offering.

Investment operations are conducted in Special Value Continuation Partners, LP, a Delaware limited partnership (the “Operating Company”), of which the Company owns 100% of the common limited partner interests, or in one of the Operating Company’s wholly owned subsidiaries, TCPC Funding I, LLC, a Delaware limited liability company (“TCPC Funding”), and TCPC SBIC, LP, a Delaware limited partnership (the “SBIC”). The Operating Company has also elected to be treated as a BDC under the 1940 Act. The SBIC was organized in June 2013, and, on April 22, 2014, received a license from the United States Small Business Administration (the “SBA”) to operate as a small business investment company under the provisions of Section 301(c) of the Small Business Investment Act of 1958. These consolidated financial statements include the accounts of the Company, the Operating Company, TCPC Funding and the SBIC. All significant intercompany transactions and balances have been eliminated in the consolidation.

The Company has elected to be treated as a regulated investment company (“RIC”) for U.S. federal income tax purposes. As a RIC, the Company will not be taxed on its income to the extent that it distributes such income each year and satisfies other applicable income tax requirements. The Operating Company, TCPC Funding, and the SBIC have elected to be treated as partnerships for U.S. federal income tax purposes.

The general partner of the Operating Company is SVOF/MM, LLC, which also serves as the administrator of both the Company and the Operating Company (the “Administrator” or the “General Partner”). The managing member of the General Partner is Tennenbaum Capital Partners, LLC (the “Advisor”), which serves as the investment manager to the Company, the Operating Company, TCPC Funding, and the SBIC. Most of the equity interests in the General Partner are owned directly or indirectly by the Advisor and its employees.

Company management consists of the Advisor and the Company’s board of directors. Operating Company management consists of the General Partner and the Operating Company’s board of directors. The Advisor and the General Partner direct and execute the day-to-day operations of the Company and the Operating Company, respectively, subject to oversight from the respective board of directors, which sets the broad policies of the respective entity and performs certain functions required by the 1940 Act in the case of the Operating Company. The board of directors of the Operating Company has delegated investment management of the Operating Company’s assets to the Advisor. Each board of directors consists of seven persons, five of whom are independent.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. The Company has consolidated the results of its wholly owned subsidiaries in its consolidated financial statements in accordance with ASC Topic 946. The following is a summary of the significant accounting policies of the Company and the Operating Company.

94

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

2. Summary of Significant Accounting Policies – (continued)

Reclassifications

Certain prior period amounts in the Consolidated Statements of Assets and Liabilities relating to deferred debt issuance costs were reclassified to debt to conform to the current period presentation resulting from the adoption of two Accounting Standards Updates (see “Recent Accounting Pronouncements”). Certain prior period amounts in the Consolidated Statements of Operations relating to interest expense, amortization of deferred debt issuance costs and commitment fees have been reclassified into “interest and other debt expenses” to conform to the current period presentation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well the reported amounts of revenues and expenses during the reporting periods presented. Although management believes these estimates and assumptions to be reasonable, actual results could differ from those estimates and such differences could be material.

Investment Valuation

The Company’s investments are generally held by the Operating Company, either directly or through either TCPC Funding or the SBIC. Management values investments at fair value in accordance with GAAP, based upon the principles and methods of valuation set forth in policies adopted by the board of directors. Fair value is generally defined as the amount for which an investment would be sold in an orderly transaction between market participants at the measurement date.

All investments are valued at least quarterly based on quotations or other affirmative pricing from independent third-party sources, with the exception of investments priced directly by the Advisor which in the aggregate comprise less than 5% of the capitalization of the Operating Company. Investments listed on a recognized exchange or market quotation system, whether U.S. or foreign, are valued using the closing price on the date of valuation.

Investments not listed on a recognized exchange or market quotation system, but for which reliable market quotations are readily available are valued using prices provided by a nationally recognized pricing service or by using quotations from broker-dealers.

Investments for which market quotations are either not readily available or are determined to be unreliable are priced at fair value using affirmative valuations performed by independent valuation services approved by the board of directors or, for investments aggregating less than 5% of the total capitalization of the Operating Company, using valuations determined directly by the Advisor. Such valuations are determined under a documented valuation policy that has been reviewed and approved by the board of directors.

Pursuant to this policy, the Advisor provides recent portfolio company financial statements and other reporting materials to independent valuation firms as applicable, which firms evaluate such materials along with relevant observable market data to conduct independent appraisals each quarter, and their preliminary valuation conclusions are documented and discussed with senior management of the Advisor. The audit committee of the board of directors discusses the valuations, and the board of directors approves the fair value of the investments in good faith based on the input of the Advisor, the respective independent valuation firms as applicable, and the audit committee of the board of directors.

Generally, to increase objectivity in valuing the investments, the Advisor will utilize external measures of value, such as public markets or third-party transactions, whenever possible. The Advisor’s valuation is not based on long-term work-out value, immediate liquidation value, nor incremental value for potential changes that may

95

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

2. Summary of Significant Accounting Policies – (continued)

take place in the future. The values assigned to investments are based on available information and do not necessarily represent amounts that might ultimately be realized, as these amounts depend on future circumstances and cannot reasonably be determined until the individual investments are actually liquidated. The foregoing policies apply to all investments, including any in companies and groups of affiliated companies aggregating more than 5% of the Company’s assets.

Fair valuations of investments in each asset class are determined using one or more methodologies including the market approach, income approach, or, in the case of recent investments, the cost approach, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Such information may include observed multiples of earnings and/or revenues at which transactions in securities of comparable companies occur, with appropriate adjustments for differences in company size, operations or other factors affecting comparability.

The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present value amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. The discount rates used for such analyses reflect market yields for comparable investments, considering such factors as relative credit quality, capital structure, and other factors.

In following these approaches, the types of factors that may be taken into account also include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, comparable costs of capital, the principal market in which the investment trades and enterprise values, among other factors.

Investments may be categorized based on the types of inputs used in valuing such investments. The level in the GAAP valuation hierarchy in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety. Transfers between levels are recognized as of the beginning of the reporting period.

At December 31, 2016, the Company’s investments were categorized as follows:

Level	Basis for Determining Fair Value	Bank Debt		Other Corporate Debt		Equity Securities
1	Quoted prices in active markets for identical assets	$	—	$	—	$	—
2	Other direct and indirect observable market inputs *		89,800,173		21,001,126		—
3	Independent third-party valuation sources that employ significant unobservable inputs		1,036,044,457		101,934,853		64,521,901
3	Advisor valuations with significant unobservable inputs		107,199		—		1,560,161
Total		$	1,125,951,829	$	122,935,979	$	66,082,062

* For example, quoted prices in inactive markets or quotes for comparable investments

96

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

2. Summary of Significant Accounting Policies – (continued)

Unobservable inputs used in the fair value measurement of Level 3 investments as of December 31, 2016 included the following:

Asset Type	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Avg.)
Bank Debt	$	847,311,244	Income approach	Discount rate	6.9% – 19.4% (12.1%)
		136,116,277	Market quotations	Indicative bid/ask quotes	1 – 2 (1)
		24,851,412	Market comparable companies	Revenue multiples	0.4x – 2.6x (1.0x)
		27,872,723	Market comparable companies	EBITDA multiples	7.3x – 11.0x (8.4x)
Other Corporate Debt		88,163,213	Market quotations	Indicative bid/ask quotes	1 (1)
		13,771,640	Market comparable companies	EBITDA multiples	7.6x – 7.8x (7.7x)
Equity		6,617,084	Income approach	Discount rate	7.3% – 26.2% (7.7%)
		41,442,919	Market quotations	Indicative bid/ask quotes	1(1)
		1,767,102	Market comparable companies	Revenue multiples	0.3x – 2.6x (1.6x)
		16,254,957	Market comparable companies	EBITDA multiples	5.0x – 11.0x (7.7x)
	$	1,204,168,571

Generally, a change in an unobservable input may result in a change to the value of an investment as follows:

Input	Impact to Value if Input Increases	Impact to Value if Input Decreases
Discount rate	Decrease	Increase
Revenue multiples	Increase	Decrease
EBITDA multiples	Increase	Decrease

Changes in investments categorized as Level 3 during the year ended December 31, 2016 were as follows:

	Independent Third-Party Valuation
	Bank Debt			Other Corporate Debt			Equity Securities
Beginning balance	$	907,967,337		$	89,314,530		$	49,956,123
Net realized and unrealized gains (losses)		5,606,311			(4,283,483	)		(4,803,878	)
Acquisitions *		479,811,414			30,687,836			30,306,611
Dispositions		(382,143,047	)		—			(10,611,212	)
Transfers out of Level 3 †		(26,300,274	)		(46,265,760	)		—
Transfers into Level 3 ‡		51,102,716			32,481,730			—
Reclassifications within Level 3 §		—			—			(325,743	)
Ending balance	$	1,036,044,457		$	101,934,853		$	64,521,901
Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	10,308,166		$	(4,283,483	)	$	(4,684,951	)

* Includes payments received in kind and accretion of original issue and market discounts

† Comprised of five investments that transferred to Level 2 due to increased observable market activity

‡ Comprised of seven investments that transferred from Level 2 due to reduced trading volumes

§ Comprised of two investments that reclassified to Advisor Valuation

97

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

2. Summary of Significant Accounting Policies – (continued)

	Advisor Valuation
	Bank Debt			Other Corporate Debt		Equity Securities
Beginning balance	$	1,124,504		$	—	$	2,428,217
Net realized and unrealized gains (losses)		(965,608	)		—		(776,175	)
Acquisitions *		1,050,297			—		192
Dispositions		(1,101,994	)		—		(417,816	)
Reclassifications within Level 3 †		—			—		325,743
Ending balance	$	107,199		$	—	$	1,560,161
Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	(923,543	)	$	—	$	(1,192,560	)

* Includes payments received in kind and accretion of original issue and market discounts

† Comprised of two investments that reclassified from Independent Third-Party Valuation

There were no transfers between Level 1 and 2 during the year ended December 31, 2016.

At December 31, 2015, the Company’s investments were categorized as follows:

Level	Basis for Determining Fair Value	Bank Debt		Other Corporate Debt		Equity Securities
1	Quoted prices in active markets for identical assets	$	—	$	—	$	—
2	Other direct and indirect observable market inputs *		92,311,257		39,817,757		—
3	Independent third-party valuation sources that employ significant unobservable inputs		907,967,337		89,314,530		49,956,123
3	Advisor valuations with significant unobservable inputs		1,124,504		—		2,428,217
Total		$	1,001,403,098	$	129,132,287	$	52,384,340

* For example, quoted prices in inactive markets or quotes for comparable investments

Unobservable inputs used in the fair value measurement of Level 3 investments as of December 31, 2015 included the following:

Asset Type	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Avg.)
Bank Debt	$	715,701,737	Income approach	Discount rate	4.2% – 18.9% (11.8%)
		140,033,088	Market quotations	Indicative bid/ask quotes	1 – 5(1)
		36,550,712	Market comparable companies	Revenue multiples	0.3x – 4.5x(2.2x)
		16,806,304	Market comparable companies	EBITDA multiples	3.3x – 11.5x(7.8x)
Other Corporate Debt		80,046,530	Market quotations	Indicative bid/ask quotes	1(1)
		9,268,000	Market comparable companies	EBITDA multiples	7.3x(7.3x)
Equity		7,908,649	Income approach	Discount rate	5.9% – 26.2% (8.0%)
		15,827,563	Market quotations	Indicative bid/ask quotes	1 – 2(1)
		3,212,249	Market comparable companies	Revenue multiples	0.3x – 6.0x(3.2x)
		25,435,879	Market comparable companies	EBITDA multiples	4.4x – 11.5x(6.8x)
	$	1,050,790,711

98

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

2. Summary of Significant Accounting Policies – (continued)

Changes in investments categorized as Level 3 during the year ended December 31, 2015 were as follows:

	Independent Third-Party Valuation
	Bank Debt			Other Corporate Debt			Equity Securities
Beginning balance	$	840,538,179		$	56,621,975		$	30,618,142
Net realized and unrealized gains (losses)		(28,968,245	)		(791,712	)		15,282,086
Acquisitions *		531,073,121			1,200,149			15,292,847
Dispositions		(412,262,543	)		(7,263,190	)		(11,236,952	)
Transfers out of Level 3 †		(36,143,175	)		(16,311,094	)		—
Transfers into Level 3 ‡		13,730,000			51,247,224			—
Reclassifications within Level 3 §		—			4,611,178			—
Ending balance	$	907,967,337		$	89,314,530		$	49,956,123
Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	(22,211,825	)	$	(683,384	)	$	9,375,525

* Includes payments received in kind and accretion of original issue and market discounts

† Comprised of five investments that transferred to Level 2 due to increased observable market activity

‡ Comprised of three investments that transferred from Level 2 due to reduced trading volumes

§ Comprised of one investment that reclassified from Advisor Valuation

	Advisor Valuation
	Bank Debt			Other Corporate Debt			Equity Securities
Beginning balance	$	—		$	4,611,178		$	2,324,629
Net realized and unrealized gains (losses)		134,445			—			104,805
Acquisitions *		1,725,244			—			—
Dispositions		(735,185	)		—			(1,217	)
Reclassifications within Level 3 †		—			(4,611,178	)		—
Ending balance	$	1,124,504		$	—		$	2,428,217
Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	134,445		$	—		$	333,095

* Includes payments received in kind and accretion of original issue and market discounts

† Comprised of one investment that reclassified to Independent Third-Party Valuation

There were no transfers between Level 1 and 2 during the year ended December 31, 2015.

Investment Transactions

Investment transactions are recorded on the trade date, except for private transactions that have conditions to closing, which are recorded on the closing date. The cost of investments purchased is based upon the purchase price plus those professional fees which are specifically identifiable to the investment transaction. Realized gains and losses on investments are recorded based on the specific identification method, which typically allocates the highest cost inventory to the basis of investments sold.

Cash and Cash Equivalents

Cash consists of amounts held in accounts with brokerage firms and the custodian bank. Cash equivalents consist of highly liquid investments with an original maturity of generally three months or less. Cash equivalents are carried at amortized cost which approximates fair value. Cash equivalents are classified as Level 1 in the GAAP valuation hierarchy.

99

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

2. Summary of Significant Accounting Policies – (continued)

Restricted Investments

The Company may invest without limitation in instruments that are subject to legal or contractual restrictions on resale. These instruments generally may be resold to institutional investors in transactions exempt from registration or to the public if the securities are registered. Disposal of these investments may involve time-consuming negotiations and additional expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted investments is included at the end of the Consolidated Schedule of Investments. Restricted investments, including any restricted investments in affiliates, are valued in accordance with the investment valuation policies discussed above.

Foreign Investments

The Company may invest in instruments traded in foreign countries and denominated in foreign currencies. Foreign currency denominated investments comprised approximately 0.2% and 1.4% of total investments at December 31, 2016 and December 31, 2015, respectively. Such positions were converted at the respective closing foreign exchange rates in effect at December 31, 2016 and December 31, 2015 and reported in U.S. dollars. Purchases and sales of investments and income and expense items denominated in foreign currencies, when they occur, are translated into U.S. dollars based on the foreign exchange rates in effect on the respective dates of such transactions. The portion of gains and losses on foreign investments resulting from fluctuations in foreign currencies is included in net realized and unrealized gain or loss from investments.

Investments in foreign companies and securities of foreign governments may involve special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. government. These risks include, among other things, revaluation of currencies, less reliable information about issuers, different transaction clearance and settlement practices, and potential future adverse political and economic developments. Moreover, investments in foreign companies and securities of foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies and the U.S. government.

Derivatives

In order to mitigate certain currency exchange and interest rate risks, the Operating Company may enter into certain derivative transactions. All derivatives are reported at their gross amounts as either assets or liabilities in the Consolidated Statements of Assets and Liabilities. Transactions entered into are accounted for using the mark-to-market method with the resulting change in fair value recognized in earnings for the current period. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in interest rates and the value of foreign currencies relative to the U.S. dollar. Certain derivatives may also require the Company to pledge assets as collateral to secure its obligations. As of December 31, 2016, no derivatives were outstanding.

100

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

2. Summary of Significant Accounting Policies – (continued)

During the year ended December 31, 2016, the Company entered into and exited a GBP put option with a notional amount of £2.7 million. During the year ended December 31, 2016, the Company’s interest rate cap with a notional amount of $25.0 million expired, and the Company exited a cross currency basis swap with a notional amount of $16.4 million. The interest rate cap was reported in the Consolidated Statements of Assets and Liabilities under the caption, “Options.” Gains and losses from derivatives during the year ended December 31, 2016 were included in net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations as follows:

Instrument	Realized Gains (Losses)			Unrealized Gains (Losses)
Put option	$	—		$	—
Cross currency basis swap		2,746,072			(3,229,442	)
Interest rate cap		(51,750	)		51,750

The Company did not enter into any new derivative transactions during the year ended December 31, 2015. At December 31, 2015, the Company held an interest rate cap with a notional amount of $25.0 million and a cross currency basis swap with a notional amount of $16.4 million. The interest rate cap and the cross currency basis swap are reported in the Consolidated Statements of Assets and Liabilities as options and unrealized appreciation on swaps, respectively. Gains and losses from derivatives during the year ended December 31, 2015 were included in net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations as follows:

Instrument	Realized Gains (Losses)		Unrealized Gains (Losses)
Cross currency basis swap	$	—	$	1,511,832
Interest rate cap		—		(497	)

Valuations of derivatives held at December 31, 2015 were determined using observable market inputs other than quoted prices in active markets for identical assets and, accordingly, are classified as Level 2 in the GAAP valuation hierarchy.

Deferred Debt Issuance Costs

Costs of approximately $4.1 million were incurred in September 2016 in connection with placing the Company’s unsecured convertible notes (see Note 4). Costs of approximately $1.8 million were incurred during 2015 in connection with the extension of the Operating Company’s credit facility (see Note 4). Costs of approximately $1.9 million were incurred during 2015 in connection with placing and extending TCPC Funding’s revolving credit facility (see Note 4). Costs of approximately $1.2 million and $0.4 million were incurred during the year ended December 31, 2016 and year ended December 31, 2015, respectively, in connection with placing the SBA Debentures (see Note 4). These costs were deferred and are being amortized on a straight-line basis over the estimated life of the respective instruments. The impact of utilizing the straight-line amortization method versus the effective-interest method is not material to the operations of the Company.

Revenue Recognition

Interest and dividend income, including income paid in kind, is recorded on an accrual basis. Origination, structuring, closing, commitment and other upfront fees, including original issue discounts, earned with respect to capital commitments are generally amortized or accreted into interest income over the life of the respective debt

101

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

2. Summary of Significant Accounting Policies – (continued)

investment, as are end-of-term or exit fees receivable upon repayment of a debt investment. Other fees, including certain amendment fees, prepayment fees and commitment fees on broken deals, are recognized as earned. Prepayment fees and similar income due upon the early repayment of a loan or debt security are recognized when earned and are included in interest income.

Certain debt investments are purchased at a discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general market factors that influence the financial markets as a whole. Discounts on the acquisition of corporate bonds are generally amortized using the effective-interest or constant-yield method assuming there are no questions as to collectability. When principal payments on a loan are received in an amount in excess of the loan’s amortized cost, the excess principal payments are recorded as interest income.

Income Taxes

The Company intends to comply with the applicable provisions of the Internal Revenue Code of 1986, as amended, pertaining to regulated investment companies and to make distributions of taxable income sufficient to relieve it from substantially all federal income taxes. Accordingly, no provision for income taxes is required in the consolidated financial statements. The income or loss of the Operating Company, TCPC Funding and the SBIC is reported in the respective partners’ income tax returns. In accordance with ASC Topic 740 – Income Taxes, the Company recognizes in its consolidated financial statements the effect of a tax position when it is determined that such position is more likely than not, based on the technical merits, to be sustained upon examination. As of December 31, 2016, all tax years of the Company, the Operating Company, TCPC Funding and the SBIC since January 1, 2013 remain subject to examination by federal tax authorities. No such examinations are currently pending.

During the year ended December 31, 2016, the Company accrued $0.6 million in excise taxes related to income earned in 2016 and paid $0.9 million in excise taxes related to income earned in 2015. During the year ended December 31, 2015, the Company accrued $0.9 million in excise taxes related to income earned in 2015 and paid $0.9 million in excise taxes related to income earned in 2014. During the year ended December 31, 2014, the Company accrued $0.8 million in excise taxes related to income earned in 2014 and paid $0.9 million in excise taxes related to income earned in 2013.

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Capital accounts within the financial statements are adjusted at year end for permanent book and tax differences. At December 31, 2016, the Company reclassified $0.6 million in excise tax expenses from accumulated net investment income to paid-in capital, $3.2 million in foreign currency losses from accumulated net realized losses to accumulated net investment income, and $9.3 million in certain investment income from accumulated net investment income to accumulated net realized losses. At December 31, 2015, the Company reclassified $0.9 million in excise tax expenses from accumulated net investment income to paid-in capital, $0.3 million in foreign currency gains from accumulated net realized losses to accumulated net investment income, and $10.2 million in certain investment income from accumulated net investment income to accumulated net realized losses. At December 31, 2014, the Company reclassified $0.8 million in excise tax expenses from accumulated net investment income to paid-in capital, $17,846 in foreign currency gains from accumulated net realized losses to accumulated net investment income, and $0.5 million in certain investment income from accumulated net investment income to accumulated net realized losses. Temporary differences are primarily attributable to differing book and tax treatments for the timing of the recognition of gains and losses on certain investment transactions, and will reverse in subsequent periods.

102

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

2. Summary of Significant Accounting Policies – (continued)

The tax-basis components of distributable earnings (accumulated deficit) applicable to the common shareholders of the Company and the cost and unrealized appreciation and depreciation of investments (including derivatives) for U.S. federal income tax purposes at December 31, 2016 and 2015 were as follows:

	December 31, 2016			December 31, 2015
Undistributed ordinary income	$	11,585,219		$	23,341,397
Capital loss carryforwards		(134,913,886	)		(133,041,586	)
Unrealized appreciation	$	33,945,996		$	30,920,149
Unrealized depreciation		(65,041,945	)		(79,759,600	)
Net unrealized depreciation	$	(31,095,949	)	$	(48,839,451	)
Cost	$	1,346,065,819		$	1,231,759,176

All of the Company’s distributions during the years ended December 31, 2016 and 2015 were treated as ordinary income for federal income tax purposes. The Company’s capital loss carryforwards may be used to offset capital gains in succeeding taxable years. Of the carryforwards, $2,987,174 and $34,759,883 will expire after 2017 and 2018, respectively. The remaining $97,166,831 will carry forward indefinitely until used. Distributions to holders of the Series A Preferred were treated, on an accrual basis, as distributions of ordinary income for federal tax purposes.

Recent Accounting Pronouncements

During the first quarter of 2016, the Company adopted Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) 2015-02, Amendments to the Consolidation Analysis. In particular, the new pronouncement changed the manner in which a reporting entity evaluates whether 1) an entity is a variable interest entity (“VIE”), 2) fees paid to decision makers or service providers are variable interests in a VIE, and 3) variable interests in a VIE held by related parties require the reporting entity to consolidate the VIE. The pronouncement also introduced a separate consolidation analysis specific to limited partnerships and similar entities. ASU 2015-02 also eliminated the VIE consolidation model based on majority exposure to variability that applied to certain investment companies and similar entities. The adoption of this pronouncement did not have a material impact on the Company’s consolidated financial statements.

The Company also adopted ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs as well as ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015. Together, these ASUs required, in most cases, that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Debt issuance costs incurred in connection with line-of-credit arrangements, however, may continue to be presented as an asset in the balance sheet. The adoption of these ASUs resulted in the reclassification of certain debt issuance costs related to the Term Loan, convertible notes and SBA Debentures (as defined in Note 4) from deferred debt issuance costs to debt in the Consolidated Statements of Assets and Liabilities. As of December 31, 2016 and December 31, 2015, $8.2 million and $4.2 million in debt issuance costs, respectively, were included in debt in the Consolidated Statements of Assets and Liabilities.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. Under this new pronouncement, 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 the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 applies to all entities and, for public entities, is effective for annual

103

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

2. Summary of Significant Accounting Policies – (continued)

periods beginning after December 15, 2017, and interim periods within those fiscal years. Early application is permitted, but no earlier than annual periods beginning after December 15, 2016 and interim periods within that reporting period. The Company does not expect adoption of this pronouncement to have a material impact on its consolidated financial statements.

On January 5, 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The more significant changes to the current GAAP model resulting from ASU 2016-01 include 1) elimination of the requirement to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost, 2) requiring public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and 3) requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. ASU 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted. The Company does not expect adoption of this pronouncement to have a material impact on its consolidated financial statements.

3. Management Fees, Incentive Compensation and Other Expenses

The Company’s management fee is calculated at an annual rate of 1.5% of total assets (excluding cash and cash equivalents) on a consolidated basis as of the beginning of each quarter and is payable to the Advisor quarterly in arrears.

Incentive compensation is only paid to the extent the total performance of the Company exceeds a cumulative 8% annual return since January 1, 2013 (the “Total Return Hurdle”). Beginning January 1, 2013, the incentive compensation equals 20% of net investment income (reduced by preferred dividends) and 20% of net realized gains (reduced by any net unrealized losses), subject to the Total Return Hurdle. The incentive compensation is payable quarterly in arrears as an allocation and distribution to the General Partner and is calculated as the difference between cumulative incentive compensation earned since January 1, 2013 and cumulative incentive compensation paid since January 1, 2013. A reserve for incentive compensation is accrued based on the amount of additional incentive compensation that would have been distributable to the General Partner assuming a hypothetical liquidation of the Company at net asset value on the balance sheet date. The General Partner’s equity interest in the Operating Company is comprised entirely of such reserve amount, if any. As of December 31, 2016 and December 31, 2015, no such reserve was accrued.

The Company bears all expenses incurred in connection with its business, including fees and expenses of outside contracted services, such as custodian, administrative, legal, audit and tax preparation fees, costs of valuing investments, insurance costs, brokers’ and finders’ fees relating to investments, and any other transaction costs associated with the purchase and sale of investments.

4. Leverage

Leverage is comprised of convertible senior unsecured notes due December 2019 issued by the Company (the “2019 Convertible Notes”), convertible senior unsecured notes due March 2022 issued by the Company (the “2022 Convertible Notes”), amounts outstanding under a term loan issued by the Operating Company (the “Term Loan”), amounts outstanding under a senior secured revolving credit facility issued by the Operating Company (the “SVCP Revolver” and together with the Term Loan, the “SVCP Facility”), amounts outstanding under a senior secured revolving credit facility issued by TCPC Funding (the “TCPC Funding Facility”), debentures guaranteed by the SBA (the “SBA Debentures”), and, prior to the repurchase and retirement of remaining interests on September 3, 2015, amounts outstanding under a preferred equity facility issued by the Operating Company (the “Preferred Interests”). From April 18, 2016 through its conversion to common equity on June 7, 2016, leverage also included a privately placed convertible senior unsecured note due April 2021 issued by the Company (the “CNO Note”).

104

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

4. Leverage – (continued)

Total leverage outstanding and available at December 31, 2016 was as follows:

	Maturity	Rate			CarryingValue*			Available		Total Capacity
SVCP Facility
SVCP Revolver	2018		L+2.50	%†	$	—		$	116,000,000	$	116,000,000
Term Loan	2018		L+2.50	%†		100,500,000			—		100,500,000
2019 Convertible Notes ($108 million par)	2019		5.25	%		106,547,929			—		106,547,929
2022 Convertible Notes ($140 million par)	2022		4.625	%		136,858,359			—		136,858,359
TCPC Funding Facility	2020		L+2.50	%‡		175,000,000			175,000,000		350,000,000
SBA Debentures	2024−2026		2.58	%§		61,000,000			89,000,000		150,000,000
Total leverage						579,906,288		$	380,000,000	$	959,906,288
Unamortized issuance costs						(8,247,426	)
Debt, net of unamortized issuance costs					$	571,658,862

* Except for the convertible notes, all carrying values are the same as the principal amounts outstanding.

† Based on either LIBOR or the lender’s cost of funds, subject to certain limitations

‡ Or L+2.25% subject to certain funding requirements

§ Weighted-average interest rate, excluding fees of 0.36%

Total leverage outstanding and available at December 31, 2015 was as follows:

	Maturity	Rate			Carrying Value*			Available		Total Capacity
SVCP Facility
SVCP Revolver	2018		L+1.75	%†	$	24,000,000		$	92,000,000	$	116,000,000
Term Loan	2018		L+1.75	%†		100,500,000			—		100,500,000
2019 Convertible Notes ($108 million par)	2019		5.25	%		106,110,321			—		106,110,321
TCPC Funding Facility	2020		L+2.50	%‡		229,000,000			121,000,000		350,000,000
SBA Debentures	2024−2025		2.81	%§		42,800,000			32,200,000		75,000,000
Total leverage						502,410,321		$	245,200,000	$	747,610,321
Unamortized issuance costs						(4,204,850	)
Debt, net of unamortized issuance costs					$	498,205,471

* Except for the convertible notes, all carrying values are the same as the principal amounts outstanding.

† Based on either LIBOR or the lender’s cost of funds, subject to certain limitations

‡ Or L+2.25% subject to certain funding requirements

§ Weighted-average interest rate on pooled loans of $38.8 million, excluding fees of 0.36%. As of December 31, 2015, the remaining $4.0 million of the outstanding amount was not yet pooled, and bore interest at a temporary rate of 0.90% plus fees of 0.36% through March 22, 2016, the date of the next SBA pooling.

105

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

4. Leverage – (continued)

The combined weighted-average interest rates on total leverage outstanding at December 31, 2016 and December 31, 2015 were 3.95% and 3.20%, respectively.

Total expenses related to debt include:

	Year Ended December 31,
	2016		2015		2014
Interest expense	$	21,105,429	$	15,504,570	$	7,010,215
Amortization of deferred debt issuance costs		2,798,231		2,236,311		1,926,040
Commitment fees		1,289,330		1,155,096		885,496
Total	$	25,192,990	$	18,895,977	$	9,821,751

Amounts outstanding under the SVCP Facility, the TCPC Funding Facility, the convertible notes and the SBA Debentures are carried at amortized cost in the Consolidated Statements of Assets and Liabilities. As of December 31, 2016, the estimated fair values of the SVCP Facility, the TCPC Funding Facility and the SBA Debentures approximated their carrying values, and the 2019 Convertible Notes and the 2022 Convertible Notes had estimated fair values of $113.0 million and $140.3 million, respectively. The estimated fair values of the SVCP Facility, the TCPC Funding Facility and the SBA Debentures were determined by discounting projected remaining payments using market interest rates for borrowings of the Company and entities with similar credit risks at the measurement date. The estimated fair values of the convertible notes were determined using market quotations. At December 31, 2016, the estimated fair values of the SVCP Facility, the TCPC Funding Facility, the convertible notes and the SBA Debentures as prepared for disclosure purposes were deemed to be Level 3 in the GAAP valuation hierarchy.

Convertible Notes

On June 11, 2014, the Company issued $108.0 million of convertible senior unsecured notes that mature on December 15, 2019, unless previously converted or repurchased in accordance with their terms. The 2019 Convertible Notes are general unsecured obligations of the Company, and rank structurally junior to the SVCP Facility and the TCPC Funding Facility. The Company does not have the right to redeem the 2019 Convertible Notes prior to maturity. The 2019 Convertible Notes bear interest at an annual rate of 5.25%, payable semi-annually. In certain circumstances, the 2019 Convertible Notes will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock (such combination to be at the Company’s election), at an initial conversion rate of 50.9100 shares of common stock per one thousand dollar principal amount, which is equivalent to an initial conversion price of approximately $19.64 per share of common stock, subject to customary anti-dilutional adjustments. The initial conversion price was approximately 12.5% above the $17.46 per share closing price of the Company’s common stock on June 11, 2014. At December 31, 2016, the principal amount of the 2019 Convertible Notes exceeded the value of the conversion rate multiplied by the per share closing price of the Company’s common stock. Therefore, no additional shares have been added to the calculation of diluted earnings per common share and weighted average common shares outstanding.

Prior to the close of business on the business day immediately preceding June 15, 2019, holders may convert their 2019 Convertible Notes only under certain circumstances set forth in the indenture governing the terms of the 2019 Convertible Notes. On or after June 15, 2019 until the close of business on the scheduled trading day immediately preceding December 15, 2019, holders may convert their 2019 Convertible Notes at any time. Upon conversion, the Company will pay or deliver, as the case may be, at its election, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, subject to the requirements of the indenture.

106

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

4. Leverage – (continued)

On August 30, 2016, the Company issued $140.0 million of convertible senior unsecured notes that mature on March 1, 2022, unless previously converted or repurchased in accordance with their terms. The 2022 Convertible Notes are general unsecured obligations of the Company, and rank structurally junior to the SVCP Facility and the TCPC Funding Facility. The Company does not have the right to redeem the 2022 Convertible Notes prior to maturity. The 2022 Convertible Notes bear interest at an annual rate of 4.625%, payable semi-annually. In certain circumstances, the 2022 Convertible Notes will be convertible into cash, shares of the Company’s common stock or a combinationof cash and shares of common stock (such combination to be at the Company’s election), at an initial conversion rate of 54.5019 shares of common stock per one thousand dollar principal amount of the 2022 Convertible Notes, which is equivalent to an initial conversion price of approximately $18.35 per share of common stock, subject to customary anti-dilutional adjustments. The initial conversion price was approximately 10.0% above the $16.68 per share closing price of the Company’s common stock on August 30, 2016. At December 31, 2016, the principal amount of the 2022 Convertible Notes exceeded the value of the conversion rate multiplied by the per share closing price of the Company’s common stock. Therefore, no additional shares have been added to the calculation of diluted earnings per common share and weighted average common shares outstanding.

Prior to the close of business on the business day immediately preceding September 1, 2021, holders may convert their 2022 Convertible Notes only under certain circumstances set forth in the indenture governing the terms of the 2022 Convertible Notes. On or after September 1, 2021 until the close of business on the scheduled trading day immediately preceding March 1, 2022, holders may convert their 2022 Convertible Notes at any time. Upon conversion, the Company will pay or deliver, as the case may be, at its election, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, subject to the requirements of the indenture.

The 2019 Convertible Notes and 2022 Convertible Notes are accounted for in accordance with ASC Topic 470-20 – Debt with Conversion and Other Options. Upon conversion of any of the 2019 Convertible Notes or the 2022 Convertible Notes, the Company intends to pay the outstanding principal amount in cash and, to the extent that the conversion value exceeds the principal amount, has the option to pay the excess amount in cash or shares of the Company’s common stock (or a combination of cash and shares), subject to the requirements of the respective indenture. The Company has determined that the embedded conversion options in the 2019 Convertible Notes and 2022 Convertible Notes are not required to be separately accounted for as derivatives under GAAP. At the time of issuance the estimated values of the debt and equity components of the 2019 Convertible Notes were approximately 97.7% and 2.3%, respectively. At the time of issuance the estimated values of the debt and equity components of the 2022 Convertible Notes were approximately 97.6% and 2.4%, respectively.

The original issue discounts equal to the equity components of the 2019 Convertible Notes and 2022 Convertible Notes were recorded in “paid-in capital in excess of par” in the accompanying Consolidated Statements of Assets and Liabilities. As a result, the Company records interest expense comprised of both stated interest and amortization of the original issue discounts. At the time of issuance, the equity components of the 2019 Convertible Notes and the 2022 Convertible Notes were $2.5 million and $3.3 million, respectively. As of December 31, 2016 and December 31, 2015, the components of the carrying value of the 2019 Convertible Notes and 2022 Convertible Notes were as follows:

	December 31, 2016						December 31, 2015
	2019 Convertible Notes			2022 Convertible Notes			2019 Convertible Notes			2022 Convertible Notes
Principal amount of debt	$	108,000,000		$	140,000,000		$	108,000,000			N/A
Original issue discount, net of accretion		(1,452,071	)		(3,141,641	)		(1,889,679	)		N/A
Carrying value of debt	$	106,547,929		$	136,858,359		$	106,110,321			N/A

107

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

4. Leverage – (continued)

For the years ended December 31, 2016, 2015 and 2014, the components of interest expense for the convertible notes were as follows:

	Year Ended December 31,
	2016				2015				2014
	2019 Convertible Notes		2022 Convertible Notes		2019 Convertible Notes		2022 Convertible Notes		2019 Convertible Notes		2022 Convertible Notes
Stated interest expense	$	5,670,000	$	2,050,416	$	5,670,000		N/A	$	3,039,750		N/A
Amortization of original issue discount		437,608		167,955		413,491		N/A		212,424		N/A
Total interest expense	$	6,107,608	$	2,218,371	$	6,083,491		N/A	$	3,252,174		N/A

The estimated effective interest rate of the debt component of the 2019 Convertible Notes, equal to the stated interest of 5.25% plus the accretion of the original issue discount, was approximately 5.75% for the year ended December 31, 2016. The estimated effective interest rate of the debt component of the 2022 Convertible Notes, equal to the stated interest of 4.625% plus the accretion of the original issue discount, was approximately 5.125% for the year ended December 31, 2016.

SVCP Facility

The SVCP Facility consists of a $100.5 million fully-drawn senior secured term loan and a senior secured revolving credit facility which provides for amounts to be drawn up to $116.0 million, subject to certain collateral and other restrictions. The SVCP Facility matures on July 31, 2018. Most of the cash and investments held directly by the Operating Company, as well as the net assets of TCPC Funding and the SBIC, are included in the collateral for the facility.

Advances under the SVCP Facility through July 31, 2014 bore interest at an annual rate equal to 0.44% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). Advances under the SVCP Facility for periods from July 31, 2014 through September 3, 2015 bore interest at an annual rate equal to 2.50% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). Advances under the SVCP Facility from September 3, 2015 through July 31, 2016 bore interest at an annual rate equal to 1.75% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). Advances under the SVCP Facility from July 31, 2016 through the maturity date of the facility bear interest at an annual rate of 2.50% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). In addition to amounts due on outstanding debt, the SVCP Revolver accrues commitment fees of 0.20% per annum on the unused portion of the facility, or 0.25% per annum when less than $46.4 million in borrowings are outstanding. The facility may be terminated, and any outstanding amounts thereunder may become due and payable, should the Operating Company fail to satisfy certain financial or other covenants. As of December 31, 2016, the Operating Company was in full compliance with such covenants.

SBA Debentures

As of December 31, 2016 the SBIC was able to issue up to $150.0 million in SBA Debentures, subject to funded regulatory capital and other customary regulatory requirements. As of December 31, 2016, the Operating Company had committed $75.0 million of regulatory capital to the SBIC, all of which had been funded. SBA Debentures are non-recourse and may be prepaid at any time without penalty. Once drawn, the SBIC debentures bear an interim interest rate of LIBOR plus 30 basis points. The rate then becomes fixed at the time of SBA pooling, which occurs twice each year, and is set to the then-current 10-year treasury rate plus a spread and an annual SBA charge.

108

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

4. Leverage – (continued)

SBA Debentures outstanding as of December 31, 2016 were as follows:

Issuance Date	Maturity	Debenture Amount		Fixed Interest Rate			SBA Annual Charge
September 24, 2014	September 1, 2024	$	18,500,000		3.02	%		0.36	%
March 25, 2015	March 1, 2025		9,500,000		2.52	%		0.36	%
September 23, 2015	September 1, 2025		10,800,000		2.83	%		0.36	%
March 23, 2016	March 1, 2026		4,000,000		2.51	%		0.36	%
September 21, 2016	September 1, 2026		18,200,000		2.05	%		0.36	%
		$	61,000,000		2.58	%*

* Weighted-average interest rate

SBA Debentures outstanding as of December 31, 2015 were as follows:

Issuance Date	Maturity	Debenture Amount		Fixed Interest Rate			SBA Annual Charge
Pooled loans:
September 24, 2014	September 1, 2024	$	18,500,000		3.02	%		0.36	%
March 25, 2015	March 1, 2025		9,500,000		2.52	%		0.36	%
September 23, 2015	September 1, 2025		10,800,000		2.83	%		0.36	%
			38,800,000		2.84	%*
Non-pooled loans:
December 15, 2015	March 22, 2026		4,000,000		0.90	%		0.36	%
		$	42,800,000

* Weighted-average interest rate on pooled loans

TCPC Funding Facility

The TCPC Funding Facility is a senior secured revolving credit facility which provides for amounts to be drawn up to $350.0 million, subject to certain collateral and other restrictions. The facility matures on March 6, 2020, subject to extension by the lender at the request of TCPC Funding. The facility contains an accordion feature which allows for expansion of the facility to up to $400.0 million subject to consent from the lender and other customary conditions. The cash and investments of TCPC Funding are included in the collateral for the facility.

Borrowings under the TCPC Funding Facility bear interest at a rate of LIBOR plus either 2.25% or 2.50% per annum, subject to certain funding requirements, plus an administrative fee of 0.25% per annum. In addition to amounts due on outstanding debt, the facility accrues commitment fees of 0.50% per annum on the unused portion of the facility, or 0.75% per annum when the unused portion is greater than 33% of the total facility, plus an administrative fee of 0.25% per annum. The facility may be terminated, and any outstanding amounts thereunder may become due and payable, should TCPC Funding fail to satisfy certain financial or other covenants. As of December 31, 2016, TCPC Funding was in full compliance with such covenants.

Preferred Interests

As of December 31, 2016 and 2015, no Preferred Interests were outstanding. On June 30, 2015, the Operating Company repurchased and retired 1,675 of the previously outstanding 6,700 Preferred Interests at a price of $31.8 million. On September 3, 2015, the Operating Company repurchased and retired the remaining 5,025 Preferred Interests outstanding at a price of $100.5 million.

109

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

4. Leverage – (continued)

When issued, the Preferred Interests were comprised of 6,700 Series A preferred limited partner interests with a liquidation preference of $20,000 per interest. The Preferred Interests accrued dividends at an annual rate equal to 0.85% plus either LIBOR or the interest holder’s cost of funds (subject to a cap of LIBOR plus 20 basis points).

CNO Note

On April 18, 2016, the Company issued $30.0 million in aggregate principal amount of a 5.25% convertible senior unsecured note due 2021 pursuant to a purchase agreement, dated as of April 18, 2016, between the Company and CNO Financial Investments Corp., a minority interest owner of the Advisor. The CNO Note had a maturity of April 30, 2021 unless previously converted. The CNO Note was convertible at the option of the holder at any time prior to the close of business on the business day immediately preceding April 30, 2021, in integral multiples of $1,000,000 principal amount. However, the CNO Note was automatically convertible in its entirety, without any further action by the holder, on the date on which the closing price of the common stock of the Company was at or above the Company’s most recent publicly reported net asset value per share of common stock for at least ten trading days (whether or not consecutive) in a 20 consecutive trading day period. The conversion price was the greater of (a) the closing price of the Company’s common shares on the conversion date and (b) the then-current net asset value of the Company. On June 7, 2016, the Company issued 2,011,900 shares of its common stock pursuant to the full conversion, at the holder’s option, of the $30.0 million in aggregate principal amount (plus accrued interest) of the CNO Note. The CNO Note was converted at a price of $15.02 per share of Common Stock. There was no gain or loss associated with the conversion of the CNO Note. No placement agent or underwriting fees were incurred in connection with the issuance or the conversion of the CNO Note.

5. Commitments, Contingencies, Concentration of Credit Risk and Off-Balance Sheet Risk

The Operating Company, TCPC Funding and the SBIC conduct business with brokers and dealers that are primarily headquartered in New York and Los Angeles and are members of the major securities exchanges. Banking activities are conducted with a firm headquartered in the San Francisco area.

In the normal course of business, investment activities involve executions, settlement and financing of various transactions resulting in receivables from, and payables to, brokers, dealers and the custodian. These activities may expose the Company to risk in the event that such parties are unable to fulfill contractual obligations. Management does not anticipate any material losses from counterparties with whom it conducts business. Consistent with standard business practice, the Company, the Operating Company, TCPC Funding and the SBIC enter into contracts that contain a variety of indemnifications, and are engaged from time to time in various legal actions. The maximum exposure under these arrangements and activities is unknown. However, management expects the risk of material loss to be remote.

110

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

5. Commitments, Contingencies, Concentration of Credit Risk and Off-Balance Sheet Risk – (continued)

The Consolidated Schedules of Investments include certain revolving loan facilities and other commitments with unfunded balances at December 31, 2016 and December 31, 2015 as follow:

			Unfunded Balances
Issuer	Maturity		December 31, 2016		December 31, 2015
Alera Group Intermediate Holdings, Inc.		12/30/2021	$	833,333	$	N/A
Alera Group Intermediate Holdings, Inc.		12/30/2022		759,547		N/A
Alpheus Communications, LLC		5/31/2018		357,419		1,072,256
AP Gaming I, LLC		12/20/2018		12,500,000		12,500,000
Acrisure, LLC		11/19/2022		N/A		1,351,596
Anuvia Plant Nutrients Holdings, LLC (VitAG)		2/1/2018		N/A		4,300,000
Asset International, Inc.		7/31/2020		1,325,721		565,544
Auto Trakk SPV, LLC		12/21/2021		3,827,058		N/A
Bisnow, LLC		4/29/2021		1,200,000		N/A
Caliber Home Loans, Inc.		6/30/2020		6,666,667		N/A
Cargojet Airways, LTD.		1/31/2023		N/A		14,457,306
Central MN Renewables, LLC		1/16/2016		N/A		2,100,000
Daymark Financial Acceptance, LLC		1/12/2020		N/A		20,000,000
Edmentum, Inc.		6/9/2020		3,368,586		3,368,586
Enerwise Global Technologies, Inc.		11/30/2017		4,000,000		7,500,000
Essex Ocean, LLC		3/25/2019		N/A		22,008,557
Fidelis Acquisitionco, LLC		11/4/2019		N/A		1,909,286
Hylan Datacom & Electrical, LLC		7/25/2016		1,247,989		N/A
iGM RFE1 B.V.		10/12/2021		855,935		N/A
InMobi, Inc.		9/1/2018		7,500,000		9,354,959
Marketo, Inc.		8/16/2016		1,704,545		N/A
MediMedia USA, Inc.		5/20/2018		N/A		4,293,500
Mesa Air Group, Inc.		7/15/2022		N/A		13,575,000
Mesa Airlines, Inc.		2/28/2022		9,268,182		N/A
Mesa Airlines, Inc.		12/31/2022		9,731,591		N/A
Pegasus Business Intelligence, LP (Onyx Centersource)		12/20/2021		671,356		N/A
Redaptive, Inc.		7/1/2018		N/A		15,000,000
RM OpCo, LLC (Real Mex)		3/30/2018		N/A		440,774
Utilidata, Inc.		1/1/2019		N/A		4,800,000
Vistronix, LLC		12/4/2018		N/A		205,558
VSS-Southern Holdings, LLC		11/3/2020		856,164		N/A
Waterfall International, Inc.		9/1/2018		N/A		3,200,000
Total Unfunded Balances			$	66,674,093	$	142,002,922

6. Related Party Transactions

The Company, the Operating Company, TCPC Funding, the SBIC, the Advisor, the General Partner and their members and affiliates may be considered related parties. From time to time, the Operating Company advances payments to third parties on behalf of the Company which are reimbursable through deductions from distributions to the Company. At December 31, 2016 and December 31, 2015, no such amounts were outstanding. From time to time, the Advisor advances payments to third parties on behalf of the Company and the Operating Company and receives reimbursement from the Company and the Operating Company. At

111

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

6. Related Party Transactions – (continued)

December 31, 2016 and 2015, amounts reimbursable to the Advisor totaled $0.3 million and $0.5 million, respectively, as reflected in the Consolidated Statements of Assets and Liabilities.

Pursuant to administration agreements between the Administrator and each of the Company and the Operating Company (the “Administration Agreements”), the Administrator may be reimbursed for costs and expenses incurred by the Administrator for office space rental, office equipment and utilities allocable to the Company or the Operating Company, as well as costs and expenses incurred by the Administrator or its affiliates relating to any administrative, operating, or other non-investment advisory services provided by the Administrator or its affiliates to the Company or the Operating Company. For the years ended December 31, 2016, 2015 and 2014, expenses allocated pursuant to the Administration Agreements totaled $1.7 million, $1.6 million and $1.4 million, respectively.

On November 25, 2014, the Company and the Operating Company obtained an exemptive order (the “Exemptive Order”) from the Securities and Exchange Commission permitting the Company and Operating Company to purchase certain investments from affiliated investment companies at fair value. The Exemptive Order exempts the Company and the Operating Company from provisions of Sections 17(a) and 57(a) of the 1940 Act which would otherwise restrict such transfers. All such purchases are subject to the conditions set forth in the Exemptive Order, which among others include certain procedures to verify that each purchase is done at the current fair value of the respective investment. During the years ended December 31, 2016 and 2015, the Company purchased approximately $0.0 million and $94.5 million, respectively, of investments from affiliates (as defined in the 1940 Act), which were classified as Level 2 in the GAAP valuation hierarchy at the time of the transfer. The selling party has no continuing involvement in the transferred assets. All of the transfers were consummated in accordance with the provisions of the Exemptive Order and were accounted for as a purchase in accordance with ASC 860, Transfers and Servicing.

7. Stockholders’ Equity and Dividends

The following table summarizes the total shares issued and proceeds received in public offerings of the Company’s common stock net of underwriting discounts and offering costs as well as shares issued in connection with the Company’s dividend reinvestment plan for the year ended December 31, 2016:

	Shares Issued		Price Per Share			Net Proceeds
Shares issued from dividend reinvestment plan		610	$	15.83	*	$	9,657
Shares issued from conversion of convertible debt †		2,011,900		15.02			—
July 13, 2016 registered direct public offering		2,336,552		15.09			34,958,570

* Weighted-average price per share

† Shares issued in connection with the full conversion of the CNO Note

The following table summarizes the total shares issued and proceeds received in public offerings of the Company’s common stock net of underwriting discounts and offering costs as well as shares issued in connection with the Company’s dividend reinvestment plan for the year ended December 31, 2015:

	Shares Issued		Price Per Share			Net Proceeds
At-the-market offerings		248,614	$	15.87	*	$	3,946,066
Shares issued from dividend reinvestment plan		555		14.62	*		8,116

* Weighted-average price per share

112

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

7. Stockholders’ Equity and Dividends – (continued)

The Company’s dividends are recorded on the ex-dividend date. The following table summarizes the Company’s dividends declared and paid for the year ended December 31, 2016:

Date Declared	Record Date	Payment Date	Type		Amount Per Share		Total Amount
February 24, 2016	March 17, 2016	March 31, 2016		Regular	$	0.36	$	17,530,963
May 10, 2016	June 16, 2016	June 30, 2016		Regular		0.36		18,254,229
August 9, 2016	September 16, 2016	September 30, 2016		Regular		0.36		19,094,976
November 8, 2016	December 16, 2016	December 30, 2016		Regular		0.36		19,095,030
					$	1.44	$	73,975,198

The following table summarizes the Company’s dividends declared and paid for the year ended December 31, 2015:

Date Declared	Record Date	Payment Date	Type		Amount Per Share		Total Amount
March 10, 2015	March 19, 2015	March 31, 2015		Regular	$	0.36	$	17,535,826
May 7, 2015	June 16, 2015	June 30, 2015		Regular		0.36		17,625,370
August 6, 2015	September 16, 2015	September 30, 2015		Regular		0.36		17,625,310
November 5, 2015	December 17, 2015	December 31, 2015		Regular		0.36		17,590,638
					$	1.44	$	70,377,144

On February 24, 2015, the Company’s board of directors approved a stock repurchase plan (the “Company Repurchase Plan”) to acquire up to $50.0 million in the aggregate of the Company’s common stock at prices at certain thresholds below the Company’s net asset value per share, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. The Company Repurchase Plan is designed to allow the Company to repurchase its common stock at times when it otherwise might be prevented from doing so under insider trading laws. The Company Repurchase Plan requires an agent selected by the Company to repurchase shares of common stock on the Company’s behalf if and when the market price per share is at certain thresholds below the most recently reported net asset value per share. Under the plan, the agent will increase the volume of purchases made if the price of the Company’s common stock declines, subject to volume restrictions. The timing and amount of any stock repurchased depends on the terms and conditions of the Company Repurchase Plan, the market price of the common stock and trading volumes, and no assurance can be given that any particular amount of common stock will be repurchased. The Company Repurchase Plan was re-approved on November 2, 2016, to be in effect through the earlier of two trading days after the Company’s fourth quarter 2016 earnings release unless further extended or terminated by the Company’s board of directors, or such time as the approved $50.0 million repurchase amount has been fully utilized, subject to certain conditions.

The following table summarizes the total shares repurchased and amounts paid by the Company under the Company Repurchase Plan, including broker fees, for the year ended December 31, 2016:

	Shares Repurchased		Price Per Share			Total Cost
Company Repurchase Plan		141,896	$	13.25	*	$	1,879,548

* Weighted-average price per share

113

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

7. Stockholders’ Equity and Dividends – (continued)

The following table summarizes the total shares repurchased and amounts paid by the Company under the Company Repurchase Plan, including broker fees, for the year ended December 31, 2015:

	Shares Repurchased		Price Per Share			Total Cost
Company Repurchase Plan		125,062	$	14.38	*	$	1,797,876

* Weighted-average price per share

8. Earnings Per Share

In accordance with ASC 260, Earnings per Share, basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, if any, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The following information sets forth the computation of the net increase in net assets per share resulting from operations for the years ended December 31, 2016, 2015 and 2014:

	Year Ended December 31,
	2016		2015		2014
Net increase in net assets applicable to common shareholders resulting from operations	$	76,317,159	$	59,068,827	$	34,547,519
Weighted average shares outstanding		50,948,035		48,863,188		39,395,671
Earnings per share	$	1.50	$	1.21	$	0.88

9. Subsequent Events

On February 22, 2017, the Company’s board of directors re-approved the Company Repurchase Plan, to be in effect through the earlier of two trading days after the Company’s first quarter 2017 earnings release or such time as the approved $50.0 million repurchase amount has been fully utilized, subject to certain conditions.

On February 28, 2017, the Company’s board of directors declared a first quarter regular dividend of $0.36 per share payable on March 31, 2017 to stockholders of record as of the close of business on March 17, 2017.

114

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

10. Financial Highlights

The financial highlights below show the Company's results of operations for each of the five years ended December 31, 2016, as applicable. Per share amounts are calculated assuming the common shares issued in the Conversion on April 2, 2012 and those sold in the initial public offering on April 3, 2012 had been issued as of January 1, 2012.

	Year Ended December 31,
	2016			2015			2014			2013			2012
Per Common Share
Per share NAV at beginning of period (1)	$	14.78		$	15.01		$	15.18		$	14.71		$	14.84
Investment operations:
Net investment income before income taxes		1.88			2.07			1.98			2.13			1.95
Excise taxes		(0.01	)		(0.02	)		(0.02	)		(0.03	)		(0.07	)
Net investment income		1.87			2.05			1.96			2.10			1.88
Net realized and unrealized losses		—			(0.45	)		(0.69	)		0.35			(0.60	)
Dividends on Series A preferred equity facility		—			(0.01	)		(0.04	)		(0.06	)		(0.07	)
Incentive allocation reserve and distributions		(0.37	)		(0.41	)		(0.35	)		(0.48	)		—
Total from investment operations		1.50			1.18			0.88			1.91			1.21
Issuance of common stock		0.01			—			0.43			0.09			—
Repurchase of common stock		—			—			—			—			—
Issuance of convertible debt		0.06			—			0.06			—			—
Repurchase of Series A preferred interests		—			0.03			—			—			—
Distributions to common shareholders from:
Net investment income		(1.44	)		(1.44	)		(1.54	)		(1.53	)		(1.34	)
Per share NAV at end of period	$	14.91		$	14.78		$	15.01		$	15.18		$	14.71
Per share market price at end of period	$	16.90		$	13.93		$	16.78		$	16.78		$	14.74
Total return based on market value (1), (2)		31.7	%		(8.4	%)		9.2	%		24.2	%		9.0	%
Total return based on net asset value (1)		10.6	%		8.1	%		9.0	%		13.6	%		8.2	%
Shares outstanding at end of period		53,041,900			48,834,734			48,710,627			36,199,916			21,477,628

115

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

10. Financial Highlights – (continued)

	Year Ended December 31,
	2016			2015			2014			2013			2012
Ratios to average common equity: (3)
Net investment income (4)		10.1	%		10.9	%		10.2	%		10.9	%		13.6	%
Expenses (5)		6.9	%		6.2	%		4.7	%		3.6	%		3.5	%
Expenses and incentive allocation (6)		9.4	%		8.9	%		7.2	%		6.5	%		N/A
Ending common shareholder equity	$	790,935,991		$	721,977,017		$	731,129,028		$	549,553,354		$	315,987,550
Portfolio turnover rate		37.9	%		37.8	%		28.4	%		38.9	%		48.3	%
Weighted-average leverage outstanding (7)	$	542,421,190		$	513,312,510		$	343,095,352		$	222,471,233		$	159,374,317
Weighted-average interest rate on leverage (8)		3.9	%		3.2	%		2.5	%		1.2	%		1.1	%
Weighted-average number of common shares		50,948,035			48,863,188			39,395,671			25,926,493			21,475,847
Average leverage per share (7)	$	10.65		$	10.51		$	5.31		$	3.44		$	1.18

Asset Coverage:	As of December 31,
	2016		2015		2014		2013		2012
Series A Preferred Equity Facility:
Interests outstanding		—		—		6,700		6,700		6,700
Involuntary liquidation value per interest		N/A		N/A	$	20,074	$	20,075	$	20,079
Asset coverage per interest		N/A		N/A	$	51,592	$	68,125	$	50,475
Debt
Debt outstanding (9)	$	579,906,288	$	502,410,321	$	328,696,830	$	95,000,000	$	74,000,000
Asset coverage per $1,000 of debt outstanding	$	2,344	$	2,423	$	8,973	$	8,176	$	7,077

(1) 2012 total return calculated assuming the Conversion and the initial public offering occurred on January 1, 2012.

(2) 2012 total return is based on an initial public offering price of $14.75.

(3) These ratios include interest expense but do not reflect the effect of dividends on the preferred equity facility.

(4) Net of incentive allocation and excise taxes.

(5) Excludes excise taxes.

(6) Includes incentive allocation payable to the General Partner and all Company expenses.

(7) Includes both debt and preferred leverage.

(8) Includes dividends on the preferred leverage facility.

(9) Excludes unamortized debt issuance costs which are netted in the Consolidated Statements of Assets and Liabilities.

116

TCP Capital Corp.
   
Notes to Consolidated Financial Statements (Continued)
   
December 31, 2016

11. Select Quarterly Data (Unaudited)

	2016
	Q4			Q3			Q2			Q1
Total investment income	$	39,527,322		$	38,468,990		$	35,595,171		$	34,589,282
Net investment income before taxes		24,153,673			25,665,057			23,133,724			22,870,379
Excise taxes		569,511			—			—			—
Net investment income		23,584,162			25,665,057			23,133,724			22,870,379
Net realized and unrealized gain		4,053,638			208,756			2,675,361			(6,823,253	)
Incentive allocation reserve and distributions		(4,716,834	)		(5,133,010	)		(4,626,745	)		(4,574,076	)
Net increase in net assets resulting from operations	$	22,920,966		$	20,740,803		$	21,182,340		$	11,473,050
Basic and diluted earnings per common share	$	0.44		$	0.39		$	0.43		$	0.24

	2015
	Q4			Q3			Q2			Q1
Total investment income	$	39,616,003		$	35,499,049		$	38,937,820		$	32,815,353
Net investment income before taxes		26,914,734			24,254,967			27,269,335			22,940,482
Excise taxes		876,706			—			—			—
Net investment income		26,038,028			24,254,967			27,269,335			22,940,482
Net realized and unrealized gain		(18,739,472	)		(1,886,201	)		(2,214,992	)		435,554
Gain on repurchase of Series A preferred interests		—			—			1,675,000			—
Preferred dividends		—			(62,294	)		(349,907	)		(341,939	)
Incentive allocation reserve and distributions		(5,207,604	)		(4,838,534	)		(5,383,887	)		(4,519,709	)
Net increase in net assets resulting from operations	$	2,090,952		$	17,467,938		$	20,995,549		$	18,514,388
Basic and diluted earnings per common share	$	0.04		$	0.36		$	0.43		$	0.38

	2014
	Q4			Q3			Q2			Q1
Total investment income	$	32,135,038		$	27,190,466		$	24,587,300		$	22,668,644
Net investment income before taxes		22,684,324			19,200,190			18,426,208			17,790,654
Excise taxes		808,813			—			—			—
Net investment income		21,875,511			19,200,190			18,426,208			17,790,654
Net realized and unrealized gain		(24,967,480	)		(4,505,178	)		(3,011,938	)		5,180,018
Preferred dividends		(360,303	)		(362,169	)		(357,060	)		(358,640	)
Incentive allocation reserve and distributions		(3,601,876	)		(2,866,569	)		(3,011,442	)		(4,522,407	)
Net increase in net assets resulting from operations	$	(7,054,148	)	$	11,466,274		$	12,045,768		$	18,089,625
Basic and diluted earnings per common share	$	(0.16	)	$	0.29		$	0.33		$	0.50

117

TCP Capital Corp.

Consolidated Schedule of Changes in Investments in Affiliates⁽¹⁾
   
Year Ended December 31, 2016

Security	Dividends or Interest(2)		Fair Value at December 31, 2015		Acquisitions(3)		Dispositions(4)			Fair Value at December 31, 2016
36th Street Capital Partners Holdings, LLC, Membership Units	$	—	$	225,000	$	6,656,342	$	(62,445	)	$	6,818,897
36th Street Capital Partners Holdings, LLC, Subordinated Promissory Note, 12%, due 11/1/20		1,921,851		900,000		28,303,304		—			29,203,304
AGY Holding Corp., Senior Secured 2nd Lien Notes, 11%, due 11/15/16		1,019,480		9,268,000		—		—			9,268,000
AGY Holding Corp., Senior Secured Delayed Draw Term Loan, 12%, due 9/15/18		20,074		—		1,049,147		—			1,049,147
AGY Holding Corp., Senior Secured Term Loan, 12%, due 9/15/16		594,088		4,869,577		133		—			4,869,710
Anacomp, Inc., Class A Common Stock		—		1,581,964		—		(376,658	)		1,205,306
Edmentum Ultimate Holdings, LLC, Junior PIK Notes, 10%, due 6/9/20		1,381,227		11,343,490		1,362,996		(605,003	)		12,101,483
Edmentum Ultimate Holdings, LLC, Senior PIK Notes, 8.5%, due 6/9/20		236,640		2,612,408		233,838		—			2,846,246
Edmentum, Inc., Junior Revolving Facility, 5%, due 6/9/20		51,210		—		2,762,241		(2,762,241	)		—
Edmentum Ultimate Holdings, LLC, Class A Common Units		—		680,218		443,373		—			1,123,591
EPMC HoldCo, LLC, Membership Units		—		682,614		102,392		(574,971	)		210,035
Essex Ocean II, LLC, Membership Units		—		200,686		65,438		(107,079	)		159,045
Globecomm Systems Inc., Senior Secured 1st Lien Term Loan, LIBOR + 7.625%, 1.25% LIBOR Floor, due 12/11/18		1,316,646		14,256,233		562,182		(338,413	)		14,480,002
KAGY Holding Company, Inc., Series A Preferred Stock		—		6,118,515		45,967		(1,557,236	)		4,607,246
Kawa Solar Holdings Limited, Bank Guarantee Credit Facility, 8.2% Cash + 3.5% PIK, due 7/2/17		2,475,897		25,000,000		661,542		(4,384,889	)		21,276,653
Kawa Solar Holdings Limited, Revolving Credit Facility, 8.2%, due 7/2/17		93,425		—		4,000,000		—			4,000,000
Kawa Solar Holdings Limited, Ordinary Shares		—		—		—		—			—
Kawa Solar Holdings Limited, Series B Preferred Shares		—		—		1,395,350		—			1,395,350
N659UA Aircraft Secured Mortgage, 12%, due 2/28/16		4,554		318,980		—		(318,980	)		—
N661UA Aircraft Secured Mortgage, 12%, due 5/4/16		11,822		570,303		—		(570,303	)		—
N913DL Aircraft Secured Mortgage, 8%, due 3/15/17		2,322		115,617		—		(115,617	)		—
N918DL Aircraft Secured Mortgage, 8%, due 8/15/18		5,109		237,494		—		(237,494	)		—
N954DL Aircraft Secured Mortgage, 8%, due 3/20/19		7,829		342,734		—		(342,734	)		—
N955DL Aircraft Secured Mortgage, 8%, due 6/20/19		8,463		369,162		—		(369,162	)		—
N956DL Aircraft Secured Mortgage, 8%, due 5/20/19		8,365		365,197		—		(365,197	)		—
N957DL Aircraft Secured Mortgage, 8%, due 6/20/19		8,537		372,392		—		(372,392	)		—
N959DL Aircraft Secured Mortgage, 8%, due 7/20/19		8,708		379,522		—		(379,522	)		—
N960DL Aircraft Secured Mortgage, 8%, due 10/20/19		9,289		403,869		—		(403,869	)		—
N961DL Aircraft Secured Mortgage, 8%, due 8/20/19		9,028		393,115		—		(393,115	)		—
N976DL Aircraft Secured Mortgage, 8%, due 2/15/18		4,636		218,321		—		(218,321	)		—
N913DL Equipment Trust Beneficial Interests		491,371		107,501		375		(107,876	)		—
N918DL Equipment Trust Beneficial Interests		8,483		127,662		89,515		(217,177	)		—
N954DL Equipment Trust Beneficial Interests		8,743		77,850		17,496		(95,346	)		—
N955DL Equipment Trust Beneficial Interests		8,278		108,100		2,433		(110,533	)		—
N956DL Equipment Trust Beneficial Interests		8,362		104,478		2,571		(107,049	)		—
N957DL Equipment Trust Beneficial Interests		8,249		105,329		2,637		(107,966	)		—
N959DL Equipment Trust Beneficial Interests		8,139		106,203		2,702		(108,905	)		—
N960DL Equipment Trust Beneficial Interests		7,785		105,937		3,088		(109,025	)		—

118

Security	Dividends or Interest(2)		Fair Value at December 31, 2015		Acquisitions(3)		Dispositions(4)			Fair Value at December 31, 2016
N961DL Equipment Trust Beneficial Interests		7,976		101,487		3,159		(104,646	)		—
N976DL Equipment Trust Beneficial Interests		8,635		100,793		755		(101,548	)		—
RM Holdco, LLC, Equity Participation		—		—		—		—			—
RM Holdco, LLC, Membership Units		251,887		—		—		—			—
RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche A, 7%, due 3/21/16		328,902		3,719,155		1,152,129		—			4,871,284
RM OpCo, LLC, Senior Secured 2nd Lien Term Loan Tranche B, 8.5%, due 3/30/18		804,739		4,490,993		1,131,050		(2,467,273	)		3,154,770
RM OpCo, LLC, Senior Secured 2nd Lien Term Loan Tranche B-1, 8.5%, due 3/30/18		253,440		2,797,956		251,599		—			3,049,555
RM OpCo, LLC, Convertible 2nd Lien Term Loan Tranche B-1, 8.5%, due 3/30/18		165,193		1,783,036		164,019		(3,684	)		1,943,371
RM OpCo, LLC, Senior Convertible 2nd Lien Term Loan B, 8.5%, due 3/30/18		248,959		2,188,233		2,063,135		—			4,251,368
United N659UA-767, LLC (N659UA)		456,168		3,368,599		448,126		(624,787	)		3,191,938
United N661UA-767, LLC (N661UA)		549,091		3,294,024		673,594		(701,517	)		3,266,101
Wasserstein Cosmos Co-Invest, L.P., Limited Partnership Units		—		4,198,500		—		(2,668,500	)		1,530,000

Notes to Consolidated Schedule of Changes in Investments in Affiliates:

(1) The issuers of the securities listed on this schedule are considered affiliates under the Investment Company Act of 1940 due to the ownership by the Company of 5% or more of the issuers' voting securities.

(2) Also includes fee and lease income as applicable.

(3) Acquisitions include new purchases, PIK income, amortization of original issue and market discounts and net unrealized appreciation.

(4) Dispositions include decreases in the cost basis from sales, paydowns, mortgage amortizations, aircraft depreciation and net unrealized depreciation.

119

TCP Capital Corp.

Consolidated Schedule of Changes in Investments in Affiliates⁽¹⁾
   
Year Ended December 31, 2015

Security	Dividends or Interest(2)		Fair Value at December 31, 2014		Acquisitions(3)		Dispositions(4)			Fair Value at December 31, 2015
36th Street Capital Partners Holdings, LLC, Membership Units	$	15,600	$	—	$	225,000	$	—		$	225,000
36th Street Capital Partners Holdings, LLC, Subordinated Promissory Note, 12%, due 11/1/20		—		—		900,000		—			900,000
AGY Holding Corp., Senior Secured 2nd Lien Notes, 11%, due 11/15/16		1,019,480		9,017,764		250,236		—			9,268,000
AGY Holding Corp., Senior Secured Term Loan, 12%, due 9/15/16		592,466		4,869,577		—		—			4,869,577
Anacomp, Inc., Class A Common Stock		—		916,535		665,429		—			1,581,964
Edmentum Ultimate Holdings, LLC, Junior PIK Notes, 10%, due 6/9/20		715,131		—		12,054,264		(710,774	)		11,343,490
Edmentum Ultimate Holdings, LLC, Senior PIK Notes, 8.5%, due 6/9/20		124,828		—		2,612,408		—			2,612,408
Edmentum, Inc., Junior Revolving Facility, 5%, due 6/9/20		22,329		—		2,105,366		(2,105,366	)		—
Edmentum Ultimate Holdings, LLC, Class A Common Units		—		—		680,218		—			680,218
EPMC HoldCo, LLC, Membership Units		—		682,614		—		—			682,614
Essex Ocean II, LLC, Membership Units		—		—		200,686		—			200,686
Globecomm Systems Inc., Senior Secured 1st Lien Term Loan, LIBOR + 7.625%, 1.25% LIBOR Floor, due 12/11/18		1,330,125		14,656,950		121,560		(522,277	)		14,256,233
KAGY Holding Company, Inc., Series A Preferred Stock		—		121,975		5,996,540		—			6,118,515
N659UA Aircraft Secured Mortgage, 12%, due 2/28/16		120,307		1,659,003		—		(1,340,023	)		318,980
N661UA Aircraft Secured Mortgage, 12%, due 5/4/16		137,289		1,899,950		—		(1,329,647	)		570,303
N913DL Aircraft Secured Mortgage, 8%, due 3/15/17		12,800		209,168		—		(93,551	)		115,617
N918DL Aircraft Secured Mortgage, 8%, due 8/15/18		21,901		320,440		—		(82,946	)		237,494
N954DL Aircraft Secured Mortgage, 8%, due 3/20/19		30,753		437,679		315		(95,260	)		342,734
N955DL Aircraft Secured Mortgage, 8%, due 6/20/19		32,662		460,258		539		(91,635	)		369,162
N956DL Aircraft Secured Mortgage, 8%, due 5/20/19		32,415		457,902		479		(93,184	)		365,197
N957DL Aircraft Secured Mortgage, 8%, due 6/20/19		32,947		464,283		544		(92,435	)		372,392
N959DL Aircraft Secured Mortgage, 8%, due 7/20/19		33,476		470,601		612		(91,691	)		379,522
N960DL Aircraft Secured Mortgage, 8%, due 10/20/19		35,326		493,258		831		(90,220	)		403,869
N961DL Aircraft Secured Mortgage, 8%, due 8/20/19		34,574		484,908		694		(92,487	)		393,115
N976DL Aircraft Secured Mortgage, 8%, due 2/15/18		20,940		314,588		—		(96,267	)		218,321
N913DL Equipment Trust Beneficial Interests		25,444		117,497		90,909		(100,905	)		107,501
N918DL Equipment Trust Beneficial Interests		21,074		135,890		81,670		(89,898	)		127,662
N954DL Equipment Trust Beneficial Interests		21,205		72,604		112,997		(107,751	)		77,850
N955DL Equipment Trust Beneficial Interests		20,000		111,010		103,527		(106,437	)		108,100
N956DL Equipment Trust Beneficial Interests		20,172		106,800		105,581		(107,903	)		104,478
N957DL Equipment Trust Beneficial Interests		19,872		107,682		105,105		(107,458	)		105,329
N959DL Equipment Trust Beneficial Interests		19,577		108,579		104,638		(107,014	)		106,203
N960DL Equipment Trust Beneficial Interests		18,590		107,865		104,750		(106,678	)		105,937
N961DL Equipment Trust Beneficial Interests		19,044		102,826		107,207		(108,546	)		101,487
N976DL Equipment Trust Beneficial Interests		20,825		102,006		101,347		(102,560	)		100,793
RM Holdco, LLC, Equity Participation		—		792		—		(792	)		—
RM Holdco, LLC, Membership Units		—		—		—		—			—
RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche A, 7%, due 3/21/16		272,075		3,900,025		18,674		(199,544	)		3,719,155
RM OpCo, LLC, Senior Secured 2nd Lien Term Loan Tranche B, 8.5%, due 3/30/18		736,422		6,457,325		731,070		(2,697,402	)		4,490,993

120

Security	Dividends or Interest(2)		Fair Value at December 31, 2014		Acquisitions(3)		Dispositions(4)			Fair Value at December 31, 2015
RM OpCo, LLC, Senior Secured 2nd Lien Term Loan Tranche B-1, 8.5%, due 3/30/18		238,052		2,567,717		239,889		(9,650	)		2,797,956
RM OpCo, LLC, Convertible 2nd Lien Term Loan Tranche B-1, 8.5%, due 3/30/18		165,715		1,636,314		164,641		(17,919	)		1,783,036
RM OpCo, LLC, Senior Convertible 2nd Lien Term Loan B, 8.5%, due 3/30/18		120,207		631,164		1,557,069		—			2,188,233
United N659UA-767, LLC (N659UA)		581,125		3,177,822		1,268,821		(1,078,044	)		3,368,599
United N661UA-767, LLC (N661UA)		569,770		3,078,923		1,230,498		(1,015,397	)		3,294,024
Wasserstein Cosmos Co-Invest, L.P., Limited Partnership Units		—		4,175,000		1,050,000		(1,026,500	)		4,198,500

Notes to Consolidated Schedule of Changes in Investments in Affiliates:

(1) The issuers of the securities listed on this schedule are considered affiliates under the Investment Company Act of 1940 due to the ownership by the Company of 5% or more of the issuers’ voting securities.

(2) Also includes fee and lease income as applicable.

(3) Acquisitions include new purchases, PIK income, accretion of original issue and market discounts and net unrealized appreciation.

(4) Dispositions include decreases in the cost basis from sales, paydowns, mortgage amortizations, aircraft depreciation and net unrealized depreciation.

121

TCP Capital Corp.

Consolidated Schedule of Restricted Securities of Unaffiliated Issuers
   
December 31, 2016

Investment	Acquisition Date
Avanti Communications Group, PLC, Senior Secured Notes, 10%, due 10/1/19	9/26/13
BlackLine Intermediate, Inc., Warrants to Purchase Common Stock	9/25/13
Boomerang Tube Holdings, Inc., Common Stock	2/2/16
Caribbean Financial Group, Senior Secured Notes, 11.5%, due 11/15/19	10/19/12
Epic Aero, Inc. (One Sky), Warrants to Purchase Common Stock	12/4/13
Findly Talent, LLC, Membership Units	1/1/14
Fuse Media, LLC, Warrants to Purchase Common Stock	8/3/12
Fuse, LLC, Senior Secured Notes, 10.375%, due 7/1/19	6/18/14
GACP I, LP, Membership Units	10/1/15
Gogo Intermediate Holdings, LLC, Senior Secured Notes, 12.5%, due 7/1/22	6/9/16
Green Biologics, Inc., Warrants to Purchase Stock	12/22/14
InMobi, Inc., Warrants to Purchase Stock	9/18/15
Integra Telecom, Inc., Common Stock	11/19/09
Integra Telecom, Inc., Warrants	11/19/09
Iracore International, Inc., Senior Secured Notes, 9.5%, due 6/1/18	5/8/13
Magnolia Finance V plc, Asset-Backed Credit Linked Notes, 13.125%, due 8/2/21	8/1/13
Marsico Holdings, LLC, Common Interest Units	9/10/12
Nanosys, Inc., Warrants to Purchase Common Stock	3/29/16
NEG Parent, LLC, Class A Units	10/17/16
NEG Parent, LLC, Class A Warrants to Purchase Class A Units	10/17/16
NEG Parent, LLC, Class B Warrants to Purchase Class A Units	10/17/16
NEG Parent, LLC, Class P Units	10/17/16
NEXTracker, Inc., Series B Preferred Stock	12/17/14
NEXTracker, Inc., Series C Preferred Stock	6/12/15
Rightside Group, Ltd., Warrants	8/6/14
Shop Holding, LLC (Connexity), Class A Units	6/2/11
Soasta, Inc., Warrants to Purchase Series F Preferred Stock	3/4/16
Soraa, Inc., Warrants to Purchase Common Stock	8/29/14
SoundCloud, Ltd., Warrants to Purchase Preferred Stock	4/30/15
STG-Fairway Holdings, LLC (First Advantage), Class A Units	12/30/10
Trade Finance Funding I, Ltd., Secured Class B Notes, 10.75%, due 11/13/18	11/13/13
Utilidata, Inc., Warrants to Purchase Stock	12/22/15
V Telecom Investment S.C.A. (Vivacom), Common Shares	11/9/12
Waterfall International, Inc., Series B Preferred Stock	9/16/2015
Waterfall International, Inc., Warrants to Purchase Stock	9/16/2015

122

TCP Capital Corp.

Consolidated Schedule of Restricted Securities of Unaffiliated Issuers
   
December 31, 2015

Investment	Acquisition Date
Avanti Communications Group, PLC, Senior Secured Notes, 10%, due 10/1/19	9/26/13
BlackLine Intermediate, Inc., Warrants to Purchase Common Stock	9/25/13
BPA Laboratories, Inc., Senior Secured Notes, 12.25%, due 4/1/17 (144A)	3/5/12
Caribbean Financial Group, Senior Secured Notes, 11.5%, due 11/15/19	10/19/12
Findly Talent, LLC, Membership Units	1/1/14
Flight Options Holdings I, Inc. (One Sky), Warrants to Purchase Common Stock	12/4/13
Fuse Media, LLC, Warrants to Purchase Common Stock	8/3/12
Fuse, LLC, Senior Secured Notes, 10.375%, due 7/1/19	6/18/14
GACP I, LP, Membership Units	10/1/15
Green Biologics, Inc., Warrants to Purchase Stock	12/22/14
InMobi, Inc., Warrants to Purchase Stock	9/18/15
Integra Telecom, Inc., Common Stock	11/19/09
Integra Telecom, Inc., Warrants	11/19/09
Iracore International, Inc., Senior Secured Notes, 9.5%, due 6/1/18	5/8/13
Magnolia Finance V plc, Asset-Backed Credit Linked Notes, 13.125%, due 8/2/21	8/1/13
Marsico Holdings, LLC, Common Interest Units	9/10/12
NEXTracker, Inc., Series B Preferred Stock	12/17/14
NEXTracker, Inc., Series C Preferred Stock	6/12/15
Precision Holdings, LLC, Class C Membership Interests	Var. 2010 & 2011
Rightside Group, Ltd., Warrants	8/6/14
Shop Holding, LLC (Connexity), Class A Units	6/2/11
Shop Holding, LLC (Connexity), Warrants to Purchase Class A Units	6/2/11
Soraa, Inc., Warrants to Purchase Common Stock	8/29/14
SoundCloud, Ltd., Warrants to Purchase Preferred Stock	4/30/15
STG-Fairway Holdings, LLC (First Advantage), Class A Units	12/30/10
Trade Finance Funding I, Ltd., Secured Class B Notes, 10.75%, due 11/13/18	11/13/13
Utilidata, Inc., Warrants to Purchase Stock	12/22/15
V Telecom Investment S.C.A. (Vivacom), Common Shares	11/9/12
Waterfall International, Inc., Series B Preferred Stock	9/16/2015
Waterfall International, Inc., Warrants to Purchase Stock	9/16/2015

123

TCP Capital Corp.

Consolidating Statement of Assets and Liabilities
   
December 31, 2016

	TCP Capital Corp. Standalone			Special Value Continuation Partners, LP Consolidated			Eliminations			TCP Capital Corp. Consolidated
Assets
Investments, at fair value:
Companies less than 5% owned	$	—		$	1,175,097,468		$	—		$	1,175,097,468
Companies 5% to 25% owned		—			69,355,808			—			69,355,808
Companies more than 25% owned		—			70,516,594			—			70,516,594
Investment in subsidiary		1,031,709,637			—			(1,031,709,637	)		—
Total investments		1,031,709,637			1,314,969,870			(1,031,709,637	)		1,314,969,870
Cash and cash equivalents		—			53,579,868			—			53,579,868
Accrued interest income		—			13,692,194			—			13,692,194
Deferred debt issuance costs		—			3,828,784			—			3,828,784
Prepaid expenses and other assets		371,466			1,156,279			—			1,527,745
Total assets		1,032,081,103			1,387,226,995			(1,031,709,637	)		1,387,598,461
Liabilities
Debt, net of unamortized issuance costs		237,871,436			333,787,426			—			571,658,862
Payable for investment securities purchased		—			12,348,925			—			12,348,925
Interest payable		2,298,333			2,715,380			—			5,013,713
Incentive allocation payable		—			4,716,834			—			4,716,834
Payable to the Advisor		—			325,790			—			325,790
Accrued expenses and other liabilities		975,343			1,623,003			—			2,598,346
Total liabilities		241,145,112			355,517,358			—			596,662,470
Net assets	$	790,935,991		$	1,031,709,637		$	(1,031,709,637	)	$	790,935,991
Composition of net assets
Common stock	$	53,042		$	—		$	—		$	53,042
Additional paid-in capital		944,426,650			1,180,024,317			(1,180,024,317	)		944,426,650
Accumulated deficit		(153,543,701	)		(148,314,680	)		148,314,680			(153,543,701	)
Net assets	$	790,935,991		$	1,031,709,637		$	(1,031,709,637	)	$	790,935,991

124

TCP Capital Corp.

Consolidating Statement of Assets and Liabilities
   
December 31, 2015

	TCP Capital Corp. Standalone			Special Value Continuation Partners, LP Consolidated			Eliminations			TCP Capital Corp. Consolidated
Assets
Investments, at fair value:
Companies less than 5% owned	$	—		$	1,099,208,475		$	—		$	1,099,208,475
Companies 5% to 25% owned		—			69,008,931			—			69,008,931
Companies more than 25% owned		—			14,702,319			—			14,702,319
Investment in subsidiary		827,455,601			—			(827,455,601	)		—
Total investments		827,455,601			1,182,919,725			(827,455,601	)		1,182,919,725
Cash and cash equivalents		—			35,629,435			—			35,629,435
Deferred debt issuance costs		—			5,390,241			—			5,390,241
Accrued interest income		—			9,613,064			—			9,613,064
Unrealized appreciation on swaps		—			3,229,442			—			3,229,442
Prepaid expenses and other assets		283,913			2,047,131			—			2,331,044
Total assets		827,739,514			1,238,829,038			(827,455,601	)		1,239,112,951
Liabilities
Debt, net of unamortized issuance costs		103,738,064			394,467,407			—			498,205,471
Payable for investment securities purchased		—			6,425,414			—			6,425,414
Incentive allocation payable		—			5,207,606			—			5,207,606
Interest payable		247,916			2,663,341			—			2,911,257
Payable to the Advisor		247,574			260,760			—			508,334
Accrued expenses and other liabilities		1,528,943			2,348,909			—			3,877,852
Total liabilities		105,762,497			411,373,437			—			517,135,934
Net assets	$	721,977,017		$	827,455,601		$	(827,455,601	)	$	721,977,017
Composition of net assets
Common stock	$	48,834		$	—		$	—		$	48,834
Additional paid-in capital		878,383,356			981,033,295			(981,033,295	)		878,383,356
Accumulated deficit		(156,455,173	)		(153,577,694	)		153,577,694			(156,455,173	)
Net assets	$	721,977,017		$	827,455,601		$	(827,455,601	)	$	721,977,017

125

TCP Capital Corp.
Consolidating Statement of Operations

Year Ended December 31, 2016

	TCP Capital Corp. Standalone			Special Value Continuation Partners, LP Consolidated			Eliminations			TCP Capital Corp. Consolidated
Investment income
Interest income:
Companies less than 5% owned	$	—		$	133,915,069		$	—		$	133,915,069
Companies 5% to 25% owned		—			6,672,486			—			6,672,486
Companies more than 25% owned		—			4,430,859			—			4,430,859
Lease income:
Companies more than 25% owned		—			1,571,280			—			1,571,280
Other income:
Companies less than 5% owned		—			1,442,096			—			1,442,096
Companies more than 25% owned		—			148,975			—			148,975
Total investment income		—			148,180,765			—			148,180,765
Operating expenses
Interest and other debt expenses		9,470,135			15,722,855			—			25,192,990
Management and advisory fees		—			18,881,786			—			18,881,786
Legal fees, professional fees and due diligence expenses		480,552			1,840,407			—			2,320,959
Administration expenses		—			1,693,304			—			1,693,304
Director fees		140,101			283,803			—			423,904
Insurance expense		124,203			257,949			—			382,152
Custody fees		3,500			309,573			—			313,073
Other operating expenses		912,551			2,237,213			—			3,149,764
Total expenses		11,131,042			41,226,890			—			52,357,932
Net investment income (loss) before income taxes		(11,131,042	)		106,953,875			—			95,822,833
Excise tax expense		569,511			—			—			569,511
Net investment income (loss)		(11,700,553	)		106,953,875			—			95,253,322
Net realized and unrealized gain (loss) on investments and foreign currency
Net realized gain (loss):
Investments in companies less than 5% owned		—			(15,499,336	)		—			(15,499,336	)
Investments in companies 5% to 25% owned		—			417,446			—			417,446
Investments in companies more than 5% owned		—			79,742			—			79,742
Net realized loss		—			(15,002,148	)		—			(15,002,148	)
Change in net unrealized appreciation/depreciation		—			15,116,650			—			15,116,650
Net realized and unrealized loss		—			114,502			—			114,502
Net increase (decrease) in net assets from operations		(11,700,553	)		107,068,377			—			95,367,824
Interest in earnings of subsidiary		88,017,712			—			(88,017,712	)		—
Distributions of incentive allocation to the General Partner from net investment income		—			—			(19,050,665	)		(19,050,665	)
Net increase in net assets applicable to common equityholders resulting from operations	$	76,317,159		$	107,068,377		$	(107,068,377	)	$	76,317,159

126

TCP Capital Corp.

Consolidating Statement of Operations
   
Year Ended December 31, 2015

	TCP Capital Corp. Standalone			Special Value Continuation Partners, LP Consolidated			Eliminations			TCP Capital Corp. Consolidated
Investment income
Interest income:
Companies less than 5% owned	$	—		$	135,518,703		$	—		$	135,518,703
Companies 5% to 25% owned		—			5,932,861			—			5,932,861
Companies more than 25% owned		—			560,989			—			560,989
Lease income:
Companies 5% to 25% owned		—			1,352,797			—			1,352,797
Other income:
Companies less than 5% owned		153,216			3,349,659			—			3,502,875
Total investment income		153,216			146,715,009			—			146,868,225
Operating expenses
Interest and other debt expenses		6,770,147			12,125,830			—			18,895,977
Management and advisory fees		—			18,593,660			—			18,593,660
Legal fees, professional fees and due diligence expenses		1,665,182			1,175,657			—			2,840,839
Administrative expenses		—			1,600,477			—			1,600,477
Insurance expense		123,315			251,405			—			374,720
Director fees		104,906			213,411			—			318,317
Custody fees		3,500			296,555			—			300,055
Other operating expenses		1,451,769			1,112,893			—			2,564,662
Total expenses		10,118,819			35,369,888			—			45,488,707
Net investment income (loss) before income taxes		(9,965,603	)		111,345,121			—			101,379,518
Excise tax expense		876,706			—			—			876,706
Net investment income (loss)		(10,842,309	)		111,345,121			—			100,502,812
Net realized and unrealized gain (loss) on investments and foreign currency
Net realized gain (loss):
Investments in companies less than 5% owned		—			(7,077,393	)		—			(7,077,393	)
Investments in companies 5% to 25% owned		—			(10,613,422	)		—			(10,613,422	)
Investments in companies more than 5% owned		—			19,167			—			19,167
Net realized loss		—			(17,671,648	)		—			(17,671,648	)
Change in net unrealized appreciation/depreciation		—			(4,733,463	)		—			(4,733,463	)
Net realized and unrealized loss		—			(22,405,111	)		—			(22,405,111	)
Net increase (decrease) in net assets from operations		(10,842,309	)		88,940,010			—			78,097,701
Interest in earnings of subsidiary		69,911,136			—			(69,911,136	)		—
Gain on repurchase of Series A preferred interests		—			1,675,000			—			1,675,000
Dividends paid on Series A preferred equity facility		—			(1,251,930	)		—			(1,251,930	)
Net change in accumulated dividends on Series A preferred equity facility		—			497,790			—			497,790
Distributions of incentive allocation to the General Partner from net investment income		—			—			(19,949,734	)		(19,949,734	)
Net increase in net assets applicable to common equityholders resulting from operations	$	59,068,827		$	89,860,870		$	(89,860,870	)	$	59,068,827

127

TCP Capital Corp.

Consolidating Statement of Operations
   
Year Ended December 31, 2014

	TCP Capital Corp. Standalone			Special Value Continuation Partners, LP Consolidated			Eliminations			TCP Capital Corp. Consolidated
Investment income
Interest income:
Companies less than 5% owned	$	—		$	94,632,495		$	—		$	94,632,495
Companies 5% to 25% owned		—			5,394,075			—			5,394,075
Companies more than 25% owned		—			896,695			—			896,695
Dividend income:
Companies 5% to 25% owned		—			1,968,748			—			1,968,748
Lease income:
Companies 5% to 25% owned		—			320,277			—			320,277
Companies more than 25% owned		—			1,014,053			—			1,014,053
Other income:
Companies less than 5% owned		—			2,328,980			—			2,328,980
Companies 5% to 25% owned		—			26,125			—			26,125
Total investment income		—			106,581,448			—			106,581,448
Operating expenses
Management and advisory fees		—			13,646,064			—			13,646,064
Interest and other debt expenses		3,624,661			6,197,090			—			9,821,751
Administrative expenses		—			1,421,863			—			1,421,863
Legal fees, professional fees and due diligence expenses		402,086			953,284			—			1,355,370
Director fees		117,943			239,107			—			357,050
Insurance expense		95,988			192,168			—			288,156
Custody fees		3,500			225,754			—			229,254
Other operating expenses		803,544			557,020			—			1,360,564
Total expenses		5,047,722			23,432,350			—			28,480,072
Net investment income (loss) before income taxes		(5,047,722	)		83,149,098			—			78,101,376
Excise tax expense		808,813			—			—			808,813
Net investment income (loss)		(5,856,535	)		83,149,098			—			77,292,563
Net realized and unrealized loss on investments and foreign currency
Net realized loss:
Investments in companies less than 5% owned		—			(16,370,638	)		—			(16,370,638	)
Investments in companies 5% to 25% owned		—			(4,748,229	)		—			(4,748,229	)
Net realized loss		—			(21,118,867	)		—			(21,118,867	)
Change in net unrealized appreciation/depreciation		—			(6,185,711	)		—			(6,185,711	)
Net realized and unrealized loss		—			(27,304,578	)		—			(27,304,578	)
Net increase (decrease) in net assets from operations		(5,856,535	)		55,844,520			—			49,987,985
Interest in earnings of subsidiary		40,404,054			—			(40,404,054	)		—
Dividends paid on Series A preferred equity facility		—			(1,444,634	)		—			(1,444,634	)
Net change in accumulated dividends on Series A preferred equity facility		—			6,462			—			6,462
Distributions of incentive allocation to the General Partner from net investment income		—			—			(15,170,877	)		(15,170,877	)
Net change in reserve for incentive allocation		—			—			1,168,583			1,168,583
Net increase in net assets applicable to common equityholders resulting from operations	$	34,547,519		$	54,406,348		$	(54,406,348	)	$	34,547,519

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Item 9. Changes in Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

As of December 31, 2016 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

(b) Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2016. Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management performed an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2016 based upon the criteria set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our assessment, management determined that our internal control over financial reporting was effective as of December 31, 2016.

(c) Attestation Report of the Independent Registered Public Accounting Form

Our independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting which is set forth under the heading “Report of Independent Registered Public Accounting Firm” on page 69.

(d) Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recently completed fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None

129

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item is contained in the Registrant’s definitive Proxy Statement for its 2017 Annual Stockholders Meeting to be filed with the Securities and Exchange Commission within 120 days after December 31, 2016 and is incorporated herein by reference.

Item 11. Executive Compensation

The information required by this item is contained in the Registrant’s definitive Proxy Statement for its 2017 Annual Stockholders Meeting to be filed with the Securities and Exchange Commission within 120 days after December 31, 2016 and is incorporated herein by reference.

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

The information required by this item is contained in the Registrant’s definitive Proxy Statement for its 2017 Annual Stockholders Meeting to be filed with the Securities and Exchange Commission within 120 days after December 31, 2016 and is incorporated herein by reference.

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

The information required by this item is contained in the Registrant’s definitive Proxy Statement for its 2017 Annual Stockholders Meeting to be filed with the Securities and Exchange Commission within 120 days after December 31, 2016 and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information required by this item is contained in the Registrant’s definitive Proxy Statement for its 2017 Annual Stockholders Meeting to be filed with the Securities and Exchange Commission within 120 days after December 31, 2016 and is incorporated herein by reference.

PART IV

Item 15. Exhibits and Consolidated Financial Statement Schedules

a. Documents Filed as Part of this Report

The following reports and consolidated financial statements are set forth in Item 8:

	Page
Reports of Independent Registered Public Accounting Firm		69
Consolidated Statements of Assets and Liabilities as of December 31, 2016 and 2015		72
Consolidated Schedule of Investments as of December 31, 2016 and 2015		73
Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014		91
Consolidated Statements of Changes in Net Assets for the years ended December 31, 2016, 2015 and 2014		92
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014		93
Notes to Consolidated Financial Statements		94
Consolidated Schedules of Changes in Investments in Affiliates as of December 31, 2016 and 2015		118
Consolidated Schedules of Restricted Securities of Unaffiliated Issuers as of December 31, 2016 and 2015		122
Consolidating Statements of Assets and Liabilities as of December 31, 2016 and 2015		124
Consolidating Statements of Operations for the years ended December 31, 2016, 2015 and 2014		126

130

b. Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:

Number	Description
3.1	Articles of Incorporation of the Registrant(1)
3.2	Bylaws of the Registrant(2)
10.1	Form of Investment Management Agreement By and Between Registrant and Tennenbaum Capital Partners, LLC(3)
10.2	Form of Amended and Restated Investment Management Agreement By and Between Special Value Continuation Partners, LP and Tennenbaum Capital Partners, LLC(4)
10.3	Form of Administration Agreement of the Registrant(5)
10.4	Custodial Agreement dated as of July 31, 2006(6)
10.5	Form of Transfer Agency and Registrar Services Agreement(7)
10.6	Form of License Agreement(8)
10.7	Credit Agreement dated July 31, 2006(9)
10.8	Form of First Amendment to Credit Agreement dated February 28, 2011(10)
10.9	Form of Second Amendment to Credit Agreement dated September 18, 2013(11)
10.10	Form of Amended and Restated Partnership Agreement of Special Value Continuation Partners, LP(12)
10.11	Form of Administration Agreement of Special Value Continuation Partners, LP(13)
10.12	Form of Loan Financing and Servicing Agreement dated May 15, 2013(14)
10.13	Form of Amendment No. 1 to Loan Financing and Servicing Agreement dated August 13, 2013(15)
10.14	Form of Amendment No. 2 to Loan Financing and Servicing Agreement dated September 10, 2013(16)
10.15	Form of Sale and Contribution Agreement dated May 15, 2013(17)
10.16	Form of Co-Management Agreement of Special Value Continuation Partners, LP(18)
10.17	Form of Amendment No. 3 to Loan Financing and Servicing Agreement, dated as of February 19, 2014, by and among TCPC Funding I, LLC, as borrower, each lender and agent from time to time party thereto, Deutsche Bank AG, New York Branch, as administrative agent, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian(20)
10.18	Form of Amendment No. 4 to Loan Financing and Servicing Agreement, dated as of June 9, 2014, by and among TCPC Funding I, LLC, as borrower, each lender and agent from time to time party thereto, Deutsche Bank AG, New York Branch, as administrative agent, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian(21)
10.19	Indenture, dated as of June 17, 2014, by and between the Registrant and U.S. Bank National Association, as the Trustee(22)
10.20	Form of Global Note of 5.25% Convertible Senior Notes Due 2019 (included as part of Exhibit 10.19)(22)
10.21	Indenture, dated as of September 6, 2016, by and between the Registrant and U.S. Bank National Association, as the Trustee(23)
10.22	Form of Global Note of 4.625% Convertible Senior Notes due 2022 (included as part of Exhibit 10.21) (23)
11	Computation of Per Share Earnings (included in the notes to the financial statements contained in this report)
12	Computation of Ratios (included in the notes to the financial statements contained in this report)
14.1	Consolidated Code of Ethics of the Registrant and the Advisor(19)
21.1	Subsidiaries of the Registrant*
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934*
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934*
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U. S. C. 1350)*

* Filed herewith.

(1) Incorporated by reference to Exhibit (a)(2) to the Registrant's Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on May 13, 2011.

131

(2) Incorporated by reference to Exhibit (b)(2) to the Registrant's Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on May 13, 2011.

(3) Incorporated by reference to Exhibit (g) to the Registrant's Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on May 13, 2011.

(4) Incorporated by reference to Exhibit (k)(8) to the Registrant's Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on May 13, 2011.

(5) Incorporated by reference to Exhibit (k)(1) to the Registrant's Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on May 13, 2011.

(6) Incorporated by reference to Exhibit 10.2 to Form 10-12G of Special Value Continuation Partners, LP (File No. 000-54393), filed May 6, 2011.

(7) Incorporated by reference to Exhibit (k)(2) to the Registrant's Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on March 5, 2012

(8) Incorporated by reference to Exhibit (k)(3) to the Registrant's Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on March 5, 2012.

(9) Incorporated by reference to Exhibit 10.5 to Form 10-12G of Special Value Continuation Partners, LP (File No. 000-54393), filed May 6, 2011.

(10) Incorporated by reference to Exhibit 10.6 to Form 10-12G of Special Value Continuation Partners, LP (File No. 000-54393), filed May 6, 2011.

(11) Incorporated by reference to Exhibit 10.01 to Registrant's Form 8-K, filed September 19, 2013.

(12) Incorporated by reference to Exhibit (k)(6) to the Registrant's Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on May 13, 2011.

(13) Incorporated by reference to Exhibit (k)(9) to the Registrant's Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on May 13, 2011.

(14) Incorporated by reference to Exhibit 10.01 to Registrant's Form 8-K filed on May 17, 2013.

(15) Incorporated by reference to Exhibit 10.02 to Registrant's Form 8-K filed on September 10, 2013.

(16) Incorporated by reference to Exhibit 10.01 to Registrant's Form 8-K filed on September 10, 2013.

(17) Incorporated by reference to Exhibit 10.02 to Registrant's Form 8-K filed on May 17, 2013.

(18) Incorporated by reference to Exhibit (g)(2) to Special Value Continuation Partner, LP's Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 811-21935), filed on October 31, 2006.

(19) Incorporated by reference to Exhibit (r)(1) to the Registrant's Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on March 5, 2012.

(20) Incorporated by reference to Exhibit 10.01 of the Registrant's Form 8-K filed on February 21, 2014.

(21) Incorporated by reference to Exhibit 10.01 of the Registrant's Form 8-K filed on June 9, 2014.

(22) Incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed on June 17, 2014.

(23) Incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed on September 6, 2016.

132

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

TCP Capital Corp.
By:	/s/ Howard M. Levkowitz
	Howard M. Levkowitz Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.

Date	Signature	Title
February 28, 2017	/s/ Howard M. Levkowitz	Chief Executive Officer, Chairman of the Board and Director (Principal Executive Officer)
	Howard M. Levkowitz
February 28, 2017	/s/ Eric J. Draut	Director
	Eric J. Draut
February 28, 2017	/s/ Franklin R. Johnson	Director
	Franklin R. Johnson
February 28, 2017	/s/ Peter E. Schwab	Director
	Peter E. Schwab
February 28, 2017	/s/ Brian F. Wruble	Director
	Brian F. Wruble
February 28, 2017	/s/ M. Freddie Reiss	Director
	M. Freddie Reiss
February 28, 2017	/s/ Rajneesh Vig	President and Director
	Rajneesh Vig
February 28, 2017	/s/ Paul L. Davis	Chief Financial Officer (Principal
	Paul L. Davis	Financial Officer)

133