**Exhibit 4.2**

 

**DESCRIPTION OF SECURITIES**

**REGISTERED PURSUANT TO SECTION 12 OFTHE SECURITIES**

**EXCHANGE ACT OF 1934**

 

As of December 31,2019, Audax Credit BDC Inc. (“we,” “our,” or the “Company”) had one class of securities registeredunder Section 12 of the Securities Exchange Act of 1934, as amended: our common stock, par value $0.001 per share (the “CommonStock”). Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Annual Report on Form10-K to which this Description of Securities is attached as an exhibit (the “Form 10-K”).

 

The following descriptionis based on relevant portions of the Delaware General Corporation Law (the “DGCL”), our certificate of incorporationand our bylaws. This summary is a description of the material terms of, and is qualified in its entirety by, our certificate ofincorporation and bylaws, each of which is incorporated by reference as an exhibit to the Form 10-K, and may not contain all ofthe information that is important to you. We refer you to the DGCL and our certificate of incorporation and bylaws for a more detaileddescription of the provisions summarized below.

 

Our authorized stockconsists of 100,000,000 shares of Common Stock. There are no outstanding options or warrants to purchase our stock. No CommonStock has been authorized for issuance under any equity compensation plans. Under Delaware law, our stockholders generally arenot personally liable for our debts or obligations. Under our certificate of incorporation, our Board of Directors is authorizedto classify and reclassify any unissued shares of stock into other classes or series of stock without obtaining stockholder approval.

 

***Common Stock***

 

All shares of ourCommon Stock have equal rights as to earnings, assets, dividends and other distributions and voting and, when they areissued, will be duly authorized, validly issued, fully paid and nonassessable. Distributions may be paid to the holders ofour Common Stock if, as and when authorized by our Board of Directors and declared by us out of legally available funds.Shares of our Common Stock have no preemptive, exchange, conversion or redemption rights and are freely transferable, exceptwhen their transfer is restricted by federal and state securities laws or by contract. In the event of our liquidation,dissolution or winding up, each share of our Common Stock would be entitled to share ratably in all of our assets that arelegally available for distribution after we pay all debts and other liabilities and subject to any preferential rights ofholders of our preferred stock, if any preferred stock is authorized and outstanding at such time. Each share of our CommonStock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Exceptas provided with respect to any other class or series of stock, the holders of our Common Stock possess exclusive votingpower. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstandingshares of Common Stock can elect all of our directors, and holders of less than a majority of such shares are not able toelect any directors. In the event that any investor in our Shares is subject to Section 12(d) of the Investment Company Actof 1940, as amended (the “1940 Act”), such investor will either (1) seek instructions from its security holderswith regard to the voting of all proxies with respect to any stockholder vote and will vote such proxies in accordance withsuch instructions of its security holders or (2) vote the Shares held by such investor in the same proportion as the vote ofall other holders of the Common Stock.

 

 

 

** **

 

**Provisions of the DGCL and Our Certificateof Incorporation and Bylaws**

 

***Limitation on Liability of Directorsand Officers; Indemnification and Advance of Expenses***

 

The indemnificationof our officers and directors is governed by Section 145 of the DGCL, and our certificate of incorporation and bylaws. Subsection(a) of DGCL Section 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a partyto any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (otherthan an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employeeor agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent ofanother corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees),judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action,suit or proceeding if (1) such person acted in good faith, (2) in a manner such person reasonably believed to be in or not opposedto the best interests of the corporation and (3) with respect to any criminal action or proceeding, such person had no reasonablecause to believe the person’s conduct was unlawful.

  

Subsection (b) of DGCLSection 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened,pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the factthat the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of thecorporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterpriseagainst expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defenseor settlement of such action or suit if such person acted in good faith and in a manner the person reasonably believed to be in,or not opposed to, the best interests of the corporation, and except that no indemnification may be made in respect of any claim,issue or matter as to which such person has been adjudged to be liable to the corporation unless and only to the extent that theDelaware Court of Chancery or the court in which such action or suit was brought determines upon application that, despite theadjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnityfor such expenses which the Court of Chancery or such other court deems proper.

 

 

 

 

DGCL Section 145further provides that to the extent that a present or former director or officer is successful, on the merits or otherwise,in the defense of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145, or in defense of anyclaim, issue or matter therein, such person will be indemnified against expenses (including attorneys’ fees) actuallyand reasonably incurred by such person in connection with such action, suit or proceeding. In all cases in whichindemnification is permitted under subsections (a) and (b) of Section 145 (unless ordered by a court), it will be made by thecorporation only as authorized in the specific case upon a determination that indemnification of the present or formerdirector, officer, employee or agent is proper in the circumstances because the applicable standard of conduct has been metby the party to be indemnified. Such determination must be made, with respect to a person who is a director or officer at thetime of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding,even though less than a quorum, (2) by a committee of such directors designated by majority vote of such directors, eventhough less than a quorum, (3) if there are no such directors, or if such directors so direct, by independent legal counselin a written opinion or (4) by the stockholders. The statute authorizes the corporation to pay expenses incurred by anofficer or director in advance of the final disposition of a proceeding upon receipt of an undertaking by or on behalf of thedirector or officer to repay such amount if it is ultimately determined that such person is not entitled to be indemnified bythe corporation as authorized. DGCL Section 145 also provides that indemnification and advancement of expenses permittedunder such Section are not to be exclusive of any other rights to which those seeking indemnification or advancement ofexpenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. DGCLSection 145 also authorizes the corporation to purchase and maintain liability insurance on behalf of its directors,officers, employees and agents regardless of whether the corporation would have the statutory power to indemnify such personsagainst the liabilities insured.

 

Our certificate ofincorporation provides that our directors will not be liable to us or our stockholders for monetary damages for breach of fiduciaryduty as a director to the fullest extent permitted by the current DGCL or as the DGCL may hereafter be amended. DGCL Section 102(b)(7)provides that the personal liability of a director to a corporation or its stockholders for breach of fiduciary duty as a directormay be eliminated except for liability (1) for any breach of the director’s duty of loyalty to the corporation or its stockholders,(2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) under Section174 of the DGCL, relating to unlawful payment of dividends or unlawful stock purchases or redemption of stock or (4) for any transactionfrom which the director derives an improper personal benefit.

 

Our bylaws providefor the indemnification of any person to the fullest extent permitted, and in the manner provided, by the current DGCL or as theDGCL may hereafter be amended. In addition, we have entered into indemnification agreements with each of our directors and officersin order to effect the foregoing except to the extent that such indemnification would exceed the limitations on indemnificationunder Section 17(h) of the 1940 Act.

 

***Election of Directors***

 

Our certificate ofincorporation and bylaws provide that the election of a director by stockholders requires the affirmative vote of the holders ofa majority of the votes cast by stockholders present in person or by proxy at an annual or special meeting of stockholders dulycalled for such purpose and entitled to vote thereat. Under our certificate of incorporation, our Board of Directors may amendthe bylaws to alter the vote required to elect directors.

 

 

 

 

***Number of Directors; Vacancies***

 

Our certificate ofincorporation provides that the number of directors will be set only by the Board of Directors in accordance with our bylaws.Our bylaws provide that a majority of our entire Board of Directors may at any time increase or decrease the number ofdirectors. However, unless our bylaws are amended, the number of directors may never be less than four (4) nor more than ten(10). Under the DGCL, directors may be removed with or without cause by the holders of a majority of the shares then entitledto vote at an election of directors. However, under our certificate of incorporation and bylaws, any vacancy on the Board ofDirectors, whether resulting from an enlargement of the Board of Directors or stockholder vote, may be filled only by anaffirmative vote of a majority of the remaining directors then in office. The limitations on the ability of our stockholdersto fill vacancies on the Board of Directors could make it more difficult for a third-party to acquire, or discourage athird-party from seeking to acquire, control of us.

*** ***

***Action by Stockholders***

 

Under our certificateof incorporation, stockholder action can be taken only at an annual or special meeting of stockholders or by unanimous writtenconsent in lieu of a meeting. This may have the effect of delaying consideration of a stockholder proposal until the next annualmeeting.

*** ***

***Advance Notice Provisions for StockholderNominations and Stockholder Proposals***

 

Our bylaws providethat with respect to an annual meeting of stockholders, nominations of persons for election to the Board of Directors and the proposalof business to be considered by stockholders may be made only (1) by or at the direction of the Board of Directors, (2) pursuantto a notice of meeting or (3) by a stockholder who is entitled to vote at the meeting and who has complied with the advance noticeprocedures of the bylaws. Nominations of persons for election to the Board of Directors at a special meeting may be made only (1)by or at the direction of the Board of Directors or (2) so long as the Board of Directors has determined that directors will beelected at such special meeting, by a stockholder who is entitled to vote at the meeting and who has complied with the advancenotice provisions of the bylaws.

 

The purpose of requiringstockholders to give us advance notice of nominations and other business is to afford our Board of Directors a meaningful opportunityto consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extentdeemed necessary or desirable by our Board of Directors, to inform stockholders and make recommendations about such qualificationsor business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our bylaws do notgive our Board of Directors any power to disapprove stockholder nominations for the election of directors or proposals recommendingcertain action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholderproposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation ofproxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nomineesor proposals might be harmful or beneficial to us and our stockholders.

 

 

 

*** ***

***Stockholder Meetings***

 

Our bylaws providethat any action required or permitted to be taken by stockholders at an annual meeting or special meeting of stockholders mayonly be taken if it is properly brought before such meeting and our certificate of incorporation provides that, in lieu ofsuch a meeting, any such action may be taken by the unanimous written consent of our stockholders. Our certificate ofincorporation and bylaws also provide that, except as otherwise required by law, special meetings of the stockholders canonly be called by the Chairman of the Board of Directors, our Chief Executive Officer or the Board of Directors. In addition,our bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting ofstockholders, including proposed nominations of candidates for election to the Board of Directors. Stockholders at an annualmeeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or atthe direction of the Board of Directors, or by a stockholder of record on the record date for the meeting who is entitled tovote at the meeting and who has delivered to the Secretary of the Company timely written notice in proper form of thestockholder’s intention to bring such business before the meeting. These provisions could have the effect of delayingstockholder actions that are favored by the holders of a majority of our outstanding voting securities until the nextstockholder meeting.

*** ***

***Calling of Special Meetings of Stockholders***

 

Our certificate ofincorporation and bylaws provide that special meetings of stockholders may only be called by the Chairman of the Board of Directors,our Chief Executive Officer or the Board of Directors.

  

***Conflict with 1940 Act***

 

Our bylaws providethat, if and to the extent that any provision of the DGCL or any provision of our certificate of incorporation or bylaws conflictswith any provision of the 1940 Act, the applicable provision of the 1940 Act will control.