exv10w1






Exhibit 10.1




FORM OF ADVISORY AGREEMENT




INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT



BETWEEN



TPG SPECIALTY LENDING, INC.



AND



TSL ADVISERS, LLC



     This Agreement (the “Agreement”) is made as of [MONTH] __, 2011, by and between TPG SPECIALTY
LENDING, INC., a Delaware corporation (the “Company”), and TSL ADVISERS, LLC, a Delaware
limited liability company (the “Adviser”).



     WHEREAS, the Company is a closed-end management investment company that intends to elect to be
treated as a business development company (“BDC”) under the Investment Company Act of 1940
(the “Investment Company Act”);



     WHEREAS, the Adviser is an investment adviser that is registered under the Investment Advisers
Act of 1940 (the “Advisers Act”); and



     WHEREAS, the Company desires to retain the Adviser to furnish investment advisory services to
the Company on the terms and conditions hereinafter set forth, and the Adviser desires to be
retained to provide such services.



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the parties hereby agree as follows:



1. Duties of the Adviser




     (a) The Company hereby employs the Adviser to act as the investment adviser to the Company and
to manage the investment and reinvestment of the assets of the Company, subject to the supervision
of the Board of Directors of the Company (the “Board”), for the period and upon the terms
herein set forth, (i) in accordance with the investment objective, policies and restrictions that
are set forth in the Company’s registration statement on Form 10 (File No. 333-XXXXXX) initially
filed on _______, 2011 (and as the same shall be amended from time to time, the “Registration
Statement”), and prior to the filing of the Company’s Registration Statement, in accordance
with the investment objective, policies and restrictions that are set forth in the Company’s
private placement memorandum dated [DATE]; (ii) in accordance with all other applicable federal and
state laws, rules and regulations, and the Company’s charter and by-laws as the same shall be
amended from time to time; and (iii) in accordance with the Investment Company Act. Without
limiting the generality of the foregoing, the Adviser shall, during the term and subject to the
provisions of this Agreement: (i) determine the composition of the



 









 




portfolio of the Company, the nature and timing of the changes therein and the manner of
implementing such changes; (ii) identify/source, research, evaluate and negotiate the structure of
the investments made by the Company; (iii) close and monitor the Company’s investments; (iv)
determine the securities and other assets that the Company will purchase, retain, or sell; (v) use
reasonable endeavors to ensure that the Company’s investments consist mainly of shares, securities
or currencies (or derivative contracts relating thereto), which for the avoidance of doubt may
include loans, notes and other evidences of indebtedness; (vi) perform due diligence on prospective
portfolio companies; and (vii) provide the Company with such other investment advisory, research,
and related services as the Company may, from time to time, reasonably require for the investment
of its funds, including providing operating and managerial assistance to the Company and its
portfolio companies as required. Subject to the supervision of the Board, the Adviser shall have
the power and authority on behalf of the Company to effectuate its investment decisions for the
Company, including the execution and delivery of all documents relating to the Company’s
investments and the placing of orders for other purchase or sale transactions on behalf of the
Company. In the event that the Company determines to acquire debt financing, the Adviser will
arrange for such financing on the Company’s behalf, subject to the oversight and approval of the
Board. If it is necessary or appropriate for the Adviser to make investments on behalf of the
Company through a special purpose vehicle, the Adviser shall have authority to create or arrange
for the creation of such special purpose vehicle and to make such investments through such special
purpose vehicle (in accordance with the Investment Company Act).




     (b) The Adviser hereby accepts such employment and agrees during the term hereof to render the
services described herein for the compensation provided herein.



     (c) The Adviser is hereby authorized to enter into one or more sub-advisory agreements with
other investment advisers (each, a “Sub-Adviser”) pursuant to which the Adviser may obtain
the services of the Sub-Adviser(s) to assist the Adviser in fulfilling its responsibilities
hereunder. Specifically, the Adviser may retain a Sub-Adviser to recommend specific securities or
other investments based upon the Company’s investment objective and policies, and work, along with
the Adviser, in structuring, negotiating, arranging or effecting the acquisition or disposition of
such investments and monitoring investments on behalf of the Company, subject to the oversight of
the Adviser and the Company. The Company shall be responsible for any compensation payable to any
Sub-Adviser. Any sub-advisory agreement entered into by the Adviser shall be in accordance with
the requirements of the Investment Company Act and other applicable federal and state law.



     (d) The Adviser shall for all purposes herein provided be deemed to be an independent
contractor and, except as expressly provided or authorized herein, shall have no authority to act
for or represent the Company in any way or otherwise be deemed an agent of the Company.



     (e) The Adviser shall keep and preserve for the period required by the Investment Company Act
any books and records relevant to the provision of its investment advisory services



2









 




to the Company and shall specifically maintain all books and records in accordance with
Section 31(a) of the Investment Company Act with respect to the Company’s portfolio transactions
and shall render to the Board such periodic and special reports as the Board may reasonably
request. The Adviser agrees that all records that it maintains for the Company are the property of
the Company and will surrender promptly to the Company any such records upon the Company’s request,
provided that the Adviser may retain a copy of such records.




     (f) The Adviser shall be primarily responsible for the execution of any trades in securities
in the Company’s portfolio and the Company’s allocation of brokerage commissions.



2. Company’s Responsibilities and Expenses Payable by the Company 




     (a) Except as otherwise provided herein or in the Administration Agreement, the Adviser shall
be solely responsible for the compensation of its investment professionals and employees and all
overhead expenses of the Adviser (including rent, office equipment and utilities). The Company
will bear all other costs and expenses of its operations, administration and transactions,
including (without limitation) those relating to: organizational expenses (up to an aggregate of
$1,500,000, it being understood and agreed that the Adviser shall bear all organizational expenses
of the Company in excess of such amount); calculating the Company’s net asset value (including the
cost and expenses of any independent valuation firm); expenses, including travel expense, incurred
by the Adviser or payable to third parties performing due diligence on prospective portfolio
companies and, if necessary, enforcing the Company’s rights; sales and purchases of the Company’s
common stock and other securities; fees paid to the Adviser under this Agreement; distributions on
the Company’s shares; administration fees, if any, payable under the Administration Agreement
between the Company and TSL Advisers, LLC (the “Administrator”); debt service and other
costs of borrowings or other financing arrangements; the allocated costs incurred by the Adviser in
providing managerial assistance to those portfolio companies that request it; amounts payable to
third parties relating to, or associated with, making or holding investments; transfer agent and
custodial fees; costs of hedging; commissions and other compensation payable to brokers or dealers;
registration fees; listing fees; federal, state and local taxes; independent director fees and
expenses; costs of preparing and filing reports or other documents required by the Securities and
Exchange Commission and other reporting and compliance costs; the costs of any reports, proxy
statements or other notices to the Company’s stockholders, including printing and mailing costs,
and the costs of any stockholders’ meetings, as well as the compensation of an investor relations
professional responsible for the coordination and administration of the foregoing; the Company’s
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 all other expenses reasonably incurred by the Company in
connection with making investments and administering the Company’s business. Notwithstanding
anything to the contrary contained herein, the Company shall reimburse the Adviser (or its
affiliates) for an allocable portion of the compensation paid by the Adviser (or its affiliates) to
the Company’s Chief Compliance Officer and Chief Financial Officer (based on a percentage of time
such individuals devote, on an estimated basis, to the business affairs of the



3









 




Company). For the avoidance of doubt, the Adviser shall be solely responsible for any
placement or “finder’s” fees payable to placement agents engaged by the Company or its affiliates
in connection with the offering of securities by the Company.




3. Compensation of the Adviser




     The Company agrees to pay, and the Adviser agrees to accept, as compensation for the services
provided by the Adviser hereunder, a base management fee (the “Management Fee”) and an
incentive fee (the “Incentive Fee”) as hereinafter set forth. The Company shall make any
payments due hereunder to the Adviser or to the Adviser’s designee as the Adviser may otherwise
direct. To the extent permitted by applicable law, the Adviser may elect, or the Company may
adopt, a deferred compensation plan pursuant to which the Adviser may elect to defer all or a
portion of its fees hereunder for a specified period of time.



     (a) The Management Fee shall be calculated at an annual rate of 1.5% of the Company’s gross
assets. For services rendered under this Agreement, the Management Fee will be payable quarterly
in arrears. The Management Fee will be calculated based on the average value of the Company’s
gross assets at the end of the two most recently completed calendar quarters, and appropriately
adjusted for any share issuances or repurchases during the current calendar quarter.1
Management Fees for any partial month or quarter will be appropriately prorated.



     (b) The Incentive Fee shall consist of two parts, as follows:





	 	(i) 	 	One part will be calculated and payable quarterly in arrears
based on the pre-Incentive Fee net investment income for the immediately
preceding calendar quarter. For this purpose, pre-Incentive Fee net investment
income means dividends (including reinvested dividends), interest and fee
income accrued by the Company during the calendar quarter, minus the Company’s
operating expenses for the quarter (including the Management Fee, expenses
payable under the Administration Agreement to the Administrator, and any
interest expense and dividends paid on any issued and outstanding preferred
stock, but excluding the Incentive Fee). Pre-Incentive Fee net investment
income includes, in the case of investments with a deferred interest feature
(such as original issue discount, debt instruments with pay-in-kind interest
and zero coupon securities), accrued income that the Company has not yet
received in cash. Pre-Incentive Fee net investment income does not include any
realized capital gains, realized capital losses or unrealized capital
appreciation or depreciation. Pre-











 




			
	1	 	For each of the first two calendar quarters
of the Company’s operations, the Management Fee shall be calculated based on
the Company’s gross assets at the end of such calendar quarter, and
appropriately adjusted for any share issuances or repurchases during such
calendar quarter.




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Incentive Fee net investment income, expressed as a rate of return on the
value of the Company’s net assets at the end of the immediately preceding
calendar quarter, will be compared to a “hurdle rate” of 1.5% per quarter
(6% annualized). The Company’s net investment income used to calculate this
part of the Incentive Fee is also included in the amount of its gross assets
used to calculate the 1.5% Management Fee.




The Company will pay the Adviser an Incentive Fee with respect to the
Company’s pre-Incentive Fee net investment income in each calendar quarter
as follows:




	 	•	 	With the exception of the Capital Gains Fee (as defined and
discussed in greater detail below), no Incentive Fee is payable to
the Adviser in any calendar quarter in which the Company’s
pre-Incentive Fee net investment income does not exceed the hurdle
rate of 1.5% for such quarter.
	 
	 	•	 	Following any initial public offering (“IPO”) of the
Company’s common stock that may occur, 100% of the Company’s
pre-Incentive Fee net investment income with respect to that portion
of such pre-Incentive Fee net investment income, if any, that
exceeds the hurdle rate is payable to the Adviser until the Adviser
has received 17.5% of the total pre-Incentive Fee net investment
income for that fiscal quarter. The Company refers to this portion
of the Company’s Pre-Incentive Fee Net Investment Income as the
“catch-up.”
	 
	 	 	 	Prior to any IPO of the Company’s common stock that may occur, 100%
of the Company’s pre-Incentive Fee net investment income with respect
to that portion of such pre-Incentive Fee net investment income, if
any, that exceeds the hurdle rate is payable to the Adviser until the
Adviser has received 15% of the total pre-Incentive Fee net
investment income for that fiscal quarter.
	 
	 	•	 	Following any IPO of the Company’s common stock that may occur,
once the hurdle is reached and the catch-up is achieved, 17.5% of
all remaining pre-Incentive Fee net investment income for that
fiscal quarter is payable to the Adviser.
	 
	 	 	 	Prior to any IPO of the Company’s common stock that may occur, once
the hurdle is reached and the catch-up is achieved, 15% of all
remaining pre-Incentive Fee net investment income for that fiscal
quarter is payable to the Adviser.




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	 	•	 	These calculations will be appropriately prorated for any period
of less than three months and adjusted for any share issuances or
repurchases during the relevant quarter.






(ii) Following any IPO of the Company’s common stock that may occur, the second part
of the Incentive Fee (the “Capital Gains Fee”) will be determined and
payable in arrears as of the end of each fiscal year of the Company (or upon
termination of this Agreement as set forth below), and will equal the Weighted
Percentage (as defined below) of the Company’s realized capital gains, if any, on a
cumulative basis from the inception of the Company to the end of such fiscal year,
computed net of all realized capital losses and unrealized capital depreciation on a
cumulative basis, minus the aggregate amount of any previously paid capital gain
incentive fees for prior periods. The Weighted Percentage is intended to ensure
that, for each fiscal year following an IPO of the Company’s common stock, the
portion of the Company’s realized capital gains that accrued prior to an IPO will be
subject to an incentive fee rate of 15% and the portion of the Company’s realized
capital gains that accrued following an IPO will be subject to an incentive fee rate
of 17.5%, and is determined as follows:




“Weighted Percentage” means a percentage equal to the Pre-IPO Percentage
plus the Post-IPO Percentage.




“Pre-IPO Percentage” means a percentage determined by multiplying 15% by a
fraction, the numerator of which is the Pre-IPO Gain Amount and the denominator of
which is the Total Gain Amount, rounded to the nearest one hundredth percent.




“Post-IPO Percentage” means a percentage determined by multiplying 17.5% by
a fraction, the numerator of which is the Post-IPO Gain Amount and the denominator
of which is the Total Gain Amount, rounded to the nearest one hundredth percent.




“Total Gain Amount” means, for any fiscal year, the aggregate dollar amount
of the Company’s realized capital gains on a cumulative basis from the inception of
the Company to the end of such fiscal year.




“Pre-IPO Gain Amount” means the aggregate dollar amount equal to sum of the
following:




(A) In respect of each capital gain of the Company realized prior to the
occurrence of any IPO, a dollar amount equal to 100% of such capital gain;
and




(B) In respect of each capital gain of the Company realized following the
occurrence of an IPO:



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(I) In the event that the investment giving rise to such capital gain
was made by the Company prior to the occurrence of an IPO, a dollar
amount equal to the portion of such capital gain, if any, that had
accrued on the books of the Company as of the date of any IPO (the
“Marked Amount”); provided, however, if the Marked Amount for
such capital gain exceeds the disposition proceeds realized in
respect of the such capital gain, the dollar amount to be included in
this paragraph (B)(I) in respect of such capital gain shall equal (x)
the disposition proceeds realized in respect of such capital gain
minus (y) the cost basis of such capital gain; or




(II) In the event that the investment giving rise to such capital
gain was made by the Company following the occurrence of an IPO,
zero.




“Post-IPO Gain Amount” means the aggregate dollar amount equal to the sum of
the following:




(A) In respect of each capital gain of the Company realized prior to the
occurrence of an IPO, zero; and




(B) In respect of each capital gain of the Company realized following the
occurrence of an IPO:




(I) In the event that the investment giving rise to such capital gain
was made by the Company prior to the occurrence of an IPO, a dollar
amount equal to (x) disposition proceeds realized in respect of such
capital gain minus (y) the Marked Amount in respect of such capital
gain; provided, however, if the Marked Amount for such capital gain
exceeds the disposition proceeds realized in respect of such capital
gain, the amount to be included in this paragraph (B)(I) in respect
of such capital gain shall be zero; provided, further, if the
investment giving rise to such capital gain was reflected as an
unrealized capital loss on the books of the Company as of the date of
an IPO, the dollar amount to be included in this paragraph (B)(I)
shall equal 100% of such capital gain; or




(II) In the event that the investment giving rise to such capital
gain was made by the Company following the occurrence of an IPO, a
dollar amount equal to 100% of such capital gain.




Prior to any IPO of the Company’s common stock that may occur, the Capital Gains Fee
will equal 15% of the Company’s realized capital gains, if any, on a cumulative
basis from the inception of the Company to the end of such fiscal



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year, computed net of all realized capital losses and unrealized capital
depreciation on a cumulative basis, minus the aggregate amount of any previously
paid capital gain incentive fees for prior period; provided that the Capital Gains
Fee determined as of [DATE] will be calculated for a period of shorter than twelve
calendar months to take into account any realized capital gains computed net of all
realized capital losses and unrealized capital depreciation from inception. In the
event that this Agreement shall terminate as of a date that is not a fiscal year
end, the termination date shall be treated as though it were a fiscal year end for
purposes of calculating and paying a Capital Gains Fee.



Examples of Quarterly Incentive Fee Calculation :



Example 1: Income Related Portion of Incentive Fee (*) (**):



Alternative 1



Assumptions



Investment income (including interest, dividends, fees, etc.) = 2%

Hurdle rate (1) = 1.5%

Management fee (2) = 0.375%

Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20%

Pre-Incentive Fee net investment income

   (investment income - (management fee + other expenses)) = 1.425%

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




Alternative 2



Assumptions



Investment income (including interest, dividends, fees, etc.) = 2.375%

Hurdle rate (1) = 1.5%

Management fee (2) = 0.375%

Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20%

Pre-Incentive Fee net investment income

   (investment income - (management fee + other expenses)) = 1.8%

Incentive Fee = 100% × pre-Incentive Fee net investment income, subject to the “catch-up” (4)

   = 100% × (1.8% - 1.5%)

   = 0.3%




Alternative 3



Assumptions



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

Hurdle rate (1) = 1.5%

Management fee (2) = 0.375%

Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20%

Pre-Incentive Fee net investment income

   (investment income - (management fee + other expenses)) = 2.925%

Incentive Fee = 17.5% × pre-Incentive Fee net investment income, subject to “catch-up” (4)

Incentive Fee = 100% × “catch-up” + (17.5% ×
(pre-Incentive Fee net investment income - 1.82%))

Catch-up = 1.82% - 1.5% =0.32%

Incentive Fee = (100% × 0.32%) + (17.5% × (2.925% - 1.82%))

   = 0.32% + (17.5% × 1.105%)





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   = 0.32% + 0.193%

   = 0.513%






 




			
	(1)	 	Represents 6.0% annualized hurdle rate.
	 
	(2)	 	Represents 1.5% annualized management fee.
	 
	(3)	 	Excludes organizational and offering expenses.
	 
	(4)	 	The “catch-up” provision is intended to provide the Adviser with an
Incentive Fee of 17.5% on all of the Company’s pre-Incentive Fee net
investment income as if a hurdle rate did not apply when the Company’s net
investment income exceeds 17.5% in any calendar quarter and is not applied
once the Adviser has received 17.5% of investment income in a quarter. The
“catch-up” portion of the Company’s pre-Incentive Fee Net Investment Income
is the portion that exceeds the 1.5% hurdle rate but is less than or equal
to 1.82% in any fiscal quarter.
	 
	(*)	 	This example assumes that an IPO of the Company’s common stock has occurred.
	 
	(**)	 	The hypothetical amount of pre-Incentive Fee net investment income shown is
based on a percentage of total net assets.





Example 2: Capital Gains Portion of Incentive Fee:



Assumptions





	•	 	Year 1: $10 million investment made in Company A
(“Investment A”), $10 million investment
made in Company B (“Investment B”), $10 million
investment made in Company C (“Investment
C”), $10 million investment made in Company D
(“Investment D”) and $10 million investment
made in Company E (“Investment E”).
	 
	•	 	Year 2: Investment A sold for $20 million, fair market value (“FMV”) of Investment B
determined to be $8 million, FMV of Investment C determined to be $12 million, and FMV of
Investments D and E each determined to be $10 million.
	 
	•	 	Year 3: IPO of the Company occurs. At IPO, FMV of Investment of B determined to be $8
million, FMV of Investment C determined to be $14 million, FMV of Investment D determined to
be $14 million and FMV of Investment E determined to be $16 million.
	 
	•	 	Year 4: $10 million investment made in Company F
(“Investment F”), Investment D sold for $12
million, FMV of Investment B determined to be $10 million, FMV of Investment C determined to
be $16 million and FMV of Investment E determined to be $14 million.
	 
	•	 	Year 5: Investment C sold for $20 million, FMV of Investment B determined to be $14 million,
FMV of Investment E determined to be $10 million and FMV of Investment F determined to $12
million.
	 
	•	 	Year 6: Investment B sold for $16 million, FMV of Investment E determined to be $8 million
and FMV of Investment F determined to be $15 million.
	 
	•	 	Year 7: Investment E sold for $8 million and FMV of Investment F determined to be $17 million.
	 
	•	 	Year 8: Investment F sold for $18 million.




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     These assumptions are summarized in the following chart:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Cumulative	 	Cumulative	 	Cumulative
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Unrealized	 	Realized	 	Realized
	 	 	Investment	 	Investment	 	Investment	 	Investment	 	Investment	 	Investment	 	Capital	 	Capital	 	Capital
	 	 	A	 	B	 	C	 	D	 	E	 	F	 	Depreciation	 	Losses	 	Gains
	Year 1

	 	$10 million (cost
basis)
	 	$10 million (cost
basis)
	 	$10 million (cost
basis)
	 	$10 million (cost
basis)
	 	$10 million (cost
basis)
	 	—
	 	—
	 	—
	 	—
	 
	Year 2

	 	$20 million (sale
price)
	 	$8 million FMV
	 	$12 million FMV
	 	$10 million FMV
	 	$10 million FMV
	 	—
	 	$2 million
	 	—
	 	$10 million
	 
	Year 3 (IPO)

	 	—
	 	$8 million FMV at
IPO
	 	$14 million FMV at
IPO
	 	$14 million FMV at
IPO
	 	$16 million FMV at
IPO
	 	—
	 	$2 million
	 	—
	 	$10 million
	 
	Year 4

	 	—
	 	$10 million FMV
	 	$16 million FMV
	 	$12 million (sale
price)
	 	$14 million FMV
	 	$10 million (cost
basis)
	 	—
	 	—
	 	$12 million
	 
	Year 5

	 	—
	 	$14 million FMV
	 	$20 million (sale
price)
	 	—
	 	$10 million FMV
	 	$12 million FMV
	 	—
	 	—
	 	$22 million
	 
	Year 6

	 	—
	 	$16 million (sale
price)
	 	—
	 	—
	 	$8 million FMV
	 	$15 million FMV
	 	$2 million
	 	—
	 	$28 million
	 
	Year 7

	 	—
	 	—
	 	—
	 	—
	 	$8 million (sale
price)
	 	$17 million FMV
	 	—
	 	$2 million
	 	$28 million
	 
	Year 8

	 	—
	 	—
	 	—
	 	—
	 	—
	 	$18 million (sale
price)
	 	—
	 	$2 million
	 	$36 million






     The capital gains portion of the Incentive Fee would be:




	 	•	 	Year 1: None
	 
	 	•	 	Year 2:
	 
	 	 	 	Capital gains Incentive Fee = 15% multiplied by ($10 million realized
capital gains on sale of Investment A less $2 million cumulative
capital depreciation) = $1.2 million
	 
	 	•	 	Year 3:
	 
	 	 	 	Capital Gains Incentive Fee = (Weighted Percentage multiplied by ($10
million cumulative realized capital gains less $2 million cumulative
capital depreciation)) less $1.2 million cumulative Capital Gains Fee
previously paid = $1.2 million less $1.2 million = $0.00
	 
	 	 	 	Weighted Percentage = (15% multiplied by ($10 million Pre-IPO Gain
Amount divided by $10 million Total Gain Amount)) plus (17.5%
multiplied by ($0 Post-IPO Gain Amount divided by $10 million Total
Gain Amount)) = 15%
	 
	 	•	 	Year 4:
	 
	 	 	 	Capital Gains Fee = (Weighted Percentage multiplied by ($12 million
cumulative realized capital gains)) less $1.2 million cumulative
Capital Gains Fee previously paid = $1.8 million less $1.2 million =
$0.6 million
	 
	 	 	 	Weighted Percentage = (15% multiplied by ($12 million Pre-IPO Gain
Amount divided by $12 million Total Gain




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	 	 	 	Amount)) plus (17.5%
multiplied by ($0 Post-IPO Gain Amount divided by $10 million Total
Gain Amount)) = 15%
	 
	 	•	 	Year 5:
	 
	 	 	 	Capital Gains Fee = (Weighted Percentage multiplied by ($22 million
cumulative realized capital gains)) less $1.8 million cumulative
Capital Gains Fee previously paid = $3.45 million less $1.8 million =
$1.65 million
	 
	 	 	 	Weighted Percentage = (15% multiplied by ($16 million Pre-IPO Gain
Amount divided by $22 million Total Gain Amount)) plus (17.5%
multiplied by ($6 Post-IPO Gain Amount divided by $22 million Total
Gain Amount)) = 15.68%
	 
	 	•	 	Year 6:
	 
	 	 	 	Capital Gains Fee = (Weighted Percentage multiplied by ($28 million
cumulative realized capital gains less $2 million cumulative capital
depreciation)) less $3.45 million cumulative Capital Gains Fee
previously paid = $4.18 million less $3.45 million =
$0.73 million
	 
	 	 	 	
Weighted Percentage = (15% multiplied by ($16 million Pre-IPO Gain
Amount divided by $28 million Total Gain Amount)) plus (17.5%
multiplied by ($12 Post-IPO Gain Amount divided by $28 million Total
Gain Amount)) = 16.07%
	 
	 	•	 	Year 7:
	 
	 	 	 	Capital Gains Fee = (Weighted Percentage multiplied by ($28 million
cumulative realized capital gains less $2 million cumulative realized
capital losses)) less $4.18 million cumulative Capital Gains Fee
previously paid = $4.18 million less $4.18 million =
$0.00
	 
	 	 	 	
Weighted Percentage = (15% multiplied by ($16 million Pre-IPO Gain
Amount divided by $28 million Total Gain Amount)) plus (17.5%
multiplied by ($12 Post-IPO Gain Amount divided by $28 million Total
Gain Amount)) = 16.07%
	 
	 	•	 	Year 8:
	 
	 	 	 	Capital Gains Fee = (Weighted Percentage multiplied by ($36 million
cumulative realized capital gains less $2 million cumulative realized
capital losses)) less $4.18 million cumulative Capital Gains Fee
previously paid = $5.57 million less $4.18 million = $1.39 million

	 
	 	 	 	
Weighted Percentage = (15% multiplied by ($16 million Pre-IPO Gain
Amount divided by $36 million Total Gain Amount)) plus (17.5%
multiplied by ($18 Post-IPO Gain Amount divided by $36 million Total
Gain Amount)) = 16.39%





     (c) Prior to any IPO of the Company’s common stock that may occur, the Adviser shall
waive its right to receive the Management Fee in excess of the sum of (i) 0.25% of aggregate
committed but undrawn capital and (ii) 0.75% of aggregate drawn capital (including capital drawn to
pay Company expenses) during any period. The fee waiver shall terminate if and when the Company
makes an IPO of its common stock.



     (d) Any transaction, loan origination, advisory or similar fees (“Transaction Fees”)
received in connection with the Company’s activities or the Adviser’s activities as they relate to
the Company shall be the property of the Company. The parties agree that any Transaction Fees
paid to the members, managers, partners or employees of the Company, the Adviser or their
respective affiliates in connection with the Company’s activities or the Adviser’s activities as



11









 







they relate to the Company shall be promptly remitted to the Company; provided, however,
Transaction Fees received in respect of an investment opportunity in which the Company and one or
more entities (including affiliates of the Adviser) participate shall be allocated to each of the
Company and such entities pro rata in accordance with their respective investments
or proposed investments in such investment opportunity.



4. Covenants of the Adviser




     The Adviser agrees that its activities will at all times be in compliance in all material
respects with all applicable federal and state laws governing its operations and investments.



5. Excess Brokerage Commissions




     The Adviser is hereby authorized, to the fullest extent now or hereafter permitted by law, to
cause the Company to pay a member of a national securities exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of commission another
member of such exchange, broker or dealer would have charged for effecting that transaction, if the
Adviser determines in good faith, taking into account such factors as price (including the
applicable brokerage commission or dealer spread), size of order, difficulty of execution, and
operational facilities of the firm and the firm’s risk and skill in positioning blocks of
securities, that such amount of commission is reasonable in relation to the value of the brokerage
and/or research services provided by such member, broker or dealer, viewed in terms of either that
particular transaction or its overall responsibilities with respect to the Company’s portfolio, and
constitutes the best net results for the Company.



6. Investment Team




     The Adviser shall manage the Company’s portfolio through a team of investment professionals
(the “Investment Team”) dedicated primarily to the Company’s business, in cooperation with
the Company’s Chief Executive Officer. The Investment Team shall be comprised of senior personnel
of the Adviser, supported by and with access to the investment professionals, analytical
capabilities and support personnel of the Company and TPG Capital, L.P.



7. Limitations on the Employment of the Adviser




     The services of the Adviser to the Company are not exclusive, and the Adviser may engage in
any other business or render similar or different services to others including, without limitation,
the direct or indirect sponsorship or management of other investment-based accounts or commingled
pools of capital, however structured, having investment objectives similar to those of the Company,
so long as its services to the Company hereunder are not impaired thereby, and nothing in this
Agreement shall limit or restrict the right of any manager, partner,
officer or employee of the Adviser to engage in any other business or to devote his or her
time and attention in part to any other business, whether of a similar or dissimilar nature, or to
receive any fees or compensation in connection therewith (including fees for serving as a director
of, or



12









 







providing consulting services to, one or more of the Company’s portfolio companies, subject
to applicable law). So long as this Agreement or any extension, renewal or amendment remains in
effect, the Adviser shall be the only investment adviser for the Company, subject to the Adviser’s
right to enter into sub-advisory agreements at set forth herein. The Adviser assumes no
responsibility under this Agreement other than to render the services called for hereunder. It is
understood that directors, officers, employees and stockholders of the Company are or may become
interested in the Adviser and its affiliates, as directors, officers, employees, partners,
stockholders, members, managers or otherwise, and that the Adviser and directors, officers,
employees, partners, stockholders, members and managers of the Adviser and its affiliates are or
may become similarly interested in the Company as stockholders or otherwise.



8. Responsibility of Dual Directors, Officers and/or Employees




     If any person who is a manager, partner, officer or employee of the Adviser or the
Administrator is or becomes a director, officer and/or employee of the Company and acts as such in
any business of the Company, then such manager, partner, officer and/or employee of the Adviser or
the Administrator shall be deemed to be acting in such capacity solely for the Company, and not as
a manager, partner, officer or employee of the Adviser or the Administrator or under the control or
direction of the Adviser or the Administrator, even if paid by the Adviser or the Administrator.



9. Conflicts of Interest




     The Adviser agrees that it shall submit to the Board a description of any potential or actual
conflict of interest that the Adviser determines to be material in any transaction or relationship
between the Company and any entity controlled by it, on the one hand, and the Adviser or any of its
affiliates or their respective employees, partners, members, officers or directors, on the other
hand; provided, however, that any transaction that is (i) conducted on an arm’s length
basis and generates Transaction Fees one hundred percent (100%) of which are paid or remitted to
the Company in accordance with Section 3(d) or (ii) made pursuant to an exemptive order obtained by
the Company or the Adviser under the Investment Company Act shall not, in either case, constitute a
conflict of interest for the purposes of this Section 9. Any transaction or relationship required
to be submitted to the Board pursuant to the previous sentence shall promptly be reviewed and
approved or disapproved by the Board, and the Adviser shall supply the Board with all information
and data reasonably requested by the Board to enable it to reach an informed decision with respect
thereto.



10. Limitation of Liability of the Adviser; Indemnification




     The Adviser (and its members, managers, officers, employees, agents, controlling persons and
any other person or entity affiliated with it) shall not be liable to the Company for
any action taken or omitted to be taken by the Adviser in connection with the performance of
any of its duties or obligations under this Agreement or otherwise as an investment adviser of the
Company (except to the extent specified in Section 36(b) of the Investment Company Act



13









 







concerning
loss resulting from a breach of fiduciary duty (as the same is finally determined by judicial
proceedings) with respect to the receipt of compensation for services). As permitted by Article
VIII of the Certificate of Incorporation, the Company shall, to the fullest extent permitted by
law, provide indemnification and the right to the advancement of expenses, to each person who was
or is made a party or is threatened to be made a party to or is involved (including, without
limitation, as a witness) in any actual or threatened action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he/she is or was a member,
manager, officer, employee, agent, controlling person or any other person or entity affiliated with
the Adviser, including without limitation the Administrator, or is or was a member of the Adviser’s
Investment Review Committee (each such person hereinafter an “Indemnitee”), on the same
general terms set forth in Article VIII of the Certificate of Incorporation, the terms of which are
incorporated herein mutatis mutandi as applied to the Indemnitees.



11. Effectiveness, Duration and Termination of Agreement




     (a) This Agreement shall become effective as of the first date above written. This Agreement
may be terminated at any time, without the payment of any penalty, upon not more than 60 days’
written notice, by the vote of a majority of the outstanding voting securities of the Company or by
the vote of the Company’s directors or by the Adviser. The provisions of Section 10 of this
Agreement shall remain in full force and effect, and the Adviser shall remain entitled to the
benefits thereof, notwithstanding any termination of this Agreement. Further, notwithstanding the
termination or expiration of this Agreement as aforesaid, the Adviser shall be entitled to any
amounts owed under Section 3 through the date of termination or expiration, and Section 10 shall
continue in force and effect and apply to the Adviser and its representatives as and to the extent
applicable.



     (b) This Agreement shall continue in effect for two years from the date hereof, or to the
extent consistent with the requirements of the Investment Company Act, from the date of the
Company’s election to be regulated as a BDC under the Investment Company Act, and thereafter shall
continue automatically for successive annual periods, provided that such continuance is
specifically approved at least annually by (A) the vote of the Board, or by the vote of a majority
of the outstanding voting securities of the Company and (B) the vote of a majority of the Company’s
directors who are not parties to this Agreement or “interested persons” (as such term is defined in
Section 2(a)(19) of the Investment Company Act) of any such party, in accordance with the
requirements of the Investment Company Act.



     (c) This Agreement will automatically terminate in the event of its “assignment” (as such term
is defined for purposes of Section 15(a)(4) of the Investment Company Act).



12. Notices




     Any notice under this Agreement shall be given in writing, addressed and delivered or mailed,
postage prepaid, to the other party at its principal office.



14









 





13. Amendments




     This Agreement may be amended by mutual consent, but the consent of the Company must be
obtained in conformity with the requirements of the Investment Company Act.



14. Entire Agreement; Governing Law




     This Agreement contains the entire agreement of the parties and supersedes all prior
agreements, understandings and arrangements with respect to the subject matter hereof. This
Agreement shall be construed in accordance with the laws of the State of Delaware and in accordance
with the applicable provisions of the Investment Company Act. In such case, to the extent the
applicable laws of the State of Delaware, or any of the provisions herein, conflict with the
provisions of the Investment Company Act, the latter shall control.



[Remainder of page intentionally left blank.]








15









 








* * *




     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the
date above written.



	 	 	 	 	 
	 	TPG SPECIALTY LENDING, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	TSL ADVISERS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title: