EX-10.4



 Exhibit 10.4 
 FIRST AMENDED AND RESTATED 
 INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT

 BETWEEN 
 SOLAR CAPITAL LTD. 
 AND 

SOLAR CAPITAL PARTNERS, LLC 
 Agreement (this “Agreement”) made this 2nd day of August 2016, by and between SOLAR CAPITAL LTD., a Maryland corporation (“Company”), and SOLAR CAPITAL PARTNERS, LLC, a Delaware limited liability company (the
“Adviser”). 
 WHEREAS, the Company is a closed-end management investment company that has elected 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”); 

WHEREAS, the Company and the Adviser are parties to the investment advisory and management agreement, dated February 9, 2010, by and
between the Company and the Adviser (the “Prior Agreement”); 
 WHEREAS, the Company and the Adviser desire to
amend and restate the Prior Agreement to set forth the terms and conditions for the continued provision by the Adviser of investment advisory services to the Company; and 

WHEREAS, the Company’s board of directors has determined that such amendment and restatement clarifies the intent of the Prior
Agreement in a manner that is consistent with the Company’s public disclosures and is not detrimental to the Company. 

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 N-2 (File No. 333-148734) initially filed on January 18, 2008 (as the same shall be amended from time to time, the “Registration Statement”); (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, 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) perform due diligence on prospective
portfolio companies; and (vi) provide the 

  
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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. 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 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 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. 

 

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


All investment professionals of the Adviser and their respective staffs, when and to the extent engaged in providing investment advisory
and management services hereunder, and the compensation and routine overhead expenses of such personnel allocable to such services, will be provided and paid for by the Adviser and not by the Company. The Company will bear all other costs and
expenses of its operations, administration and transactions, including (without limitation) those relating to: organization and offering; calculating the Company’s net asset value (including the cost and expenses of any independent valuation
firm); expenses incurred by the Adviser payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for the Company and in providing administrative services, monitoring the Company’s
investments and performing due diligence on its prospective portfolio companies; interest payable on debt, if any, incurred to finance the Company’s investments; sales and purchases of the Company’s common stock and other securities;
investment advisory and management fees; administration fees, if any, payable under the Administration Agreement between the Company and Solar Capital Management, LLC (the “Administrator”), the Company’s administrator; fees
payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments; transfer agent and custodial fees; federal and 

  
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state registration fees; all costs of registration and listing the Company’s shares on any securities exchange; federal, state and local taxes; independent Directors’ fees and expenses;
costs of preparing and filing reports or other documents required by the Securities and Exchange Commission; costs of any reports, proxy statements or other notices to stockholders, including printing costs; the Company’s allocable portion of
the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums; direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other
staff, independent auditors and outside legal costs; and all other expenses incurred by the Company or the Administrator in connection with administering the Company’s business, including payments under the Administration Agreement between the
Company and the Administrator based upon the Company’s allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of the
Company’s chief compliance officer and chief financial officer and their respective staffs. 
  

	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 (“Base Management Fee”) and an
incentive fee (“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 Base Management Fee shall be calculated at an annual rate of 2.00% of the Company’s gross assets, excluding temporary
assets acquired at the end of each fiscal quarter for purposes of preserving investment flexibility for the next fiscal quarter. Temporary assets include, but are not limited to, U.S. treasury bills, other short-term U.S. government or
government agency securities, repurchase agreements or cash borrowings. 
 (b) For services rendered under this agreement,
the Base Management Fee will be payable quarterly in arrears. The Base 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. Base Management Fees for any partial month or quarter will be appropriately pro-rated. 
 (c) 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 interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination,
structuring, diligence and consulting fees and fees for providing significant managerial assistance or other fees that the Company receives from portfolio companies) accrued by the Company during the calendar quarter, minus the Company’s
operating expenses for the quarter (including the Base 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 we have 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-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 1.75% per quarter (7.00% annualized). The




  
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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 2.00% base 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: (1) no Incentive Fee in any calendar quarter in which the Company’s pre-Incentive Fee
net investment income does not exceed the hurdle rate of 1.75%; (2) 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
but is less than 2.1875% in any calendar quarter (8.75% annualized); this portion of the pre-Incentive Fee net investment income (which exceeds the hurdle but is less than 2.1875%) is referred to herein as the “catch-up.” The
“catch-up” is meant to provide the Adviser with 20% of the Company’s pre-Incentive Fee net investment income as if a hurdle did not apply if this net investment income exceeds 2.1875% in any calendar quarter; and (3) 20% of the amount
of the Company’s pre-Incentive Fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) payable to the Adviser (once the hurdle is reached and the catch-up is achieved, 20% of all pre-Incentive Fee
investment income thereafter is allocated to the Adviser). These calculations will be appropriately pro-rated for any period of less than three months and adjusted for any share issuances or repurchases during the relevant quarter.


  

	 	(ii)	The second part of the Incentive Fee (the “Capital Gains Fee”) will be determined and payable in arrears as of the end of each calendar year (or upon
termination of this Agreement as set forth below), commencing on December 31, 2007, and will equal 20.0% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net
of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the amount of any previously paid capital gain Incentive Fees, with respect to each of the investments in the Company’s portfolio; provided that the
Incentive Fee determined as of December 31, 2007 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 calendar year end, the termination date shall be treated as though it were a calendar 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.) = 1.25% 

Hurdle rate (1) = 1.75% 
 Management fee (2) = 0.50% 
 Other expenses (legal, accounting, custodian, transfer
agent, etc.) (3) = 0.20% 
 Pre-Incentive Fee net investment income 

(investment income – (management fee + other expenses)) = 0.55% 

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

  
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 Alternative 2 

Assumptions 
 Investment income (including interest, dividends, fees, etc.) = 2.70% 
 Hurdle rate
(1) = 1.75% 
 Management fee (2) = 0.50% 
 Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20% 

Pre-Incentive Fee net investment income 
 (investment income – (management fee + other expenses)) = 2.00% 
 Incentive
Fee = 100% × pre-Incentive Fee net investment income, subject to the “catch-up” (4) 
 = 100%
× (2.00% – 1.75%) 
 = 0.25% 
 Alternative 3 
 Assumptions 

Investment income (including interest, dividends, fees, etc.) = 3.00% 

Hurdle rate (1) = 1.75% 
 Management fee (2) = 0.50% 
 Other expenses (legal, accounting, custodian, transfer
agent, etc.) (3) = 0.20% 
 Pre-Incentive Fee net investment income 

(investment income – (management fee + other expenses)) = 2.30% 

Incentive Fee = 20% × pre-Incentive Fee net investment income, subject to “catch-up” (4) 

Incentive Fee = 100% × “catch-up” + (20% × (pre-Incentive Fee net investment income – 2.1875%)) 

Catch-up = 2.1875% – 1.75% = 0.4375% 
 Incentive Fee = (100% × 0.4375%) + (20% × (2.3% – 2.1875%)) 
 = 0.4375% + (20% × 0.1125%) 
 = 0.4375% + 0.0225% 

= 0.46% 

 

	(1)	Represents 7.0% annualized hurdle rate.  


	(2)	Represents 2.0% annualized management fee.  


	(3)	Excludes organizational and offering expenses.  


	(4)	The “catch-up” provision is intended to provide our investment adviser with an Incentive Fee of 20% on all of our pre-Incentive Fee net investment income
as if a hurdle rate did not apply when our net investment income exceeds 2.1875% in any calendar quarter.  


	(*)	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: 
 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 (“FMV”) of Investment B determined to be $32 million



  

	 	•	 	 Year 3: FMV of Investment B determined to be $25 million 



 

	 	•	 	 Year 4: Investment B sold for $31 million 



  
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 The capital gains portion of the Incentive Fee would be: 

 

	 	•	 	 Year 1: None 


  

	 	•	 	 Year 2: Capital gains Incentive Fee of $6 million ($30 million realized capital gains on sale of Investment A multiplied by 20%)



  

	 	•	 	 Year 3: None 


 $5 million (20% multiplied by ($30 million cumulative capital gains less $5 million cumulative capital depreciation)) less $6 million (previous capital gains fee paid in Year 2) 

 

	 	•	 	 Year 4: Capital Gains Fee of $200,000 


 $6.2 million ($31 million cumulative realized capital gains multiplied by 20%) less $6 million (Capital Gains Fee taken in Year 2) 
 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



  

	 	•	 	 Year 3: FMV of Investment B determined to be $27 million and Investment C sold for $30 million 



 

	 	•	 	 Year 4: FMV of Investment B determined to be $35 million 



 

	 	•	 	 Year 5: Investment B sold for $20 million 


 The Capital Gains Fee, if any, would be: 
  

	 	•	 	 Year 1: None 


  

	 	•	 	 Year 2: $5 million Capital Gains Fee 


 20% multiplied by $25 million ($30 million realized capital gains on Investment A less unrealized capital depreciation on Investment B) 

 

	 	•	 	 Year 3: $1.4 million Capital Gains Fee(1) 


 $6.4 million (20% multiplied by $32 million ($35 million cumulative realized capital gains less $3 million unrealized capital depreciation)) less $5 million Capital Gains Fee received in Year 2

  

	 	•	 	 Year 4: None 


  

	 	•	 	 Year 5: None 


 $5 million (20% multiplied by $25 million (cumulative realized capital gains of $35 million less realized capital losses of $10 million)) less $6.4 million cumulative Capital Gains Fee paid in Year 2 and
Year 3 
  

	(1)	 As illustrated in Year 3 of Alternative 1 above, if Solar Capital were to be wound up on a date other than December 31st of any year, Solar Capital may have paid aggregate capital gain Incentive Fees that are more than the amount of
such fees that would be payable if Solar Capital had been wound up on December 31 of such year. 



  
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	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.	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 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. 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. 
  

	7.	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. 
  

	8.	Limitation of Liability of the Adviser; Indemnification. 

 The Adviser (and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser, including without limitation its sole member
and the Administrator and any affiliated person thereof to the extent they are providing services for or otherwise acting on behalf of the Adviser, Administrator or the Company) 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 

  
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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 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), and the Company shall indemnify, defend and protect the Adviser (and its officers, managers, partners, agents,
employees, controlling persons, members and any other person or entity affiliated with the Adviser, including without limitation its general partner and the Administrator, each of whom shall be deemed a third party beneficiary hereof) (collectively,
the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified
Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Company or its security holders) arising out of or otherwise based upon the
performance of any of the Adviser’s duties or obligations under this Agreement or otherwise as an investment adviser of the Company. Notwithstanding the preceding sentence of this Section 8 to the contrary, nothing contained herein shall
protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Company or its security holders to which the Indemnified Parties would
otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of the Adviser’s duties or by reason of the reckless disregard of the Adviser’s duties and obligations under this Agreement (as the
same shall be determined in accordance with the Investment Company Act and any interpretations or guidance by the Securities and Exchange Commission or its staff thereunder). 

 

	9.	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 8 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 8 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 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). 
  

	10.	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. 
  

	11.	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. 
  

	12.	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 

  
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accordance with the laws of the State of New York 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
New York, or any of the provisions herein, conflict with the provisions of the Investment Company Act, the latter shall control. 

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

			
	SOLAR CAPITAL LTD.
		
	 By:    
	 	 /s/ Michael S. Gross

		 	Name: Michael S. Gross
		 	 Title:   Chief Executive Officer, President,
 Chairman of the Board and Director

	
	SOLAR CAPITAL PARTNERS, LLC
		
	 By:    
	 	 /s/ Michael S. Gross

		 	Name: Michael S. Gross
		 	Title:   Managing Member



  
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